Besides my own personal preferences, there are a few other reasons why I choose to devote this site to the selection of individual stocks for long-term ownership positions rather than long-term index investing. One of them is this: There are times when the collection of stocks that make up a particular index are overvalued, but you can find individual companies within the index that are not too expensive.
For instance, the historical median range for the S&P 500 is a valuation of 14.57x earnings. The historical mean range is 15.52x earnings. Even if you accept the premise that technological and individual productivity gains can justify slightly higher P/E ratios over time due to the implication that more cash can be extracted from the business (thus meriting the high valuations), we are still only talking about a justified shift towards a permanent 16-17x earnings range. Right now, the S&P trades at 19.64x profits. At a minimum, the average stock in the S&P 500 is 13% overvalued. At a maximum, using the historical median range, the average S&P 500 stock is currently 25% overpriced.