If you believe markets are generally efficient and prefer to invest in an index mutual fund to achieve an index-like return, shopping for the best index mutual fund based on low fees and a low expense ratio makes good sense. The portfolio manager of an index mutual fund endeavors to invest the fund's assets to track the index as closely and cost-effectively as possible. Larger index funds have an advantage in that they can spread their operating costs over a larger asset base.
STEP #2. Now throw a little reality into the picture. Specifically, you need to realize that nobody can consistently predict the turning point of a rapidly moving market. People who pay attention to value (which is always a wise move) can tell you when things are out of whack with the market, but they cannot tell you if the market will turn in a week, a year, or a decade! Warren Buffet correctly predicted that the stock market was way over valued LONG before it actually corrected. Since Warren is a value-type investor, it made perfect sense to stay on the sidelines. In contrast, many active traders became multiple millionaires during that period and then rapidly adapted to the market downturn. Both were "correct" for the type of style that they employed.
By April 2001 the markets really had taken a dive, but Wall Street analysts, brokers and the financial press continued to harp on the great buying opportunity this presented. Buying on dips, dollar cost averaging and “V” type recovery were continuously hyped to the unsuspecting public.