When is the best time to buy a stock? When all the optimists have left the room. This is the subject of a Morningstar article:

http://news.morningstar.com/doc/document/print/1,3651,90491,00.html

The equity risk premium is the excess return investors require to convince themselves that it's worth the risk to hold stocks instead of risk-free short-term treasury bills.

Understanding the equity risk premium is vital because it's (arguably) the main determinant of P/E ratios.When Mr. Market is feeling "safe," it's typically not the best time to be throwing money into stocks.

"Triumph of the Optimists: 101 Years of Global Investment Returns" by Elroy Dimson, Paul Marsh, and Mike Staunton