The time I spent last week visiting clients and prospects in London and Zurich provided both a needed respite from the depressing action in Gotham, and more than a few insights about how investors and traders far removed from Wall Street view the current state of affairs. To those of us toiling in the vicious environs of Wall Street, the market is obviously an immediate concern.

Tea and sympathy? Well, at least you can have some tea. In Europe, there's little sympathy for the New Economy's demise, but an overwhelming majority of savvy investors empathize with the recently bedeviled Fed head, who's facing perhaps his stickiest dilemma yet. Most of the talk on the other side of the pond simply revolves around the question of how much our economic slowdown will affect the global economy. The biggest difference I found was that overseas investors aren't busy looking for a scapegoat, a preoccupation that seems to waste the time of many pros and individual investors here in the U.S.

Evaporating 'Wealth'

The other side of a market mania is a painful process that can threaten one's emotional and financial well being. That's why it's so important to stick to a plan and execute it with as little passion as possible. It also serves as a reminder that most individuals are ill equipped to handle the rigors of prudent speculation. There's no free lunch, especially in the shark-infested waters of the capital markets. Yet the damage inflicted by greedy firms is perhaps much greater than just a massive erasure of "wealth."

Wealth is a misunderstood concept, as is the difference between investing and saving. The trillions of dollars in market capitalization that have evaporated over the course of this grizzly market are nothing more than an illusion. It wasn't wealth or money in the first place; it was only paper.

There was simply no way to monetize all that paper, although at the margin, many sharp folks did turn that paper into real wealth. Valuations were such that in many cases, decades of strong earnings had already been discounted and many of those companies were destined never to earn a dime. A huge amount of money was transferred from investors to entrepreneurs, corporate management and, of course, the investment firms that were paid well to bring companies public. Still, most of the "wealth" created during the final stages of the mania was about as tangible as that on the ledgers of "investors" in Ponzi's infamous scheme.

As bloody as things were Monday, it just might have been bad enough to generate at least a decent bounce. Downside volume on the Nasdaq Composite Index topped upside volume by 10 to 1 Friday and by an incredible 20 to 1 Monday, with the New York Stock Exchange reading 10 to 1 Monday. Other than mining stocks and government bonds, there was no place to hide. Those types of readings have generally led to sharp reversals, but the lack of huge volume indicates that it probably doesn't mark an important turning point. My friend Tony Dwyer at Kirlin Capital informed me that the Nazz readings have only been as extreme two other times since 1990. And while the next day was strong, there was more pain in store shortly thereafter.

As I mentioned Monday, the damage is no longer being contained to the tech sector. Market bellwether General Electric (GE:NYSE - news - boards) fell almost 10% Monday and has been trading well below its 40-week simple moving average. It pierced its 40-month SMA in the late-day nosedive, which is very ominous indeed. The Philadelphia Stock Exchange/KBW Bank Index, or BKX, and the S&P Insurance Index, or IUX, both took out their 40-week SMAs, and the American Stock Exchange Securities Broker/Dealer Index was already well below its mark.

Optimizing Opportunities

I continue to believe that shorting opportunities outside the tech sector offer the best risk/reward opportunities, as there's still the sense that one can hide from the final stages of this bear market. That's unlikely to be the case, in my opinion, as valuations are already very high and analysts have yet to mark down estimates to reflect a recession. The global economy will feel our pain to some degree, and the Fed cannot risk debasing the dollar.

Rallies are to be sold and portfolios should be holding a decent slug of cash to be in a position to capitalize when the bottom is made. Financials, retailers and transports look ripe for further downside once the expected bounce runs its course. Those who are underweight tech might consider nibbling on tech, as the market's gone from discounting a decade of growth to ignoring longer-term opportunities for the strong. However, it's imperative to stick with real strength and not simply jump back into the past's leadership. Obviously, companies with weak balance sheets should be avoided.

Is this the end of the world as we know it? Well, it's always a new day, but it's just another stanza of the same old song. Human emotions always will hold sway over markets, and the longer-term outlook still appears to be very bright. Still, there's no reason to change my first-half targets of 1500 on the Nasdaq Composite and 985 on the S&P 500. In fact, my indicators show that 1500 might even be a bit optimistic.

Certainly, prices have become more attractive in some cases, but it's time for most investors to begin anew. Prudence and diversification should be the cornerstones of one's financial plans, and those who came to view the market as sport should give their hard-earned money to an experienced and reputable pro. (There are many of them, but you have to look at more than just bull market performance.) Take in a ballgame or start a new hobby. Spend more time with your family and less with your PC and CNBC. Or just have a spot of tea. Just don't look for sympathy. It's not forthcoming, it's unproductive and it's not what made America great.