Yes, the stock market is high, and the 10 year bull can't last forever, so you only allocate 30% or 45% to stocks. You have to invest the money somewhere, and stocks have the best long term record (other than high end art, rare cars, etc), as long as you 'own the index'.
I'd probably have less than 45% allocated to stocks right now (was thinking 1/3 or 33%), but after listening to Bogle, he said that 50% was his personal minimum.
With allocation models, you need the discipline of a max/min range -- for stocks say 30% minimum, 70% maximum. That way you can never go 'all in' or 'all out'. Otherwise you become a market timer, which is a losing proposition since nobody can time the market with consistency.
Bogle said if you see the market at ridiculous valuations (1999/2000 the PE was in the 30-40 range) then lower your stock allocation, but you never go to zero.
Bottomline is to buy the index, get an allocation model you can live with, and then let it work. Avoiding dumb mistakes (trading, get rich quick) will put you way ahead over the long haul.
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