The Panic of 2008 has kept everyone on their toes. If you haven't stayed a step ahead of the market's brutal rotation, you've seen your favorite stocks get pounded.

One of the hardest parts of mastering the stock market is dealing with its short attention span. Often, just when you may think you've found a winning investing strategy or gained enough expertise in a particular sector of the economy to feel comfortable with your investing decisions, someone pulls the rug out from under you -- and those rules you've worked so hard to develop no longer seem to apply.

That lack of stability presents a constant challenge for investors. But at the same time, it means investing never gets boring -- and there's always a reward for those who can change gears quickly.

The cycle begins
Ten years ago, tech stocks had acquired a cult following. The year 1999 would bring the culmination of the bull market, in which the tech-heavy Nasdaq Composite would almost double. So-called "old-economy" bellwethers like ExxonMobil (NYSE:XOM) and Boeing (NYSE:BA) were seen as has-beens compared to the opportunities available in tech, and even legendary investor Warren Buffett was mocked for being out of touch with the power of the Internet.

Of course, we all remember what happened next. As big-name tech stocks fell out of favor, old-economy companies were among the best performers. Consider these returns from 2000 to 2002:


Return, 1/1/2000 to 12/31/2002

Chesapeake Energy (NYSE:CHK)


UnitedHealth Group


Lockheed Martin


Whole Foods Market (NASDAQ:WFMI)

127.4% (NASDAQ:AMZN)


Cisco Systems (NASDAQ:CSCO)




Source: Capital IQ, a division of Standard & Poor's.

During the bear market that started in 2000, it didn't matter if a company looked like the next Microsoft -- if it was tech, it got sold, irrespective of its potential. Although plenty of companies did go belly up, even the largest tech companies got hurt badly. In part, that was because they had risen so much. But much of it was simply because investors had moved on to the next hot sectors.

Coming full circle
As the tech boom ended, the strong rise in housing prices that had begun in 1997 continued to accelerate. As a result, homebuilder stocks like Toll Brothers (NYSE:TOL) and Pulte Homes tripled between 2002 and the end of 2005. In addition, the financial companies that made homebuying possible for so many people also prospered. Those who piled into those sectors did extremely well -- until the housing market began to crack, and the events that would eventually lead to the latest panic started.

Investors moved on again, following red-hot energy and commodities stocks. They soared as financials suffered -- until July, when oil and metals prices collapsed. Now, investors have seen those stocks hit especially hard, even in an overall brutal market.

And so where can you look now for security? Many believe it's time for tech stocks to come back into vogue. With defensive sectors like consumer staples already fairly expensive, tech may again have a day in the sun.

Get a jump on the competition
Even if tech proves not to be the next hot sector, the key is realizing that focusing on any single part of the economy will limit your gains in the long run. Expertise in a particular sector can help you profit in the short term while your sector is popular among investors. But when the investing cycle pushes another industry into the limelight, you may end up simply riding your shares up and down, cutting your profits or even turning gains into losses. In contrast, those who can shift with the times have a huge advantage.

So when you're learning about a particular company or industry, be on the lookout for general tips that you can use in all your investing. Although some tools you'll learn will be industry-specific, common concepts like free cash flow or profit margin have universal application. If you can predict the next investing fad rather than simply following the crowd, you can grab bargains before they disappear.

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Fool contributor Dan Caplinger learns a little at a time. He owns shares of Chesapeake Energy. UnitedHealth Group, Microsoft, and Chesapeake Energy are Motley Fool Inside Value picks. Whole Foods Market, UnitedHealth Group, and Amazon are Motley Fool Stock Advisor picks. The Fool owns shares of UnitedHealth Group. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy won't panic on you.