Let's all take a deep breath and try to get a few things straight at a confusing moment.

First, longtime Wall Streeters say that no matter what you read, view or hear from the media, this is not October 1987. Yes, investors have lost trillions of dollars in the past weeks and stand to lose more. And some of those losses will be permanent - i.e., in stocks that have already seen their all-time highs.

But the financial system is not in danger of collapse. That is a key difference between today and 1987.

A leading bank stock investor, who declined to be identified, said, "The banks are in very good shape going into this crisis. Real estate loans are not bad. Their inventories of bonds have held up, unlike '87 when bonds were declining for six months before the crash. Look, at the end of the day,

Chase Manhattan

(CMB)

may wake up and discover that the venture investment business is not a profitable one for them, but failures there will not put the bank under."

On the Tuesday after 1987's Friday crash and Black Monday, there were legitimate fears that the financial system -- our banks, brokerages, exchanges and other financial intermediaries -- were in danger. Banks and brokerages carried far less capital than today. Risk management systems were more primitive. The

NYSE

and the

Nasdaq

markets were far less able to handle the volume of trading.

On the Tuesday after the crash, stocks opened sickeningly lower before rallying. If the Tuesday rally had not come then, according to the then-CEO of one of the top U.S. brokerages, "My firm and a lot of others would have been out of business."

That is how close disaster was in 1987. That is why the

New York Fed

brought the big commercial banks together to convince them not to pull their loans to the brokerages. That is not the case today.

Today, we are seeing heavy losses in Asia and smaller but still significant declines in Europe. The carnage is greatest is the tech sectors that previously enjoyed the greatest run-ups. That is always the case. Less speculative shares are in better shape and investors should not worry that real companies are going to zero.

What will today bring? No one knows.

But one hard-core value investor based in Boston who has entered this decline laden with cash and puts on the S&P doubts an '87 redux -- meaning a sudden collapse.

"Valuations are ridiculous in much of the market. Most in tech but also in some of the big cap stocks like

General Electric

(GE) - Get Report

, in my opinion. But the public wants to buy the dip so I expect this decline to be longer than in '87," he said.

Another investment manager who was a young trader at

Goldman Sachs

in 1987 says, "The speculation in tech stocks far exceeds anything we saw in '87. But many other stocks have been in a bear market for almost two years.

And corporate balance sheets are in far better shape than they were in '87. And interest rates are lower than they were then."

The consensus of these grizzled investors? "Old Economy" stocks will ride this out to the extent the shares are fairly-valued and new economy stocks will remain vulnerable to steady declines for some time. To the extent the old economy stocks run their businesses well and the economy does not tank anytime soon -- and there are few signs of that -- they should be OK.

The ex-Goldman trader advised that investors take a step back and ask, "'How much of my money should I have in stocks?' If you work and have $30,000 in the market, even if you have already lost $10,000, ask yourself, 'Can I afford to lose another $10,000?'"

If not, take some off the table in those shares in which you have the least confidence.

(Tomorrow,

TSC

will present a real portfolio of stocks held by a real person to give readers some idea how a defensive portfolio of meat-and-potatoes companies has ridden out the current downdraft.)