Two articles that I found very interesting, were relating to company valuations and the stock price vertigo that most people are currently experiencing. Personally I think that if people could only see the stock price today and not the movement of the last 5 years they would be less worried. Is human nature to say what goes up must come down at some point?
Here are the articles. Apple's 6,000% Rally Began With 'Stretched' P/E of 165 and Is the JSE really too high?
"... the stocks with the top 10 highest P/Es in the Nasdaq 100 a decade ago are up an average of 185 percent since"
"...the market was effectively flat between January 2008 and July 2012. In other words, three and a half years of the five and a half year bull run were actually just spent getting the market back to where it started"
If you have cash at the moment, equities are really your only investment option if you want returns. Property might give some return but it requires a large capital outlay and has large amounts of admin involved, so not an option for many people. These limited options mean that equities are worth more and part of the reason why multiples are higher than average.
Buying the quality means that even if multiples drop at some point in the future, you do not need to sell, earnings and dividends will continue to grow and the capital "loss" made during the pullback becomes inconsequential.