Perhaps someone has crunched some numbers to show how many weeks years prior to a crash period it is actually better on a marginal basis to buy rather than sit out.

My google-fu skills have brought up the following: http://www.marketoracle.co.uk/Article17714.html

OP, I believe you should wait for a market correction prior to investing. Reasoning as follows.

Markets have boom/bust cycles. This is as close as we have to economic fact. Despite the best efforts of government, they haven't been able to even smooth out, let alone eliminate the cycle. What they have been able to do is hasten a recovery after the fact via ultra-loose monetary/fiscal policy (this makes it into the narrative later).

From this, we can create a few investment options for you: 1. Dollar-cost average your way in, reducing your total exposure during the crash 2. Invest heavily in equities (low-fee ETF) now, accepting that you will have to stand firm through the next downturn. 3. Design a low-beta portfolio (i.e. invest in the market, but in things that won't do too badly in a crash). 4. Wait, hoping you won't miss out on an additional 20 years of capital appreciation.

(In all cases, this isn't necessarily a case of cash or equities. At 25 this is probably less of an issue, but as you grow your wealth you will probably want to distribute your cash between bonds, high-interest savings accounts, and various other more 'stable' investments like gold.

Dollar-cost averaging The worst of both worlds. Generally with bubbles, the majority of the growth will happen preceding the crash. Thus, if you want to get into the market and are willing to ride out the storm, I would recommend fully investing in equities now to capture as much of the upswing as possible.

Additionally, don't underestimate investor psychology. When the correction occurs, you (and me, and everyone else) will be very nervous and unsure about whether the market has bottomed out. If you've just lost a good chunk of your savings, you would likely be able to sit tight and wait for it to climb back up; but you are not going to be in a mood to throw the rest of your savings into the market!

Investing in equities There are several strong indications that the current bull market has plenty of fuel left, and similarly several indications that we are already late into the bubble stage. I won't go into these, but they're worth doing some research on if you're interested. There are as many factors and angles to consider as there are market analysts!

We do know that in the past (which is not an indication of the future), that bull markets tend to last 7-10 years before a major correction, with significant variation. We are currently 7 years into a secular bull-market run which indicates to me that a crash may not be imminent, but we are closer to the the coming correction than to 2008.

Unfortunately we don't know how big the correction is going to be. Others have pointed out that it could be a minor correction of 10%, at which point you will be left wondering whether to invest. There are several reasons I believe this correction will be at least as sharp and deep as 2008, if not more so. Firstly, interest rates have been lowered to basically zero, pushing investors into riskier and riskier assets. Second, governments have been actively trying to stabilize markets, which will delay the correction but make it larger when it does occur. Finally, while there was some deleveraging after '08; everybody has leveraged back up (who wouldn't, it's free money, right?)

Low beta portfolio The reason I don't recommend this is that it requires significant research, and is likely to not help that much anyway. During a crash, equities become highly correlated and traditional covariance-based risk models tend not to work that well; ergo, you'd probably lose almost as much as you would with an index-tracker fund/ETF. I only mention it because it's a valid option, and one that hasn't yet been mentioned.

Waiting There are two main arguments against waiting, which I will argue against. Firstly, we could have several more years of strong growth prior to the crash. While this is true, it's not the amount of time that counts but the actual growth amount, and to what point we will crash. Given the mixed economic data, low EPS, and low GDP growth numbers we've been seeing, I would argue that the high valuations in the stock market reflect undue optimism and speculation rather than true underlying economic growth. Once this optimism is replaced by fear (as it is during a bust cycle), these valuations will come back down to reality and, in fact, undershoot. I.e. I am going out on a limb and predicting that the market, regardless of how high it rises (and it's likely to rise significantly before the crash) will descend below its current level.

Secondly, many have argued that you won't know when the crash has hit. I've only been through one market correction, but I think most of the old-timers in here would back me up in saying this is patently absurd. In 2000, or in 2008, you knew there was a crash. People were jumping from buildings. Everyone was panicking, and every fiber of your being said to pull your money out of the markets and run. This is a good indication that it's time to invest (I didn't, and should have).

If you want something a bit more mathematical, I'd say that anything over a 30% correction over 3 months would be a good time to put your money in the market. Anything less than 10% is probably a hiccup that will recover quickly. While it's obviously possible, it's hopefully unlikely you'll get something in between those (herd behavior and all that). Just remember, corrections in the past have played out over a number of months, so don't attempt to catch a falling knife! Wait at least 1 month after you believe the correction has ended before starting to dollar-average your way in. You will miss out on a small initial rebound, but are a lot less likely to be diving in halfway into the correction.

Good luck, and happy investing!

TL;DR: Wait for a >30% correction, wait for an additional month or two, then aggressively dollar-cost average your way into the market. Be prepared to miss out on some epic gains in the markets in the interm. Contrarian, so please read before downvoting :)