This is unlikely to be read given how late it is -- but one major flaw in your argument is the statement "people would invest their money elsewhere". It is very clear that the largest investors are not using "their money" but borrowed money. Ultra-cheap debt has enabled hedge funds and companies to leverage up and purchase far more stock than they could otherwise afford, massively driving up demand and pumping up equity prices to the high P/E ratios that you dismiss -- and low interest rates are the enabler.

Stock Buybacks By Corporations The Largest Share of U.S. Equity Demand

https://www.forbes.com/sites/robertlenzner/2018/02/22/stock-...