No matter how stoic you are, watching your stocks drop sharply is unnerving.

At Motley Fool Hidden Gems, we haven't been immune to the sudden and severe haircuts Mr. Market has doled out recently. Since last September, we've had positions decrease 20%, 30% ... even 50%.

And frankly, we're excited about it.

Come again?
Sure, seeing those big red numbers can be painful, but we know that volatility presents great opportunities for patient investors to profit. That's particularly true when a company's fundamentals and business prospects haven't declined -- but its stock price has.

In a report called "How to Stop Worrying and Learn to Love Volatility" (PDF file), Lord Abbett senior economist Milton Ezrati showed how market volatility "can actually help build wealth over time, especially for longer-term investors."

According to Ezrati, regularly adding new money in a volatile market allows an investor to purchase more shares at cheaper prices, thus lowering the effective cost basis. Interestingly, Ezrati's findings hold true whether prices are rising or falling.

Of course, few investors feel like adding new money when the market seems to shift momentum at the drop of a hat -- but this is exactly the time to consider committing new capital.

Totally outrageous
Ready to commit that capital? You're in luck -- the market has put many fine companies on sale.

My Foolish colleague Tim Hanson recently highlighted a few stocks that he felt were outrageously cheap. Now, Tim's a great analyst and a deadeye three-point shooter (we play basketball after work), but I wasn't terribly outraged when I saw how cheap his stocks were.

These stocks are cheap
In fact, many good stocks are cheap right now. Baker Hughes (NYSE: BHI) and ConocoPhillips (NYSE: COP) have been halved. The same can be said of International Game Technology (NYSE: IGT), Pharmaceutical Product Development (Nasdaq: PPDI), and Dell (Nasdaq: DELL), which is trading at its lowest price since 1998.

Even supposedly "recession-resistant" stocks are feeling the pain. Campbell Soup (NYSE: CPB) is near its five-year low.

But there's a reason
I think those are all fine companies, and at today's prices, there's a decent chance they'll go on to post market-beating returns. But there's a reason each of them has fallen, be it decreased consumer spending, competitive concerns, plummeting energy prices, or general recession-fueled fears. Continued...