> What if an investor decided to detach from the herd once the CAPE ratio hit 50? At that point, the Nikkei had already delivered 263% over the previous ten years, or 13.8% a year. Not too bad. But once the CAPE ratio broke 50 in 1986, it wouldn’t peak for another 45 months, and it would add another 145%. Could the person who sold at CAPE 50 really sit on their hands for another 4 years as the mania sucked everyone else in?
* https://theirrelevantinvestor.com/2017/08/10/stock-bubble/
Second, the CAPE is fairly good at predicting future returns. Current S&P 500 CAPE:
* https://www.multpl.com/shiller-pe
So at 35.83, as I type this, the expected returns are 2.79%. If you can find an investment that earns at least that (or more), then you should be putting your money there. Can you list an investment that has that expected return? Indian, Bahrainian, or Mexican bonds perhaps?
* https://www.investing.com/rates-bonds/bahrain-government-bon...
* https://www.investing.com/rates-bonds/india-government-bonds
* https://www.investing.com/rates-bonds/mexico-government-bond...
The actual lessons to learn from Japan, one of which is diversification:
> Diversification, as always, is the key to avoiding a blow-up. The entire point of diversification is to avoid having your entire portfolio in a Japan situation. The global stock market has done just fine since 1990 even when you include Japan in the results.
* https://ritholtz.com/2017/10/japan-greatest-bubble-time/
There are plenty of "markets" out there:
* https://www.bogleheads.org/wiki/Callan_periodic_table_of_inv...