Three years ago, cash was not king, the buying power of private equity dominated the investment landscape, and no takeover (regardless of size) was impossible. Endowments, pension plans, banks and hedge funds jumped headlong into the leveraged world of private equity.

Even two years ago, mutual and hedge funds were enthusiastically invested in equities (especially of a materials, commodities and energy kind) as the newest paradigm of economic decoupling gained credence.

Today, cash (and liquidity) is back on the throne as king, as the great unwind of debt and the liquidation of overlevered investments gains momentum as the hedge fund industry implodes further.

Of course, the moral of yesterday's "In the Land of Chicken Little" story is not to believe everything you are told.

Take the advice of the Johnny-come-lately Chicken Littles if you will, but trust me, they will not anticipate recovery, nor will they (like the cagey fox) participate in feasting on the developing and unprecedented values.

Attractive valuations, a negative sentiment extreme and early signs (and expectations) of economic stabilization are moving closer to reality.

The sky is not falling as value is on our doorstep and dinner is being served!

How you can survive -- and even prosper -- in a rocky midyear market? Get the "best ideas to make real money" from Jim Cramer, Doug Kass, Helene Meisler and other RealMoney experts at our May 2 Investment Conference. Learn more here.
At the time of publication, Kass had no positions in the stocks mentioned, although holdings can change at any time.

Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Long/Short LP.

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