It's a new trading week, but I can't blame you if you're still licking old portfolio wounds. The market got pounded last week, and I'm sure you got plenty of that over the weekend.

  • "Wild Day Caps Worst Week Ever for Stocks," reads the front page headline in the Journal's weekend edition.
  • "How do you say massacre in at least a dozen languages," begins Alan Abelson in his introductory Barron's column. "A little more urgent perhaps: Do you happen to know the best place to view the end of the world?"
  • "On the brink of a meltdown," teases the MarketWatch landing page.

I'm not going to pat you on the back, smash your rearview mirror to bits, and ask you to keep your chin up. Last week was brutal. The S&P 500 shed 18.2% of its value. Put another way, it would take a 22.2% gain for the index to make back last week's losses.

Under historical norms, it would take the market roughly two years to make that back. Under hysterical norms, the current volatility throws averages out the window. It may take several years -- or several weeks -- to get you back to where you were last week.

It's grim, unless you happen to miraculously have a ton of money to throw at the market given this week's prices.

Opportunity calls, but your phone's been disconnected
There are two schools of thought here. The first argues that you do nothing. Ride it out. Timing the market often leads investors to miss the eventual upswing, and since most domestic indices have shed roughly 40% of their value -- let's face it -- you should already doubt your market timing skills. Staying put makes sense.

The second school of thought suggests that you cut your losses. When Jim Cramer went on the Today show on Monday morning last week, urging investors to sell, he probably took plenty of shots from the bulls for his Chicken Little 'tude. Guess what? Those who listened were spared the bulk of last week's carnage. Moving to the sidelines also makes sense.

I don't have a degree from either school of thought. My alma mater is from a third campus, suggesting that it's time for opportunistic nibbling.

There are plenty of stocks that appear cheap given the recent markdowns, but they're never going to bounce back. Winning investors need to look at models, sectors, and balance sheets. Identify the stocks that will thrive in the future, and the share prices will follow.

Yes, I'm naming names
Last week was ugly, but not if you own shares of Apple (NASDAQ:AAPL). The stock shed just 0.3% during the market's "worst week ever." Between the buzz over Tuesday's MacBook event and the success of its iPhone, Mr. Market knows that Apple is here to stay.

Netflix (NASDAQ:NFLX) is another relative winner. Yes, the DVD rental pioneer shed 16% of its value, but Netflix started off the week by talking down its near-term subscriber targets. Investors rapped the stock's knuckles, but then warmed up to it by week's end, realizing that Netflix is still a company built for economic downturns with its "staycation" bent.

But now let me get into some relative losers -- stocks that shed more than 18% last week -- that I think will bounce back quicker than the market.


Last Week

Cedar Fair (NYSE:FUN)




Steak 'n Shake (NYSE:SNS)



Cedar Fair's plunge is a head-scratcher. Last month, the company announced that 2008 revenue inched 3% higher through Labor Day. This is a seasonal business. Save for a few Halloween weekend events, all but one of its parks are essentially done for the year. They don't reopen until late springtime. If we head deeper into an economic downturn and bounce back before next summer, Cedar Fair will have artfully hibernated through the lull.

Yahoo! has been losing market share to Google (NASDAQ:GOOG), but it's still growing. Advertisers will scale back in an economic downturn, but online advertising should fare better as it represents a medium which offers immediate accountability. Google -- and Yahoo! as a close second in paid search -- should emerge with a bigger chunk of the ad market when the market recovers.

Steak 'n Shake is in a rut. Consumers are shaking off casual dining concepts and trading down to fast food joints. That's bad for Steak 'n Shake, but it's also one of the most economical table service eateries in the country. Once consumers return to casual dining, it won't be the white tablecloth establishments.

The Street makes the cut not just because Cramer made the right call a week ago, but because investors are going to gravitate toward premium investing advice to help guide them through these turbulent waters. With investment brokers buckling, do-it-yourself investing will grow in popularity, but investors will still seek out professional advice.

So what are you waiting for? Today may be the bottom. Or it may be just one more rung down in this brutal bear of a market. The key is that you don't squander the time to bone up on the research to help you single out the companies that will thrash the market when it does bounce back.

In that sense, given the ridiculous prices on some of these eventual victors, last week may have actually been the best week ever.

Other ways to ride out the volatility:

Steak 'n Shake is a Motley Fool Hidden Gems Pay Dirt pick. Google is a Motley Fool Rule Breakers recommendation. Netflix and Apple are Motley Fool Stock Advisor picks. The Fool owns shares of Steak 'n Shake. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz has tried to catch a falling steak knife, with the scar to prove it. He does own shares in Cedar Fair and Netflix. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.