We've got a lot of maxims to live by when it comes to facing fear:

"We have nothing to fear but fear itself."

"Courage is not the lack of fear, but the ability to face it."

"He who fears something gives it power over him."

These are all good words to ponder when we find ourselves in the midst of a market meltdown like this one -- otherwise, we can become immovably gripped with fear and even panic. It's such fears that caused trading volume on the New York Stock Exchange to rise to its second highest level in history yesterday -- a record which was set only the day before. According to an S&P analyst, 2008 now ranks as the eighth most volatile year since 1928.

A case of jittery nerves
Among the top volume leaders, investors have a right to be fearful that their stakes in these companies are threatened. AIG (NYSE:AIG) investors, for example, saw their ownership stake reduced by 80% when the government seized control of the insurer. Morgan Stanley (NYSE:MS) hurriedly entered into preliminary merger talks with Wachovia (NYSE:WB). When shotgun marriages like Merrill Lynch (NYSE:MER) and Bank of America (NYSE:BAC) are quickly arranged, it's not just individual investors who become afraid, but professional traders, too. And even companies well beyond the scope of financials, like Microsoft (NASDAQ:MSFT) and Intel (NASDAQ:INTC), are seeing volume spikes in recent days.

It's enough to make you want to pull your money out of the market, your money market funds, and even your savings account and stash it all under your mattress. Yet, if you can keep your wits about you when others are losing theirs, to paraphrase Rudyard Kipling, it's also a time when you can find great opportunity.

Fear mongers
The Volatility Index or VIX -- which, appropriately enough, is often called the "fear index" -- rose to its highest level yesterday since late 2002. It's based on the implied volatility of S&P 500 stock options, which tends to be sensitive to periods of market uncertainty. Usually, if the overall market is falling, you'll see the VIX going up.

However, if you compare a chart of the VIX with that of the S&P 500, you'll find that the VIX last reached levels like these in 2002. That was at the maximum height of pessimism near the end of the last bear market, and afterward, the market index began a five-year ascent that saw the S&P 500 nearly double. Even now, with all the wreck and ruin around us, the S&P remains well above where it was at its late 2002 levels -- the last time the VIX was so full of doom and gloom.

Where can you find such opportunities? Our Stock Advisor newsletter offers a unique place to look for extreme buying opportunities. Unique because it was launched in the maw of the recession of 2002, just as the VIX was reaching its apex and the S&P 500 was dropping to its nadir. Since then, its picks have returned an average of 40%, compared to a big goose egg for the market overall.

Fear and greed
Which brings us to perhaps one of the greatest maxims of all about fear, uttered by a fairly successful investor you may have heard of, Warren Buffett:

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."

When things go bump in the night is the time when we must face our fears. If others are cowering, then that's an opportune time for us to show courage and invest.