Here we see major world stock market averages during 2007. Representing the U.S., we have SPY (dark blue); Asia is represented by the Vanguard Pacific ETF (VPL; yellow); Europe is the Vanguard European ETF (VGK; pink); and emerging markets are the Vanguard Emerging Market ETF (VWO; light blue).
Notice that Europe and the emerging markets were hammered the worst during the late February/early March selloff. Note also that they have become the performance leaders since that time. Indeed, at present, the U.S.--despite all-time Dow highs--is the world performance laggard.
During the market debacle of late February and early March, I noted the extreme negative sentiment, with put/call ratios more bearish than we had seen even during the 2000-2002 crash. In retrospect we can see that this was an overreaction to fears at the time regarding the demise of housing and the Yen carry trade. What we've seen since then is a repricing of world equity assets reflecting an unwinding of that overreaction.
Panic takes everything down with it; the good with the bad. A powerful market strategy is to find good assets caught in the panicky downdraft and invest for the return of rational repricing. While it's true that markets can stay irrational longer than traders can stay solvent, it's also the case that prudent investors who wait for irrational pricings can put their solvency to good use by making longer-term bets on eventual market sanity.