I totally see where you are coming from hardmano. This may sound crazy but your comments about shorting I agree with and I often tell people the same, let me stress the position is a small short term trade with a tight stop. I certainly am aware of that saying "the market can go irrationally higher longer than you can stay solvent" or whatever it may be. I guess I see things in a similar way to you, and agree these sort of strategies depend on your aggressiveness as a trader and timeframe. Fortunately I viewed the October slump as a great buying opportunity and did well from then through to January, and in hinsight have taken some off the table too early, but nonetheless very happy with my performance over the last few years.
Let me say this about the p/e of the market. The high profiles analysts saying the mkt is cheap or fair value on a p/e basis are the "cheerleaders" of this bull market. Have you noticed that Shane Oliver from AMP and Craig James from comsec work for organisations with massive exposure to the funds management indusrty that benefit enormously from bull markets and bullish outlooks. They are the ones in the major papers cheerleading the market daily. Just beware on the p/e's. The ASX200 rally is not broadbased, the banks and major resource companies represent a great percentage. The banks are trading on forward p/e's getting close to 16 times, compared to recent years I often see them trade more like 12 times forward earnings, and this at a time where an interest rate rise is more than a 50/50 chance this year, bond yields are surging higher across the globe ,and a petrol price placing pressure on consumers with record debt levels. With this backdrop why should banks trade at historical premiums, with their yields barely over 4% now? Banks are normally low p/e stocks and 16 is high for them, yet 16 doesn't seem as high when quoted for the ASX200. Also resource companies represent a greater percentage nowadays of the index, they too are historically lower p/e companies. Beware the cheerleaders. If i get my short wrong not much damage is done at all. And as I said I don't care if the brave punters make bucketloads riding this market to 6000 points, they deserve it, you can have the gains if you want the risk.
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