If you think the price of an asset is maybe 100% higher than it should be, but it has a current P/E ratio of 20, it's theoretically better than making no investment at all if you hold it for 10 years (not accounting for tax or how the earnings are distributed, and assuming constant real earnings). If all the stocks available to you are like that, and your only other non-shady investment options are an already terribly inflated housing market, I think it's still rational. There's also no guarantee that the bubble will even pop in 10 years. The best case scenario for overvalued equities is that they deflate at a rate somewhat lower than real growth - in that case, you see yoy growth in the traded price of the asset while the asset prices move towards more reasonable prices.