In all fairness, Brian, people have been losing money in the markets for 6 months now pretty widely. Just look at how supposedly 'high quality' companies have fallen in price.
PBR, VALE, Morgan Stanley, Bank of America, FCX, X, etc, etc etc.
Those companies, and many more like them, just go to show you that 'expensive high quality companies' can also fall very significantly in value -- Unfortunately these 'expensive stocks' have much more limited upside than some ultra-value plays.
So yes, buying a company at a P/E of 15 is a scary thing on a risk/reward basis (Of course, it depends on the company and its growth profile/balance sheet/etc)...Specially when you can buy so many at a P/E of 5 that are pretty high in quality.
Note that I am not endorsing chasing a P/E 1-2 China stock versus going for a P/E 4-5 stock, given their wildly different risk assessments.
-Fernando
