Did your stocks survive the market plunge on Tuesday, Feb. 27? Yeah, mine neither.

We aren't alone, at least. Only 13% of NYSE and 9% of Nasdaq stocks finished the day higher, and all 30 Dow Industrial stocks felt the market's wrath as well. The few stocks still in the green included RadioShack (NYSE:RSH) and Syneron Medical (NASDAQ:ELOS).

After February's drop and the recent market volatility we've experienced, investors must be wondering whether this is a sign of things to come. Following four solid years of market gains, it wouldn't be out of the question for the market to enter a prolonged selling period.

On the other hand, perhaps the markets are so convinced of an impending slide that the confluence of rising Treasury yields, high gasoline prices, and tense geopolitical events is simply becoming a self-fulfilling prophecy.

Whatever the case, recent events remind us that there is, in fact, risk in the stock market.

Lesson learned
While this might be a great time to reassess your risk exposure, it would be folly to blindly sell your stocks based solely on uncertain market conditions.

Although RadioShack and Syneron Medical were two exceptions in February's plummet, they show that not all stocks follow general market sentiment.

In fact, during the last bear market from August 2000 to March 2003, where the S&P shed 42% of its value, a whopping 1,810 stocks posted positive gains.

They included:

Total Return, August 2000
to March 2003



Arch Coal (NYSE:ACI)




AutoZone (NYSE:AZO)




TJX Companies (NYSE:TJX)


*Data provided by Capital IQ, a division of Standard & Poor's.

What's their secret?
The stories behind each company's bear-market growth are vastly different. Arch Coal capitalized on the growing global demand for coal, PetSmart continued to define the pet services industry, and Starbucks provided a caffeine fix to millions of customers.

But all of them did share something in 2000: free cash flow. In other words, each company was fiscally sound and generating extra cash by the time the bear market rolled around. This made it much easier for them to conduct business as usual during a very hectic time for the U.S. markets.

Bringing it full circle
So while the market volatility in February and this past week has served as a wake-up call, it shouldn't be considered a forecast that all stocks are headed downward. Now is a great time to make sure that you're invested in financially sound companies with strong business models and reasonable valuations.

Need a few stocks to fit that bill? Fool co-founders David and Tom Gardner and their Motley Fool Stock Advisor investing service can help. Taken together, their Stock Advisor picks are beating the market by more than 38 percentage points. You can check out all of their recommendations, including their top five stocks for right now, for free with a 30-day trial.

Ready to get started? Simply click here to take advantage of our free trial offer.

This article was originally published on Feb. 28, 2007. It has been updated.

Todd Wenning's random '90s movie of the day is Mo' Money, starring Damon Wayans. He owns shares of Starbucks. Starbucks and Petsmart are Motley Fool Stock Advisor picks. VF is an Income Investor choice. Syneron Medical is a Rule Breakers selection. The Fool's disclosure policy believes that a job ain't nothin' but work.