If you listen to the media you might believe that Greece is going to blow up, followed by Spain and eventually all of Europe is going to implode. "This is 2008 all over again. Maybe worse? There are so many issues!" say some pundits. There is little wonder why many investors are selling stocks and moving into cash and treasury bonds even though yields are near record lows.

Our company has written extensively about our concerns related to the levels of government in Europe and elsewhere. The market has now come to appreciate the severity of it.

There are a number of issues that we remain concerned about: the sovereign debt crisis worldwide, the financial reform packages passing through US Congress, the threat of slower global growth and the spectre of deflation.

All legitimate concerns. Maybe it makes sense to sell stocks now and try to buy them back when they are even cheaper, when the market stabilises and there is some clarity on all these problems. However, investors should recognise that the market is a forward discounting mechanism and during periods of uncertainty the discount on shares increases creating some select opportunities.

Many of the stocks that I cover are already pricing in a bear market scenarios if not worse. If you are going to wait until you see no major problems, it will probably be too late.

The problem with the average investor in general, is they don't appreciate volatility for what it really is: opportunity. There is only one true risk in investing - the permanent loss of capital. If you understand what you own then price changes may actually provide you with both the ability to buy more or sell.

There is no question that the world currently faces a number of issues but when have we ever NOT had any major issues. As an example, let me mention a few periods in history when there were some really major issues.

In the spring of 1942, the German war machine was virtually unstoppable. US ships were actually being sunk in New York harbour and it looked like the allies were going to lose the war. The stock market got pummelled, falling 60 percent from its peak. Railway stocks traded at one times earnings. From the 1st quarter of 1941 the S&P 500 produced a ten-year total return of 286 percent.

In 1974 the pundits were predicting the end of western civilisation. Interest rates were above 12 percent, Nixon resigned, gold doubled (currency trading was actually halted at various times), the oil embargo was creating a panic about supply shortages and OPEC was surely going to take over the world.

From the 3rd quarter of 1974 the S&P 500 produced a 10-year total return of 325 percent. In periods when the market sags with fear it pays to step back and look at things rationally even if its extremely hard to do.

Henry Howard Harper wrote a book in 1926 called "The Psychology of Speculation". Mr. Harper got it right back then when he said: "…it is said that persons who become disoriented in a forest will almost invariably go in the wrong direction…and that in an effort to salvage goods from a burning house, they will throw mirrors and other fragile articles out a third-storey window and carry pillows downstairs."

He also said: "…it frequently happens that price fluctuations result from a wave of hysteria among a coterie of traders, and bear but little analogy to the true value of stocks."

The events of 2008 have trained us to believe that any solution presented by governments will never be good enough. We have all become somewhat jaded and scared by these events and the fact that they happened in recent history has simply made many people shun all risk and focus exclusively on the "issues".

This is causing many traditional "safe havens", such as US Treasuries, to appear extremely expensive and more risky securities to appear extremely cheap.

There is no guarantee that markets will not fall further at this point. Just remember to throw the pillows out the window and carry down the mirrors. Use volatility to your advantage.

Nathan Kowalski is the chief financial officer at Anchor Investment Management. He holds a Chartered Financial Analyst (CFA) designation and Chartered Accountant (CA) designation.