You look for stocks that have held up the best during the market downturns, saying they'll be the ones that do best once the bulls return. But what about good companies whose stocks are beaten down?

Mike Cintolo: There are really two answers to this question. In general, yes, if a stock has a great growth story and can't go down much when the market is heading south, think of it like a coiled spring--it wants to go higher, but the weight of the market is on top of it. Once that weight is relieved (i.e., a new market rally), the stock will spring higher, oftentimes in a hurry.

Yes, the stock that falls 30% or more during a correction will probably have a snapback rally, but unless the stock has formed a bottoming pattern--something that usually takes many weeks--there will be many investors who own that broken stock at higher prices who will be looking to sell as the stock rallies ... and that selling will slow down or stop any attempted advance.

More important, though, is that you have to decide what kind of investor you are. I'm sure it's possible to make money buying beaten-down stocks, but that is not my style. I simply know there are plenty of good opportunities in stocks that hold up well during a market decline, including many that turn into great winners. In other words, I'm not saying my way is the only way, only that I know it's worked for decades at Cabot.

Michael Cintolo
Vice President of Investments, Editor of Cabot Market Letter and Cabot Top Ten Trader

A growth stock and market timing expert, Michael Cintolo is editor of Cabot Market Letter and Cabot Top Ten Trader. Since joining Cabot in 1999, Mike has uncovered exceptional growth stocks and helped to create new tools and rules for buying and selling stocks. Perhaps most notable was his development of the proprietary trend-following market timing system, Cabot Tides that has helped Cabot place among the top handful of market-timing newsletters numerous times. Cabot Market Letter is one of only nine newsletters included in Hulbert Financial Digest's 2010 Honor Roll for performance in up and down markets, and is a Timer Digest Top Ten Long-Term Timer.