The Associated Press reports that Asian markets are down between 3% and 4% today and European markets have opened down about 1%. Already this year, the S&P 500 is down 10%. Yet I am convinced investors can make money in this down market.

I have not been that surprised about how bad the economic and stock market news has been this year. I believed that it was coming – in fact I was way too early about it. I remember back in 2005 being quoted about how a housing bubble was building and that it would eventually pop.

I did not know back then about subprime mortgages or how they had been packaged into securities with odd names like Collateralized Debt Obligations (CDOs). It appears to me that this housing bubble burst is different from the one in the early 1990s thanks to those CDOs.

That's because CDOs are on the books of banks around the world and they're in the portfolios of various hedge funds and pension funds which so far have yet to fess up.

That's why I expect to see more announcements over the next several weeks of multi-billion dollar hedge funds I had never heard of suddenly liquidating themselves. It's that financial terrorist attack effect that seems to be spooking the markets.

And yet I am amazed that subscribers to my newsletter would have done so much better than the stock market if they had invested in the stocks mentioned here. While the S&P 500 fell a jaw-dropping 10% in the first two months of 2008, the average stock mentioned there – that's still in the "portfolio" after exercising the 2% stop-loss rule which leads me to sell any stock that declines by 2% from the price at which it was first mentioned – is up 9%.

Here are three of the best performers:

• Walter Industries (NYSE: WLT) rose 24% from $41.71 to $54.63.
• Ultra Petroleum (NYSE: UPL) rose 12% from $68.80 to $78.47.
• Annaly Capital Management (NYSE: NLY) rose 12% from $18.18 to $20.69.

What was it about these particular stocks that enabled them to do well? The first two were rising along with rising energy prices.

With the Fed promising interest rate cuts out to the horizon, oil – which is denominated in dollars – must rise thanks to the firm linkage between higher expected inflation and a weaker dollar.

I am nervous doing this, but in the March edition of the newsletter, I've recommended taking a look at another batch of companies that should benefit if this pattern continues. I think the Fed will eventually have to stop cutting interest rates because it only has about 300 basis points left before it hits 0% interest rates.

If those cuts continue through the rest of this year, then the energy bets I mentioned in the March issue should be relatively safe.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.