THEY say one man?s loss is another man?s gain.

As the bears retreat into the relative safety of bonds and treasury notes as stocks around the world plunge to record lows, the bulls are corralling on the edges of the markets.

There are some fantastic buying opportunities at the moment, and smart investors who have kept their powder dry and have survived one financial disaster after another, are cashing in.

The doom and gloom brigade are missing out and these bargains are passing them by like ?stocks in the night?.

In June last year, the Dow, the S&P 500 and the FTSE were 50 per cent higher than they are today.

They have now retreated to the lows of the 1990?s.

The DOW, the DAC, and the FTSE, are heavily influenced by the top 30 blue chip companies which are a gauge of how deeply the retractment has hit individual companies.

Price Earnings Valuations (PEV) have been reduced by, in some extreme cases, as much as 95 per cent.

For example, CitiGroup?s stock has tumbled 95 per cent during the past 12 months, from $US85 billion to about $US5.8 billion.

The once-great banking giant is now the smallest company and the worst-performing stock in the 30-member index.

You could have bought a share last week for $US1, which is a far cry from the $US50 you would have paid in June 2007.

This phenomena is nothing new to the world?s markets, and dates back to the infamous stock crash of the 1930s.

A number of reasons have been put forward on which to blame this current meteoritic rise and correction, but all the evidence seems to point to the mortgage backed securities which led the way to the ?bursting of the bubble? which started in the US residential housing market, which was propped up by such sophisticated securities as Credit Default Swaps (CDSs) and Collateralized Debt Obligations (CDOs).

?The Oracle?, Warren Buffet?s own flagship, Berkshire Hathaway, which was one of America?s seven remaining AAA-rated companies, recorded a reduction in profits of 96 per cent in the fourth quarter of last year.

But how can we profit from the downturn in the market?

To take one very simple example, if you had short-sold a spread of indices across all markets at the start of 2009, you could have made gains of 25 per cent.

Although the companies which make up these indices are bleeding, you can still make a handsome profit.

It is not unlike buying indices when they are going up,but instead you sell on the way down.

The difference between your sell price and the end value of the security is your profit.

The main problem most investors have faced over the last five years has been the cost of entering the market .

Welcome ?to back to the future?.

The prices of blue chip stocks around the world have plummeted by up to 90 per cent, and the only restriction on short selling is in financial stocks.

All other stocks are there for the taking.

This means that if you missed your ride on the way up, you can catch it on the way down.

Short selling is essentially betting that the price of the stock will go down in value.

Investors who have been savvy and seen the writing on the wall, have made enormous profits using this strategy over the past year.

Short selling is not new and is not without risk.

You can still lose if the market goes against you, but this risk can be mitigated by adding a stop loss at a predetermined risk tolerance.

Even the Wall Street Journal is quoting sources saying the Dow and the S&P 500, which are the barometers of the equities markets, could hit 5000 and 500 respectively.

That would mean a further fall of 20 per cent on their current values.

The Asian markets are in similar freefall with the Nikkei falling by 50 per cent in one year.

Again, if you had done nothing else but short sell the World Indices this year, your profits would have had a weighted return of 25 per cent.

Unfortunately, scare mongering and mis-information have caused an inertia-like mentally in the markets, and the global focus has been on devaluing assets.

The opportunities to participate and profit from the global downturn are there, waiting
for you.

Exchange Traded Funds (ETFs) which are a basket of stocks, allow investors to enter the market with a diversified position.

You should look for Staples commodities stocks which fall outside of the discretionary spending framework to have a potential upside as consumers retreat from buying unnecessary goods.

A report released in America this week found the combined American household suffered a devaluation of $US7 trillion dollars in personal wealth during the third quarter of last year.

That figure would have doubled in the past six months.

On a global level, this could be magnified three-fold if you account for Europe and the UK.

As the purse strings tighten, consumers will become less likely to buy unnecessary goods and will save their money for what they really need, such as food instead of an extra plasma wide-screen TV.

Once the market bottoms out, whenever that may be, we could be looking at a coiled spring with a ?buy-everything-you-can-get-your-hands-on? opportunity.

If we look back at history , the Dow rocketed up by 360 per cent after bottoming 89 per cent below its 1929 highs.

The opportunities are there.

All it takes is some careful research and the confidence to make the move back into equities while every one else is retreating.

*Edwin Goulding is a certified Financial Planner and Currency Analyst. For further information, call Edwin Goulding on 0898 711 748, or email www.phuketinvestor.com