Falling markets scare the hardiest of investors. But for those who'd thought they'd never get a great opportunity to invest, the time has come.

After a five-year bull run, major market indices yesterday came just a few points away from confirming an official bear market drop of 20% from highs set just months ago. The mood has become decidedly negative among investors. Yet although current shareholders are certainly feeling the pain, what's being lost in the glum is the fact that those who have new money to invest are seeing the best bargains in years.

A brief history lesson
While it may be hard to remember now, it wasn't that long ago that stocks were heading straight up. From July 2006 to February 2007, the S&P 500 gained over 18%. But the most remarkable thing about the advance was that there wasn't a single day during that seven-month span that the market fell 2% or more. While those who already owned stocks were obviously happy, investors who were looking for a chance to buy in felt only frustration as they put off buying, instead waiting for dips that never came.

Until now. Lately, it seems like you're seeing at least one 2% down day every week. Volatility has returned with a vengeance, reminding investors that stocks go through periods when they lurch in both directions.

Everything on sale
What makes now the right time to think about putting money in stocks is that you're finally seeing most of the broad market join the downturn. Before, much of the drop in big indices like the S&P 500 came from the struggling financial sector. Although several companies at the epicenter of the credit crunch, including Fannie Mae (NYSE: FNM) and Citigroup (NYSE: C), have lost more than half their value, the fundamental problems in the sector make even the most experienced value bottom-fishers nervous about jumping in too early.

Recently, however, you've seen the downturn spread to other parts of the market, many of which had been doing extremely well even during the early stages of the subprime crisis. Tech favorite Apple (Nasdaq: AAPL), for instance, is down about 40% from its highs. Merck (NYSE: MRK) has dropped over 30% in the past two months. And industrial stocks like General Electric (NYSE: GE) and Boeing (NYSE: BA) have also fallen substantially since last September.

Take your pick
What the overall malaise means for investors with cash on the sidelines is that you don't have to be a sector junkie to find bargains in the market. Even those who are looking for nothing more complicated than an index fund to invest in can pay just 80 cents for what others paid a dollar for less than a year ago.

For those looking to outpace the market's return, however, actively managed mutual funds are also a good option. While any manager can make money in a bull market, tough times are what set great fund managers apart from the crowd. As negative sentiment spreads through the financial markets, savvy managers can cherry-pick the best stocks, making it easier for them to prove their mettle and deliver top performance.

Of course, there's no guarantee that you'll see quick results from putting in new money now. In the long run, however, you'll be a lot happier about money you invest at these levels than you will be about the investments you made when stocks were much more expensive.

For more about how to invest during tough times, read:

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Fool contributor Dan Caplinger added some money to his stock mutual funds yesterday. He doesn't own shares of the companies mentioned in this article. Apple is a Motley Fool Stock Advisor recommendation. The Fool's disclosure policy has no downside.