So now we know what Buffett meant when he said to invest in companies that you can understand. Fannie Mae (FNM), Freddie Mac (FRE), Enron, AIG (AIG) - these are companies that not even Ivy League MBAs understand. Let’s look at a company that is much simpler: The St. Joe Company (JOE).

St. Joe was founded in 1936 in northern Florida by the famous Alfred I. Dupont. The company owns over 635,000 acres of land. Much of this land is recorded on the books at original cost, going back decades. Some of this land is prime real estate. St. Joe has 140 miles of acreage along the Gulf of Mexico and bays. Most of this is in the Red Neck Riviera: the northern part of the state.

Remember "irrational exuberance?" Well, it has now turned to "irrational pessimism." The market has gone full circle from one extreme to another. Last Friday's news of the bailout bill being passed, turned out to be a selling opportunity. It was predictable, as the smart money ended up "buying the rumor" and then quickly turning to a "selling the news" attitude, so Friday's 450 point swing was not surprising.

Bearish sentiment is at a high point, rendering "silent buy signals" to the smart money. There was no doubt plenty of selling going on, but to be fair, the selling is offset, by an identical amount of buying. The good news is this extremely oversold condition grants a target rich environment for value players looking to pick the low hanging fruit. The bad news is my head was handed to me on a platter as a majority of my holdings all managed to achieve new 52-week lows.

A few weeks ago, I wrote about UST (UST) as a stock to watch. It was supposed to be purchased by Altria (MO) before year's end for $69.50 a share. UST closed at $64.90 a share on Friday, after Altria announced that the deal might be put off until 2009 because of the deepening credit crisis. Altria will pay UST $300 million if the deal does not close by January 7, 2009. (Shareholder and government approval are required for the purchase agreement to close.)

Let's say you anticipate that the deal will go through as planned, and you buy UST for $65 a share. You can potentially make $5.13 a share, or 7.89% if there's a $0.63 UST dividend payment in December [$69.5 - $65 + $0.63 (possible December dividend) = $5.13 max gain].

Many high quality large foreign companies can be found trading on the Pink Sheets market. These stocks do not attract attention from investors in the way stocks traded on the organized exchanges do. One need not completely ignore the Pink Sheet stock market just because some of the rogue company stocks trade there. One of the main reasons some foreign stocks list their ADRs on the Pink Sheets is because they do not want to follow the expensive regulatory requirements of the Sarbanes-Oxley act. Some of the successful companies that trade on the Pink Sheets are Nestle (NSRGY.PK), E.ON (EONGY.PK), and BASF (BASFY.PK).

To find the top international pink sheet stocks, I ran a stock screener with the following criteria:

The U.S. financial-services sector is undergoing the broadest restructuring of a single industry in the history of Corporate America, and Bank of America Corp. (BAC) has positioned itself to emerge as one of three clear front-runners. Indeed, along with Citigroup Inc. (C) and JPMorgan Chase & Co. (JPM), Bank of America could well emerge from this financial maelstrom as one of the premier players on the global stage: All three will benefit from increasing market share and increased financial intermediation margins as their weaker rivals have failed and/or been taken over in part or in total by a stronger industry player.

During the many financial crises that I have analyzed around the world, the result has always been the same: The prudently managed, under-levered institutions that did not overstretch their capital bases and that were able to maintain strong funding not only survived – they ran away with the market.

A 10yr chart of General Electric (GE) reveals the company has seen the $20 level only three other times in previous cycles, and each time quickly bouncing from it (click to enlarge):

When the financial turmoil began, I sold my riskiest stocks.  Even a successful bailout bill is unlikely to return us to the heady days of 2006 and 2007.  Yet there is a bright side for clean energy investors.  Despite the recent evidence to the contrary, a financial crisis is likely to convince legislators of the importance of getting the economy going again, and of doing so with the least amount of public money possible.

Concentrating Solar Power

Among stocks in our coverage, Petrobras (PBR) and BG Group (BRGXF.PK) offer exciting long-term participation in the world’s most important oil discoveries of the past three years. The finds are in the Pre-Salt formation of the Santos Basin offshore Brazil under water a mile deep. After the market decline of recent months, both stocks offer better entry points for accumulating shares. Though our buy ratings remain suspended amid tumultuous financial markets, we believe in the long-term appeal of energy investments.

Meanwhile, in a press release last week, Petrobras estimated recoverable reserves of 3 to 4 billion barrels at Yara (65% PBR, 25% BG). Combined with last year’s estimate of 5 to 8 billion barrels at nearby Tupi (65% PBR, 25% BG), the range of total recoverable reserves has a midpoint of 10 billion barrels. That is enough to support a million barrels a day from the ten platforms PBR has ordered for delivery in 2013 to 2016.

"The market has fallen so sharply that it's difficult to declare a bottom," investment advisor Marty Fridson says. "It's hazardous to jump in, but historically you would have made money buying in times like these if you were patient."

Barron's isn't sure about those as it expects more billion-dollar writedowns that will hurt Europe’s less-capitalized banks. Large banks with high credit ratings like Credit Suisse (CS) and HSBC Holdings (HBC) or those with acquisition experience like Santander, should benefit in the current consolidating environment. 

A reader asks the proverbial $64,000 question? If you like bank stocks, which ones do you buy? And the corollary question, do you buy an ETF?

There are good things and bad things about ETFs. Numerous popular books come down for and against ETFs. I like good old American stocks. I dislike having to buy both the "see" and the "saw" of an industry. Buy a health care fund and you are buying the hospital that is a labor intensive buyer of drugs and you are buying the drug company that spits out expensive pills at a mile a minute and sells them to hospitals. (After spending millions to develop them). The two stocks are very different animals.

The AP has a tendency to turn any earnings misstep into a headline. Such was the case with Thursday’s news that “AngioDynamics 1Q profit slips on lower laser sales”. The Business Review said, “AngioDynamics reports 7.1% drop in 1Q net income.”

While true, by most measures, AngioDynamics' (ANGO) first quarter was a resounding success.

Blue-chip stocks like Coca-Cola (KO) and Microsoft (MSFT) made the list, as did Illinois Tool Works (ITW), 3M (MMM) and CME Group (CME).

Still Seized Up

I silently promised the CEO of BB&T (even if he is retiring at end of the year) to buy on a dip, thanks to his telling the truth on this bailout. [Sep 30: BB&T CEO Slams Bailout Bill].

The stock is down on this pullback in the market, so we're starting a stake below $37. We will begin with a 2.2% stake. I also added to PNC Financial (PNC) in the $74s.

Wells Fargo & Company (WFC) made headlines this morning when they announced the purchase of Wachovia Corporation (WB) (see acquisition conference call transcript). Wachovia had already entered an agreement to sell its banking operations to Citigroup Inc. (C) which was leaning on assistance from the FDIC. The new deal encompasses not only the banking portion of Wachovia, but the full company including the investment bank and brokerage operations.The deal is a stock based transaction with each share of Wachovia being exchanged for 0.1991 shares of Wells Fargo. Based on closing prices from Thursday trading, the deal is valued at roughly $15.1 Billion dollars. Management states that the deal to buy the entire firm avoids the complexity and inevitable loss of value that would have occurred if the company had been split as planned in the Citigroup deal.

Wells Fargo is taking on the full balance sheet of Wachovia including the mortgage securities that have caused so much havoc. In order to finance these liabilities and still keep their solid financial footing, Wells Fargo is expected to issue $20 billion in securities (mostly common stock) which would most likely be priced next week. This is similar to the JP Morgan deal that was priced last week. If the WFC offering performs even remotely similar to the JPM deal, investors could be looking at a very attractive trading opportunity.

Believing that Other People’s Problems spell Opportunity for long-term investors, we reinstate five oil and gas buy recommendations including ConocoPhillips (COP), StatoilHydro (STO), PetroChina (PTR), Devon Energy (DVN) and Canadian Oil Sands Trust (COSWF.PK).

Over-leveraged, weakly capitalized investors must sell in a declining market. Strongly capitalized investors can take advantage of those pressures. Strength includes the ability and temperament to withstand further declines. Yet, the bankruptcy of Lehman and the acquisition of Merrill Lynch by Bank of America (BAC) are events as dramatic as any to make the risks of further turmoil obvious to all. The five recommendations are financially strong, geographically diverse and well-represented in North American Natural Gas, Rest of World Natural Gas, Oil Production and Downstream.

The abbreviation DRIP stands for dividend reinvestment plans. Drips are a nice, low-cost way to purchase dividend stocks and build a stock portfolio. These programs allow investors to purchase shares in two ways: either through reinvesting dividends or with optional cash payments that can be sent to the companies you want to invest in. One benefit of drips is that they allow dividend reinvestment in partial shares. Another benefit of other drips is that some allow reinvesting your dividends by purchasing shares at a discount to the market price. Two such companies that I am aware of that do this are American Capital Strategies (ACAS) and National Retail Properties (NNN). (Click links to  check my analyses of ACAS and NNN.)

One of the issues with drips is that in order to participate in the DRIP you must already have purchased one share of the company stock. Some companies have overcome that hurdle for shareholders by letting people make a direct purchase in their stock. Stocks like General Electric (GE) or Exxon Mobile (XOM) are good examples of direct purchase plans with reinvestment plans.

As everyone panics, this may be the perfect time to buy assets and invest - when investments are at a discount to their underlying value. As far as I’m concerned, any large market decline is just an opportunity to buy quality assets at a discount. It’s bargain hunting time for investors.

You have to view times like these as nothing more than an opportunity. If you don’t view times like these as an opportunity, you run the risk of turning into a pessimist who will not only act irrational (like some people who sell great companies for a fraction of what they bought them for just because the price went down and despite the fact that the company still has great fundamentals - does that make ANY sense?) but may miss many opportunities to make back the money that has been lost thus far.