The world was full of optimists eight weeks ago.
The FTSE 100 has now lost more than 8% since its peak in mid-March.
At that time, I asked the question: "where have all the bears gone?"
Well it seems they answered... in Greek droves!
So now, it's all bad news
No-one is sure if Greece will exit the euro or not, and if it does, what the implications would be.
Meanwhile, German Chancellor Angela Merkel is under pressure over austerity measures. This comes as she is about to meet François Hollande, the socialist president-elect of France, who wants the EU to up its spending to ease austerity in his country.
Meanwhile, Vince Cable warned yesterday that we could face a "massive" economic impact.
Overall, the market hates the unknown more than anything else, and has reacted accordingly.
But it's only eight weeks since bullish brokers at Citigroup were advising investors that the FTSE 100 would "rocket" over the next 10 years.
As usual, the market seems to be over-reacting in both directions. All a private investor can really do, in my opinion, is to look at individual valuations and perhaps temper those judgements a little with a "what if?" macro-economic view should the worst happen.
The value is back
I said in early March that I was finding it hard to locate individual companies in which I could describe as fundamentally good value. This is no longer true. In fact, bargains now abound on individual valuations.
The trouble is that most of these bargains could face problems if a Greek exit from the euro causes a domino effect. And, by the way, there's a very well-informed debate going on right now about this very subject on the Fool's discussion boards.
Four FTSE 100 stocks I've been seriously considering buying at what I consider to be bargain-basement prices are Barclays (LSE: BARC), BP (LSE: BP), Aviva (LSE: AV) and RSA Insurance (LSE: RSA).
I explained why I thought RSA's better-than-9% yield should be sustainable last week. The shares have lost 3% since then, pushing the forward yield up to an unfeasibly high 9.5%.
Meanwhile, Aviva's shares have lost 15% of their value (corrected for the 16p per share dividend payable this week) since my Foolish colleague Stephen Bland reviewed the shares for his value portfolio in early March.
As Stephen wrote at the time: "If I'm right, then at some stage that fear will evaporate into enthusiasm, because that's how the market works, causing sectors and shares to cycle in and out of favour over time. If I'm wrong, the shares may well be trashed again down."
I think Stephen's analysis will be proved right in time. But now at 290.5p, Aviva's prospective P/E for next year of a smidgeon over 5 and an expected yield of a whopping 9.7% are certainly pricing in a lot of fear.
The same can be said of Barclays, where the prospective yield of 4.6% and P/E of a little over 5 at 191p are also pricing in a lot of eurozone worries.
And a company with a little less to worry about over eurozone finances, BP, is on a P/E of less than 6 at its 404p share price, and yielding a respectable 6%.
Time to be contrarian
These are fearful times indeed and they may be offering excellent opportunities for contrarian investors. That's certainly my view.
For me at least, concentrating on individual valuations more than macro-economic woes helps ride out the market's peaks and troughs. That isn't to say I'm ignoring the eurozone worries or to pretend I have any particular insight. Instead, mine is a balanced risk-reward approach, where the valuation numbers do the talking for me.
I just hope I'm right.
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David owns shares in Barclays, BP, Aviva and RSA Insurance.
