I was watching that DirecTV (NASDAQ: DTV) commercial the other day with the little girl from the 1982 movie Poltergeist, and was reminded of a part in the movie when she was trapped inside the nether world of ghosts that were terrorizing her family’s home, and would cry out: “mommy…..” in a haunting and echoing tone.

It was pretty scary actually.

Not unlike the turmoil in the markets in the last year, especially in the last month or so, that has driven a lot of traders and regular folks watching their life savings severely decline in value, call out at night for their mommies…

I guess in retrospect, I picked the perfect time to start a stock website devoted to the most volatile and unpredictable stocks available on Earth right?

I mean, when things go bad, small-cap and micro-cap stocks go down far more than other performers, but the same holds true on the up side.

This begs the question: What should one do with their money now?

I’ll tell you what you should do with your money!

Grab every cent you can find, sell every piece of junk you have in your house, and find any cash that you’ve been saving for a rainy day, and put it to work in the market RIGHT NOW!

Stepping Back

Ok, let’s get a grip on the situation, and think about what can and should be done.

Most of us, me included, have gotten our butts handed to us over the last year, and more so over the last few weeks as things really went south in the market overall, and with smaller stocks in particular, as it only takes a few sellers with relatively large stakes liquidating their positions to hammer these stocks disproportionately more than their larger brethren.

But out of this rubble and what seems to be a debacle, comes amazing opportunity, if you know where to look.

Smart investors, the ones that aren’t forced to sell their positions to meet margin requirements, redemptions or panic thresholds, realize that although they may not know when things will turn around, they know they certainly will.

You may have heard that on Friday, one of the world’s most respected investors, Warren Buffett himself, wrote and op-ed piece in the New York Times stating as much.

In it Warren wrote:

“A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.”

I  couldn’t have said it any better myself.

I mean seriously, do we think that great companies with sound balance sheets, great businesses, and dedicated and fully invested management teams are never going to succeed again?

I know, and have been preaching since I opened shop here on PeakStocks.com, that the best place for new money has been, and always will be, small and micro cap stocks that are in the early stages of this growth cycle, and are preparing, even now, to explode out of their doldrums as soon as there is any hint of an economic turnaround.

Is it a little disconcerting to watch your 401(k), mutual funds, or other holdings significantly decline in value in such rapid succession?

Sure, of course it is, no one likes to wake up in the morning and see that they have lost 50% of their holding’s value.

But you must put these types of moves, regardless of the reasons why they are happening, in perspective.

Ok, so some of the world’s premier banking stocks are having severe liquidity issues and are going out of business.

Does this mean that a company that makes a product that is needed in good times and bad, is also going to go out of business?

What about a company like GeoEye (NASDAQ: GEOY), my current top recommendation.

They sell satellite imagery to the National Geospatial-Intelligence Agency (NGA), as well as the online mapping industry, and other countries around the world for security and monitoring purposes.

Are you telling me that just because Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) no longer exist in their previous form, that countries around the world, and especially the U.S. will no longer require the type of satellite imagery necessary to keep their borders safe and monitor climate changes and potential threats to their countries?

You and I know that’s bogus.

But that’s the reality of a stock market “crash”, and yea, I believe what we have seen was and is a crash, regardless of the media’s tip-toeing around the subject and reluctance to use the word.

Looked at another way, does anyone out there believe that just because companies like Lehman Brothers and Washington Mutual couldn’t keep their hands out of the cookie jar that people will stop buying Christmas gifts for their kids, or not take a vacation ever again, or that business travelers, (are there any businesses left in the U.S.?), will never have to travel again?

How about a company like AAR Corp. (NYSE: AIR), another PeakStocks.com recommendation, that serves the aerospace and defense industry via their Maintenance, Repair and Overhaul (MRO) division that maintains and repairs aircraft for major airlines?

Will they all-of-a-sudden stop having aircraft to repair just because travel has slowed down?

Oh, and just in case you were wondering, AAR Corp. is trading BELOW its TANGIBLE book value of about $15.00 per share, AND insiders have been buying back the stock in droves recently, including the CEO.

Are they smarter than the rest of the market?

Probably not, but they are certainly more patient!

Yea, companies like American Airlines (NYSE: AMR), and Southwest Airlines (NYSE: LUV) are cutting back their flights, retiring older aircraft that use more fuel, and reconsidering every nuance of their business to survive the economic downturn, but does anyone really feel these high quality stalwarts of their industry won’t survive this?

Heck, they probably needed the incentive of higher fuel prices and decreased consumer demand in order to be forced to clean up their business models, look at their cost structures, and start actually charging fair value for the services that they offer.

What about restaurant companies like Chipotle Mexican Grill (NYSE: CMG), (NYSE: CMG.B), or Brinker International (NYSE: EAT), the owner of Chili’s and Macaroni Grill restaurants?

Are they going to go out of business? You and I both know that’s not going to happen.

Are they going to suffer in this decline and recession? Sure, of course, but will they stand the test of time? Absolutely.

More on this topic (What's this?)

The end of BPL? (Communications Breakdown, 10/30/08)

DirecTV Getting Bought (Eventually) by AT&T or Verizon? (CONTROLLED GREED.com, 6/15/09)

John Malone's Play to Gobble Up DirecTV Group Advances (CONTROLLED GREED.com, 9/8/08)

Read more on The DirecTV Group at Wikinvest

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