Asset allocation and portfolio management is about managing risk for the returns that are desired and/or needed. If I can achieve my (retirement) goals with only 4% returns, then why would I take on extra risk to get 6%?
If I have 60% equities and 40% bonds to achieve my 4% returns, and equities go crazy, such that I've earned a pile of money in that portion of the portfolio such that they now make up (e.g.) 70%, then selling some off to rebalance is not about market timing, but rather about managing risk and not having too many financial eggs in a particular basket.
The Nikkei 225 was 6700 in January 1980:
* https://fred.stlouisfed.org/series/NIKKEI225
It had doubled by February 1986: you should have been taking money off the table as it went up. Take your profits and put it in other places: bonds, international. Further, as the valuations/CAPE went up, you should be expecting future returns to go down.
By the time the Nikkei hit a CAPE of 50, that means expected returns would be 2%: is there any place where one could have put one's money that earned >2%? When the Nikkei hit a CAPE of 94, that means expected returns were ~1%. Japan 10-year bond were making 5% at the same time:
* https://fred.stlouisfed.org/series/IRLTLT01JPM156N
A bunch of money invested in Japan, in 1990, with a 30% JP equity allocation, a 40% JP bond allocation, and a 30% international equity allocation, would have funded a thirty year retirement using the 4% rule just fine:
* https://www.gocurrycracker.com/lessons-from-japans-lost-deca...
Why would anyone be investing 100% anywhere? Regardless of it being the Japan, US (S&P 500, NASDAQ, Russell 3000, etc), or any other other area/country?
Harry Markowitz, who won the Economics Nobel for portfolio theory, said that diversification is the only free lunch in finance.
* https://en.wikipedia.org/wiki/Harry_Markowitz
And answer to the "but Japan" quip is: diversification.