Can you smell it? The fear, I mean:

  • "CNN Poll: Americans Fear a New Great Depression" -- CNNMoney
  • "Forget Logic; Fear Appears to Have Edge" -- The New York Times
  • "Fear Trumps Greed As Market Woes Paralyze Economies" -- Bloomberg

Those are just three headlines from the past several months that show how fear is just oozing from this market. And with good reason. The S&P 500 fell as much as 50% from its October 2007 high. It's the rare person who hasn't seen his or her portfolio pummeled from the mayhem that the fall has wreaked. It's downright scary out there.

But does this mean that we should just sell everything and go away until things improve? Not necessarily.

Waiting until it's too late ...
Warren Buffett said, "The future is never clear; you pay a very high price in the stock market for a cheery consensus." Peter Lynch would agree. He has suggested that good investing doesn't require brains, but a strong stomach.

Indeed, it takes intestinal fortitude to buy into a company such as Apple (NASDAQ:AAPL) in the middle of a recession. After all, Apple sells some of the priciest personal computers around, products that are sure to be low on every consumer's list when times are bad. Yet Apple was one of the top 10 stocks of the last recession in 2001!

Sure, it's down more than 40% since the current recession began in December 2007, but the company has actually grown year-over-year sales every quarter over the past year. If you were to wait until the news was saying that consumers had lots of spare money, you'd probably miss out on an opportunity to buy a good company at a great price.

A lack of a cheery consensus is also affecting the following companies. Each of these is handily off its 52-week high despite excellent performance during this recession:


Below 52-Week High

Return on Equity*

No Cheery Consensus Because ...

First Solar (NASDAQ:FSLR)



Management comments on difficult short term

MEMC Electronic Materials (NYSE:WFR)



Lower demand for products, poor outlook

Mosaic (NYSE:MOS)



Commodities have fallen, weakened demand

Schlumberger (NYSE:SLB)



Concerns about mounting cancellation of projects

Stryker (NYSE:SYK)



Decreased hospital spending, optional surgeries being put on hold

Sources: Capital IQ (a division of Standard & Poor's) and recent news and analyst comments. Data through March 27, 2009.

Notice a common theme here? All five of those companies (six, if you include Apple) have worries -- fears, even -- about demand for their products in the near term, thanks to this recession and the world economy.

Yet because the stock market has historically led the way out of a recession, by the time the news turns cheery again for these and other companies, you'll have missed your best opportunity for moving your money into a better place. That was the tip my colleagues Brian Richards and Tim Hanson gave recently on selling during a bear market. And it makes sense to take advantage of the fear, rather than letting it rule you.

Being prudent
When there is seemingly nothing but bad news coming out of the financial markets and when neighbors and friends are getting out to protect what they have left, the prudent long-term-focused investor looks around, sees where pessimism might be too strong, and invests accordingly. And there you have it: The best time to get back into stocks is not when things have reached a "cheery consensus," in Buffett's words, but now, when pessimism has weighed on so many stock prices.

David and Tom Gardner started Motley Fool Stock Advisor in the middle of the last bear market, when a cheery consensus was painfully absent. Now, seven years later and despite another brutal bear market, they have outperformed the S&P 500 by an average of more than 34 percentage points per pick. To read more about how they achieved this and why they like Titanium Metals (NYSE:TIE) today, click here to take a free 30-day guest pass. There's no obligation to subscribe.

Fool contributor Jim Mueller owns shares of Apple but of no other company mentioned. Apple and Titanium Metals are Stock Advisor selections. Stryker is an Inside Value choice and a holding of the Fool. Our disclosure policy is always cheery.