JWR, this is really eerie... If I'm reading your post properly, P/E10 says keeps 20% or more on the sidelines all the time.

Well, I try to keep 20% in cash and, with my miniscule bond allocations, that usually means about 30% in non-equity. I want that 20% cash... Every single time I *don't* have about 20% in cash, a horrible Black Swan-type event happens where having cash-in-hand is vital. The aftermath of the markets after 9/11 is one horrific example.

Does that mean that I have been somehow practicing a quasi-P/E10 strategy all along? The reason I like that cash level is flexibility. I'm not a Nervous Nellie and cash is not my baby blanket. It's just that whenever I don't keep about 20% in cash, something horrible happens and the market tanks. Then there's a firesale and I need cash but I don't have it and can't raise it -- and I refuse to sell at a loss as a knee-jerk reaction.

I haven't had a chance to explore this stuff yet but, for the benefit of others, here's a link to your website about Shiller's P/E10 and, naturally, for Rob Bennett's valuation informed indexing.     http://www.early-retirement-planning-insights.com/lucky-7.html

Thanks, JWR!

Regards,
Susan