Billionaire investor Warren Buffett always says his favorite indicator for stock market overvaluation is to compare the total US market valuation with the country's GDP.
It’s currently running at 133 per cent compared with an all-time high of 143 per cent in 1999 just before the dot-com crash.
So, it might not be a sensible idea to run out and buy stocks right now. It’s pretty much the same story around the globe. Indeed, nine years of rock bottom interest rates have left overvaluation clearly evident in stocks, bonds and real estate.
However, this is not a bad time to pick the stocks you would like to buy after a crash, file that list and get back to it sometime in the not-too-distant-future when stock prices are much lower.
Chris Mayer, chief investment officer of the Bill Bonner Private Portfolio, tells me: "Based on my experience in 2008 (and even in the 2000 bubble burst), it is usually best to buy what you know, because it is hard to pick the bottom.
"In a real bear market, you could easily wind up buying something and then be down 20 per cent in a few months. Tough to stomach. But easier when you've bought something you know well and have a great deal of confidence in."
We last saw this process happening in late 2007 when many shares began to come off their highs. Incidentally the same thing is happening now with the S&P 500 index at an all-time high but 30 per cent of its stocks actually at year lows.
The crash was in October 2008, and the ‘devil’s bottom’ when the S&P 500 dropped to 666 - more than half its recent high - came in March 2009.
Anybody with the sheer guts to buy then, and of course the necessary cash, did exceeding well by just buying and holding. Not many investors did that.
Step forward Warren Buffett and his holding company Berkshire Hathaway. In the middle of the Global Financial Crisis he snapped up preferential stock in Goldman Sachs for a song and made a huge profit for his shareholders.
Never mind that his own share price was also under pressure. He had the cash to buy at the right time. And how much cash does he have today? A record $90 billion and change.
I would back his judgment again in the next crash and pick up his stock when it is temporarily down in price. Then let him do the tricky bit of deciding on the best bargains and when exactly to buy them.
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Mr Buffett also tends to double-up on his own top holdings during a crash. He’s been a big buyer of Apple in recent years - who hasn't been?
But in a crash there might be a once in a lifetime chance to buy Apple stock for a great price. Would you not buy an iPhone X at half price?
I hazard the same argument for buying Amazon shares immediately after a big valuation correction, a nicer way to say price crash.
Only readers with long memories will remember how Amazon struggled to avoid bankruptcy in the aftermath of the 2000 crash. But somehow the sheer brilliance of its trading platform and chief executive, Jeff Bezos - now the richest guy on the planet - made it work.
And yet Amazon still only accounts for less than two per cent of global retail sales. Just look at its competitive position and recent growth rates and what you see is a giant multinational with almost uniquely high growth potential.
Then again, should you not be looking for the next Amazon? Currently the only possible contender is Tesla. It’s way ahead in its niche of electric vehicles and also financially way over its head like Amazon in the early 2000s.
You could see existing car manufacturers as strong competitors. On the other hand, if they had really been that good they would never have allowed Tesla to emerge from nothing in the first place. Think how old bookshops tried and failed to catch up with Amazon.
Tesla chief executive Elon Musk as the next Jeff Bezos? Well he might have to go to hell-and-back first.
What else would I buy as a contrarian investor? That refers to somebody who buys at the blackest moments.
Well, I reckon the Norwegian sovereign wealth fund’s decision to give up on oil and gas shares has to be the rock bottom for that sector.
The International Energy Agency recently said that the growth of alternative technologies, like Tesla cars, for example, would not even begin to dent the growth in demand for oil and gas until 2040. That sounds like long enough for another oil price boom.
But I can’t really decide between Exxon Mobil or Shell as the most solid oil major to own for the long-term.
My other personal top pick would be the Prime Junior Silver ETF. Precious metals were a winner after the 2008 financial crash, showing the fastest recovery and biggest gains.
Silver showed double the performance of gold and junior stocks about double that. So to lever up to the maximum, without taking on any debt, the Prime Junior Silver ETF is a nice speculation as risk is spread across 25 individual stocks.
Finally, I suggest buying Emaar Development, the building arm of Dubai’s Emaar Properties, as a play on an upturn in Dubai. It’s initial public offering in mid-November sold at the lower-end of estimates after the anti-corruption arrests in Saudi Arabia, and would likely be dragged lower with all and sundry in a big global sell-off.
But Dubai’s rapid recovery from the 2008 crash confounded just about every expert, although I was on stage in Vancouver addressing 1,000 US investors and tipping Emaar shortly afterwards as some of those who bought for a seven-fold profit might recall.
Buying shares when they are cheap after financial crashes made people like Warren Buffett incredibly rich. So, why not do the same? All you need is a list of stocks, some cash and very strong nerves.
Peter Cooper has been writing about finance in the Gulf for more than 20 years
