A warning is making the rounds again, the kind where some indicator has crossed a threshold and history is said to whisper what comes next. This one comes with a Buffett quote attached, "playing with fire," which is a genuinely good phrase, because it's true. It's also exactly the sort of headline designed to make you do something. The original piece over at MSN walks through the details if you want them.

I've written about this recently, so I'll be brief. With valuations at or near the dot-com peak, and bond yields doing the job the VIX used to do, the market is expensive by almost any measure you'd want to name. The Shiller CAPE ratio I covered last month says the same thing. When Buffett calls elevated valuations playing with fire, he isn't predicting when the house burns down. Nobody can. He's saying the price you pay determines what you get back, and paying peak prices narrows your future returns while widening your future losses.

So what does history actually say comes next? Less than the headlines imply. Sometimes expensive markets correct within a year. Sometimes, like 1996 through 1999, they get more expensive for years first, and everyone who sold early watched from the sidelines while their neighbors got rich, right up until they didn't. The honest answer is that high valuations raise the odds of disappointment over the following decade. They tell you almost nothing about the next twelve months.

What I'd actually do about it is none of this exotic.

First, check your allocation. If you're 35 and holding 90 percent stocks, a correction is a purchase opportunity you'll be glad for later, even if it won't feel like one. If you're five years from retirement and still at 90 percent because the last decade was fun, that's the fire Buffett means. Fix it now, on a calm day, not during a drawdown.

Second, keep buying anyway. Dollar-cost averaging through an expensive market feels foolish and historically works fine, because the alternative, waiting for the dip, has a terrible track record of turning into waiting forever. I put money into index funds monthly without checking the CAPE first, and I'd suggest you consider the same habit.

Third, keep some cash. Not as a market call, but as ballast. Cash is what lets you sit through a bad stretch without selling good holdings at the worst possible price.

The signal will keep flashing. Signals do. Your job isn't to predict the smoke, it's to make sure that if things get hot, nothing in your plan actually burns.

The usual disclaimer: I'm sharing perspective from forty years of managing my own money, not professional financial advice. Your situation deserves someone who knows it.