Ghost,
You might be the only person here older than me. Do you remember Mary Meeker and the 2000 top? Do you remember CMGI? At Home? Do you remember early 2000 when the market "bellweather" on CNBC was not GE, IBM, or Exxon, but Yahoo (that's when I sold out the last 25% I started selling in Oct/98 because I know that something was seriously wrong with the market)? And, yes, I had these things in the last 12 months I was in the market back then (but I was 75% out at the start of 2000).
I'm seeing more data and comments that market breadth is getting more and more narrow, and that means more to me than market PE levels (it IS a market of stocks, not a stock market). But we had that in 1998-2000. I can remember back in 1999 when using the same stock screen that I still use, my universe of stocks numbered 13. That's right, 13 stocks out of ~6,000.
But the thing is that those stocks that were still growing were growing A LOT. CMGI no longer exists, but I believe in the last 12 months. it was up ~250%. There ARE stocks that are up a lot AND have growth/eps that are up a lot:
NFLX
MANH
ILMN
NFLX has negative eps this year, but everyone knows what they've done the past 5 years. There are other companies like ILMN that have 50 PE's because they have very high growth rates: In the last 3 years, ILMN has gone from 40 to 206.
You take what the defense gives you, and if the defense isn't guarding the 3 point line, that's what you take--high risk, high reward. You just understand that the party isn't going to last too long and you have to get out before the cops raid the party. That's the Soros/Quantum strategy, and that's the game I'm playing now, because once again, you take what the defense gives you.