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The question, "Is the stock market overvalued" is one of those queries that sounds important, can be debated forever and is, for all practical purposes, meaningless, much like "Where do we come from?" or "Are we alone in the universe?" or even, "Is this the year the Cubs go all the way?"

This perennial piece of speculation assumes that overvalued stocks mean the market will soon drop, and that anyone owning stocks will want to sell to avoid a loss, which is why it's so useless. The question assumes you're trying to time the market which, experience has proven, is about as likely as teaching a cat to walk on a leash.

The question also assumes that you CAN sell your stocks now, that you have some better alternative investment or, worst of all, that you plan to sit out the slump in something safe and then jump back into stocks near the market low. That means successfully timing the market TWICE, a feat akin to riding a unicycle while catching a falling knife dropped from the Empire State Building. With your toes.

Is Yellen sellin'?

The latest commentator to publicly fret that stocks may be too expensive, and thus headed for a fall, is Federal Reserve Chairwoman Janet Yellen. "I would highlight that equity-market valuations at this point generally are quite high," Yellen tut-tutted Wednesday at a Washington finance forum.

Allow me to point out that, while she's so far been terrific at her job of being an ECONOMIST, economists aren't investors. Economists such as Yellen are experts at divining the larger societal implications of interest rates and labor markets, but call me when one of them takes over for Warren Buffett. Also, leave a message because I ain't waitin' up nights.

When former Fed head Alan Greenspan direly warned of "irrational exuberance" in stocks on Dec. 5, 1996, the S&P stood at 744.38. It didn't peak for more than another three years, hitting its peak — 1,527.46 on March 24, 2000. During that time, investors who hung on more than doubled their money, something that certainly would have left me quite rationally exuberant.

Yellen's not alone in the tendency among people who attain success in one part of the larger business world to suddenly assume they possess a deep and abiding authority over anything involving money. Just look how common it is for CEOs and investment moguls who barely graduated college to pontificate about global economic policies, which always makes me want to ask, "Um ... where's your research and a PhD? Also, don't you have some more workers to go lay off?"

4 Google shares = 1 campus ticket

Calling stocks "overvalued," of course, raises the question: Overvalued by who? Stocks certainly aren't overpriced now if, after long years of disciplined investing, you're selling because you've hit some big financial goal, such as preparing to retire or getting Junior or Missy accepted at the University of Southern North Dakota at Hoople.

But even if you're not selling, don't worry — most of us aren't overpaying. For everyday investors in Individual Retirement Accounts of 401(k)s and other workplace plans, our regular paycheck deductions automatically employ an investing strategy called "dollar-cost averaging." It means that by socking $100 a week away in stocks, you buy fewer shares when the price is high and more shares when the price is low. Over time, your cost averages out, and the strategy soundly beats trying to guess when Google has peaked or Proctor & Gamble has hit bottom.

Likewise, the discipline of rebalancing your portfolio every six months to hew to your allocation of, say, 60 percent stocks and 40 percent bonds, means you're trading in some high-priced gainers and acquiring some low-cost bargains. Or, in other words, selling high and buying low, the very definition of a savvy — and happy — investor.

So, keep on investing if that's where you are in life, and don't worry about historical P/E ratios, dividend yields and just who may or may not currently possess a working crystal ball. If you're young, keep buying, and if you're not, move some money out to something stable. But if you are cashing out, put some of your gains aside. You're going to want to have some money on hand for those Cubs World Series Tickets.

Brian O'Connor is author of the award-winning book, "The $1,000 Challenge: How One Family Slashed Its Budget Without Moving Under a Bridge or Living on Government Cheese."

boconnor@detroitnews.com

(313) 222-2145

Twitter: @BrianOCTweet

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