Take stick. Poke bear. Observe.

Ssssh. In the immortal words of Elmer Fudd, "Be vewwy quiet." We're hunting pewmabeaws.

Oh yes, there's one. You can just spot the glowing, bloodshot eyes, straining from intense efforts to avoid positive economic news. The permabear is just to the left, sort of underneath that big, leaning tower of newspapers from the bank meltdown, below the "Paulson Sucks!" poster. Follow the sound of the jingle as he thumbs through his stack of gold coins, muttering about the death of the dollar.

Be careful, though. The permabear can be warm and welcoming to those who share its opinion, but it can fly into an unthinking rage when surprised by discomforting data. Believe me, you want to keep the permabear content with a steady diet of pessimistic news and opinion.

Smarter than the average bear?
Of course, not all permabears are the same.

Some will bet you their entire precious-metals portfolio that rampant, Nigeria-like inflation is on the way because of Bernanke's policy of "printing money from thin air." Others swear that the economy is in for another deflationary deep dive. You can even find individual permabears who argue for simultaneous inflationary and deflationary futures, something all but impossible.

Don't step into the bear trap
While you should avoid living your life among the permabears, it's healthy and invigorating to forage among them from time to time.

I myself was accused of being a permabear for months, having written article after article about the soon-to-end housing bubble, bad lending, idiotic real estate reporting from the mainstream media, and the likelihood of a big drop in consumer spending if it all came tumbling down.

In direct contrast to the doe-eyed talking heads who looked for sunshine in every retail report, I noted several times that when downmarket mavens like Wal-Mart (NYSE:WMT) were doing better than their peers, it was an early sign of stressed consumers trading down. I was short the market ETF the summer before the entire thing went boom.

But I learned some valuable lessons from my time among the species. Being right doesn't always make you money. That market short? The puts expired a couple of weeks before stocks got slaughtered.

And even junky companies in a meltdown industry can become bargains. I was bearish on homebuilders like KB Home (NYSE:KBH) and Toll Brothers (NYSE:TOL) for far too long. I watched in amazement as new home sales continued to drop off a cliff, yet the stocks of the stronger builders didn't go to zero with them.

In fact, most of the big homebuilders have outperformed the S&P 500 since July 2008, when most of them crashed. Being too down on these pieces of bear bait cost me money.

Embrace the bear, cautiously
All that being said, I don't believe we're on a fast trail out of the bear-riddled woods. In fact, I've said time and time again on our weekly Motley Fool Money podcast that the stock recovery looks dangerous to me, since many companies appear to be priced for revenue and earnings growth that would rival what we saw in the days of the Great Excess 2K. I think that's unlikely.

But I don't think we're headed for financial Armageddon, either -- and that's why I refuse to get stuck in the permabear trap. Instead, I do what most rational investors ought to be doing: I continue to look at individual stocks for individual opportunities.

Sometimes, that means embracing the bear argument. If there are permabears out there that believe there's not enough spare yuppie cash to keep Jamba Juice (NASDAQ:JMBA) from drowning in a puddle of disgusting wheat-grass squeezings, I agree.

But if you want to argue that suburban moms' must-have label Coach (NYSE:COH) is on the same path, we'll have to agree to disagree. I'm not sure Coach is cheap enough to offer me the kind of margin of safety I prefer in a consumer discretionary stock heading into double-digit unemployment, but I sure wouldn't want to short it at 14 times earnings.

Think small. Look for the worst.
Broadly speaking, the reason the recent rally has looked so impressive is that stocks had fallen so far in front of it. Most companies have bounced from their abysmal lows of early 2009, but not all have come roaring back.

That's because while the entire economy isn't on death watch, there are still industries that are in for a long, cold hibernation. Little Dynamic Materials (NASDAQ:BOOM), for instance, serves the oil and gas industries, providing specialized metals for refineries. But since companies like Valero (NYSE:VLO) can't even find buyers for the refineries they've taken offline, there's not much investment going on right now, and the small fries suffer.

But if you choose the right companies in such an environment, the ones that will not only survive but will see big increases on the top and bottom line when we get back to normal, you can do very well. And nothing helps get you a bargain price quite like a widespread bout of permabear-itis.

Foolish final thought
Stocks and the economy are linked, but the relationship isn't always clear. That's why it's important to step out of your permabear costume and think more critically about individual companies.

During bouts of bearishness, some companies are priced so cheap that they are worth more as scrap than the stock commands on the exchange. Other companies are just misunderstood.

Taking each company on an individual basis -- and taking advantage of the occasional sales -- is the key to success. Before buying, you need to model potential values for a variety of financial futures, from bearish to rosy. (Sorry, permabears. Could happen.)

That's exactly the stock-by-stock approach we take at Motley Fool Hidden Gems. Better yet, we've updated the service to include real money and real-time buy alerts. We've even begun to produce a video valuation series where we walk members through those financial scenarios, and Dynamic Materials is the latest company under our lens. A risk-free trial will get you access to all of it. Just click here to get started.

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Seth Jayson is co-advisor of Motley Fool Hidden Gems. At the time of publication, he had no position in any company mentioned here. Dynamic Materials is a Motley Fool Hidden Gems recommendation. Coach is a Stock Advisor pick. Wal-Mart is an Inside Value choice. The Motley Fool owns shares of Dynamic Materials and has an optimistic disclosure policy.