Wise investors will buy whichever stocks they believe will yield the best return for the money. When sophisticated investors buy richly priced stocks, the demand for those stocks increases. When demand increases, the price increases. Therefore the value of the investors' portfolio rises, and the investors make more money. It's a simple example of basic economics.
It is almost never a good idea to invest much money in individual stocks. Even the highest priced stocks can collapse,remember Enron? Best bet is to diversify; take an index fund rather than a few stocks.
I advise any potential investor to learn about the random walk theory, also known as weak form of the efficient market hypothesis, (I can’t go into detail here).
There are a wide range of investment opportunities. Precious metals are a much better investing decision, because they are actual, tangible commodities. Their value may dip, but never to zero. The same cannot be said of traditional stocks, which are equities, and have underperformed against stocks the past 15 years.
Personally, I find it foolish that investors have recently been deciding to pay up for richly priced stocks. Because they are already at such a high and ridiculous expense, investors should look at it by thinking that they should buy the less expensive ones and take a bigger chance on those. Some risks are worth it.
You pay for richly priced stocks and when they drop you lose money. This is not a very good choice. The way I see it is if you invest a little in something and gain alot,you will gain more of a profit because you will double your money and if it fails you are not loosing as much.