I have a pretty simple way of checking out stock market sentiment: I look to the number of entries on the good old-fashioned 52-week woe list. (I use the one at barchart.com.). A few months back, there were days when that table had maybe a dozen names on it.

Today, I see 446. That's almost 500 stocks smacking their foreheads on the floor, hitting their worst price over the past year.

To a lot of people, these are the worst of times. Everyone who jumped into the can't-miss foreign markets last month? Fleeing like Frenchmen. Gold bugs and their inflation hedge? Hey, my cash didn't drop 20% in value last month. And now it's down stocks across the board.

What's the reason? Pundits have a lot of theories; inflation is one. I'm not sure I buy that, because stuff that should be an inflation hedge, say gold, or oil stocks, have gone down the chute with everything else. And that's why I think we're just in the midst of a good old panic. People are dumping just about everything. What they're not dumping (yet, at least) provides a few lessons.

What has held up? Prime among my hanging-tough crowd is Johnson & Johnson (NYSE:JNJ). Of course, I bought JNJ because it was already pummeled by Mr. Market and because it makes and sells the kind of stuff that people keep buying, economic hiccups or not. In that respect, it's similar to Colgate-Palmolive (NYSE:CL), which has also fared well.

At the other end of the health spectrum, I've been pleased to see cash cow UST (NYSE:UST) similarly stoic. You can see just how comforting positions like this are by taking a peek at this chart.

What these stocks have in common is simple. They have a pretty firm lock on their target markets. They generate reliable cash flows. And, most importantly, they were a little bit cheap already.

And that gets us back to that low list. Yes, the low list always has plenty of stocks that deserve to be there, but there are lots of beautiful babies in this discarded bathwater, companies with franchises to die for, from established brands like Timberland (NYSE:TBL) to newer world-beaters like Blue Nile (NASDAQ:NILE). You can find cheap Cheesecake Factory (NASDAQ:CAKE), Fortune Brands (NYSE:FO), and other great companies -- too many to name here.

I won't try to claim that there's no more down left in this market, but I will just note this: Some of these firms are already trading below fair valuation based on my conservative estimates of their future potential, something that was clearly not the case for many of them a few weeks back.

That means the value is already in. The only question is: Do we take it now, or wait and hope for cheaper? We're at one of those points where the market separates the investors from the posers. I'm still doing more posing than playing, but as I continue trolling through that 52-week-low list, I'm sure I'll find bargains too good to pass up.

The investing legends have proved that you make your money by buying cheap, not by selling dear. So when the market gives you more than 400 stocks on sale, it's a bad time to put your head in the sand. Now's the time to hit the homework and see where the best deals lie. And when you find them, buy before it's too late.

Colgate-Palmolive is a Motley Fool Inside Value recommendation. A free trial will let you see a full stable of stocks already priced below their true worth.

Blue Nile is a recommendation of both Motley Fool Hidden Gems and Rule Breakers, andJ&J is an Income Investor recommendation.

Seth Jayson likes values. He's still working on the "buy before it's too late." At the time of publication, he had shares of Johnson & Johnson and UST, but no position in any other company mentioned. View his stock holdings and Fool profile here. Fool rules are here.