a) "epistemic arrogance" -- you believe you're smarter and know more than everyone else;
b) "heads, you might win, tails, everyone loses anyway" -- so you might as well gamble on heads;
c) "f*ck it, load up!"
And there's also d):
d) "wait it out" -- if you're already rich and infinitely patient, like Mr. Buffett. Maybe find a hobby to occupy your brain -- e.g., play Bridge online.
No, more like you decide to be less greedy than everyone else. You choose to leave money on the table in favor of getting out early.
If you think things are overvalued, there are two ways for it to go:
- the value of equities crashes in nominal terms and consumer prices are stable
- the value of the dollar itself declines, so that the nominal values of equities stay the same but consumer prices inflate to make the real value of equities revert to the norm
It’s probably a mix of a and b, but outcomes that tilt more heavily towards the latter would hurt people holding cash more. And right now b is closer to official Fed policy, since it would prefer that to getting into a Japanese deflation trap.