Certainly, the market’s recent dramatic swings have scrambled the heads of many investors. Mostly, it’s been a nasty slide down — a history-making drop that has caused a lot of agitation and remorse. Many investors are giving up. “I just don’t have the stomach for it anymore,” a semi-retired computer programmer told the Wall Street Journal, as he moved his remaining assets into T-bills.

I share the computer programmer’s frustration and anxiety. But now is the time to really pay attention. The stock market’s history-making drop may be creating some equally historic buying opportunities.

This bear market has few precedents. Really, you have to look back to the 1930s to find anything like it. According to Barron’s, at the S&P 500’s late-November lows, the blue chip index had given back a decade worth of gains. And even after the market’s recent rebound, 2008 would still be the worst year for stocks since 1931, when they dropped 53%. In the whole of the 20th century, no decline has exceeded 50%, save for the 1929-32 bear market.

Other tidbits of interest from Barron’s: The current bear market is 284 days old. We are down almost exactly as much after 284 days as the 1929-32 and 1937-38 bear markets were after 284 days. Whether our bear market looks ultimately more like 1929-32 or 1937-38 is an open question, of course. The former went on to post a total loss of 86% top to bottom. The latter, though, rallied and made up 50% of the losses in the next six months. Another hopeful message: The average time to recoup a bear market loss has been 22 months, excluding the 1929-32 collapse. As with the big crash, so with the rebound — it will come when people least expect it.

Resource stocks look like they’ve already had their 1929-32 style crash in just the last few months. Many resource names plummeted 80% or worse from top to bottom. Even companies that looked like they were in decent financial shape only a few months ago are now scrambling to raise liquidity and stave off a financial crisis.

It reminds me of what Joe Scaminace, the CEO of OM Group (OMG:nyse), said during the company’s latest conference call: “We believe very strongly that the battle will be won and lost on the balance sheet in this environment.” I agree with him. A strong balance sheet means that financially, you are in control of your own destiny. It means you don’t need to raise money, nor do you have a looming debt coming due soon. It means you’re going to be a survivor. It’s going to come down to the survivors. The upside could be spectacular on the other side for them.

OM Group is among those with no net debt and plenty of excess cash. It’s also immensely profitable, even at these lower commodity prices. The long-term demand for cobalt-needy products, such as rechargeable batteries, provides a bright looking future (particularly as it relates to vehicles). Not without peril, of course, but I’d rather face those perils with financial strength of the kind OM has than weaker, more speculative ventures.

I also like companies like Ameron Intl. (AMN:nyse) and Contango Oil & Gas (MCF:amex), both of which have plenty of excess cash and no net debt.

Balance sheets contain the kinds of critical details people tend to ignore when times are good. But if ever there were a time to focus on balance sheet strength, it is now!

“A period of prosperity contains the seeds of its own destruction,” observed that storied investor, Phil Carret, in his book The Art of Speculation (1930). “Businessmen forget the painstaking care by which they have built up their enterprises and commit themselves to reckless plans of expansion.”

This financial calamity we’re going through now will lead to the demise of those who were reckless and stretched too thin. The benefits will ultimately accrue to those who kept a little something in reserve for just such a rainy day.

One stock in particular I would encourage you to give another look: Texas Pacific Land Trust (TPL:nyse). On Friday, it slipped below $20 per share. Texas Pacific Land Trust owns nearly a million acres of land. At Friday’s valuation, the market value of the whole company is about $200 million. The implied valuation is about $200 per acre. I don’t know that the company has ever sold acres for less than an average price of $200 per acre in the last several years. Last year, the average sale was $1,244 per acre. In the last quarter, ending Sept. 30, the company sold land at an average price of $400 per acre.

It’s hard to say what all the land is worth. The company opportunistically sells pieces over time and uses the proceeds to buy back stock. So as long as it nets more than the $200 per acre in implied value, shareholders win. So far, it’s done that easily.

Of course, that’s not all there is to this company. The company also owns a number of oil and gas royalties. In the last quarter alone, the trust generated $4.6 million in royalty income. This is nearly pure profit. The company has practically no expenses. In fact, it pays more in federal income taxes. My initial estimate put the oil and gas royalties at $20 per share, assuming oil at $70 and natural gas at $7. There is a lot of margin of safety in these royalties alone, even at currently depressed prices.

And finally, what’s great about this old trust is that it’s practically immune to the whole economic crisis. It does not have to sell land. It can sit on it and wait it out. The trust has been around since 1888. It will get through this.

Texas Pacific Land Trust is a low-risk business and a great long-term holding. Today’s market gives you a chance to add to your holdings at very attractive prices. And that, I suppose, is one thing we can be thankful for in all this mess.

Source: Anti-Depression Remedies