Ghost, first: I believe US equities to be overpriced at the moment, and so I don't hold many; by overpriced, I mean the rate of return they afford for the risk profile is not as favorable to my mind as those of other vehicles available to me.
Second: so I essentially buy your conclusion, but I find your reasoning confused and convoluted.
"Unrealistic" prices? I don't know what you mean by that. The prices are very real, there is trading going on at those prices, and all outstanding shares are owned by someone.
QE can act as a "stimulus" if there is insufficient liquidity. Another way of saying this is that price levels are artificially suppressed due to insufficient liquidity.
It can, and is, easily argued that some amount of QE is rational, and permits more rational pricing. As to what the fed's monetary policy will be in the event of a big correction, QE is one of their only remaining tools, and it is now argued that further QE will have no stimulating effect, that the liquidity in the system is now sufficient; hence the issue will not occasion the implementation of any "corrective" monetary policy strategy, but will instead involve other mechanisms such as fiscal policy.
Any future income stream does not exist in a vacuum, it exists alongside competitors within a competitive marketplace. Even if stocks are purchased with the quaint view toward a "future income stream", that value of that possible income stream is always compared against the value of what else the money could be doing.
I personally have other things that I can, and do, do with my money at the moment, not involving the equity or bond markets, that make me more, with less risk to myself...BUT I do not wish to continue those ventures if I can invest profitably in the markets instead, because that represents a whole heck of a lot less work for me. But even for me, there is a level at which the markets become attractive, and I have already written about what different market levels will mean to my decision-making process.
I ask you, what alternative investments are available to you at the present time, that are attractive relative to the markets, both from a risk, return, and management perspective? Or better yet, to the average person, who has a 401k and is still working a job, or who is retired living off retirement accounts?
You seem to say that you will wait for a big "cycle low" during which you will buy in. People think that I time the markets, and they are right--but I do it according to criteria that are not abstract, and I make decisions on the basis of what I know, and what I have decided is good to me.
To me, it sounds like you will wait for some abstract market level, to buy in. I wouldn't be comfortable with that. You will no doubt miss it, although you may do OK. Part of me wants to do that, to maximize, but another part of me wants to wash my hands of the work that I now have to do, so there is incentive for me to buy in at a level that makes sense, even if that level does not represent a "cycle low".
So, you haven't explained at all just WHY you believe the SP500 will get back down to 1,100, and what the timing, or even trajectory, looks like.