Another way to see this is the thought of asset prices adjusting and reverting to the mean. Just as the valuations were overbought early this year when the market cap surpassed $800 billion, we could see overselling to the downside whereas the mean is somewhere closer to where we are today if you look at the long term chart. The reality is that fundamentals are strong but not enough to support certain valuations whereas the amount of supply has inflated since the hype occurred; creating an overhang of pricing pressure in the order books across the industry. So, it seems that we are soon seeing the opportunity to buy into the fear of others; I know I will. However, note that markets can remain irrational longer than you can remain solvent (someone said that too). So be careful as you can be trying to catch a falling knife so again do not risk more than you can lose!
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No doubt about it that markets can remain irrational longer that you can remain solvent. Especially when dealing with speculative investments! That's why I always caution people to never invest more than they can lose. If you're doing that, then it's the long haul that matters, not the day-to-day fluctuations. On the other hand, it's a different matter for short term traders, but, nevertheless, they too should be focused on best practice risk management, trading in appropriate size, using good stop loss strategies and the like. In short, no matter how correct we are about the long term, irrational short term fluctuations can break the bank if you're not correctly positioned.