It’s déjà vu all over again for the world’s financial markets. As was the case in late 2008, investors are throwing pretty much everything overboard in favor of US Treasuries.

The principal fear seems to be that we’ll see another 2008 market meltdown, which ended in March 2009 with the Dow at barely 6700. And, despite some pretty clear signs that things are at lot different now than before the fall of Lehman Brothers, investors are bailing out of almost everything regardless of quality, in hopes of avoiding another crash.

Ironically, major crashes such as what happened in late 2008 have almost never occurred so close together. And after a year of record-low interest rates, corporate America has rarely been so un-leveraged. In fact, very few companies have meaningful amounts of debt that still needs to be refinanced through 2011, virtually eliminating any exposure to another credit freeze.

What made 2008 so devastating was that few were prepared for such a confluence of extreme credit, economic and market pressures. In stark contrast, this time around even the optimists have been expecting at least a correction and the bears nothing short of Armageddon. It’s hard to argue companies and individuals aren’t far better prepared for a downturn this time around than they were the last.

Of course, the biggest lesson of the fall of 2008 was that when quality goes down it always recovers, as long as the underlying business stays sound. There were certainly casualties of that crash that fell and never got back up. But stocks and bonds backed by strong underlying companies have been massive winners since the recovery got under way last year. And that’s the best possible testament they have what it takes to weather even a “double dip” recession and renewed credit crunch—as well as assurance they’ll recover what ground they lose in today’s panic.

The threat of higher taxes and heavier regulation in the US, the still-spreading Gulf oil spill and worries about the European credit crunch are certainly serious.

On the other hand, it’s hard to argue they’re on the scale of what beset the markets in late 2008, mainly the collapse of the entire US financial system. And while credit markets may still tighten, it’s hard to argue they have to any meaningful degree given the large number of bonds being issued now at historically paltry rates.

I think you see what I’m getting at. I’m a skeptic of this selloff and the potential for a “Big W”–i.e. a second leg down for the economy and markets. The panic in many investors’ eyes is certainly real and it’s driving their investment decisions.

But in the end, the downturn that began this month will resemble more the periodic fits and starts that have affected this market since the recovery began in early March 2009, rather than the truly unique catastrophe that unfolded in late 2008.

In any case, whether the selling continues or not, our principal task remains to identify and then buy and hold stocks of strong companies. That means either large companies that dominated their markets in years past and are gearing up to do the same in the years to come, or small ones with breakthrough technologies and the ability to push them to fruition as the systems, products and processes of the decades to come.

We can use the market’s gyrations to lock in positions in strong companies. And while there’s no great rush to do so, prices now are low even as companies continue to prove themselves in the numbers. But our focus has to be on the underlying health of companies. As long as that’s secure, any dips now will prove huge buying opportunities, just as they were in 2008.

Over the past month in Portfolio 2020, we’ve featured two articles on the advanced materials sector, the key building blocks of economic development particularly in Asia. Elliott penned an article featuring such elements as molybdenum—used in making high-test steel—as well as “rare earth” elements, which are essential in flat screens among other things. Yiannis published a very timely piece forecasting a pullback in most commodity prices due to worries about the global economy.

Yiannis’ forecast in particular has hit the mark, as natural resource producers big and small have pulled back over the past month. Now, however, we’re back to prices not seen since last year, despite the fact that the fundamental argument for these stocks remains very much intact—rising demand particularly in the developing world coupled with a growing scarcity of cheap and abundant supplies.

As a result, this is an area I now advise you to consider picking up shares, particularly of the companies Yiannis and Elliott feature in their articles, which are posted on the site. They’re not as cheap as they were in early 2009 and they could go lower if the economy really does break down globally.

Barring that, however, this ongoing swoon will soon be a distant memory as growth we saw in their first quarter numbers continues. And if history is any guide, the gains in their stocks will come faster than those who stay on the sidelines now can react.

Earnings Watch

Having a truly multinational portfolio means earnings reports as well as dividend payments come in at different times of the quarter. This week, I have results for three more.

American Superconductor’s (NSDQ: AMSC) biggest news this month is the expansion of its strategic partnership with China’s Sinovel Wind Group.

The two will widen their relationship to include additional wind turbine designs for both onshore and offshore locations to develop a new product line that Beijing-based Sinovel will sell globally.

China is already the world’s biggest market for wind power, a major advantage for Sinovel which is not the world’s third largest turbine manufacturer. And more sales for Sinovel going forward will mean greater revenues for key technology provider American Superconductor.

A couple days earlier, American won another $445 million contract from Sinovel, a beneficiary of its home country’s aggressive stimulus package.

American’s fiscal fourth quarter profits (end March 31) topped expectations, coming at 18 cents per share in the company’s first profitable year. Management also released an aggressive sales forecast for the fiscal year ending March 31, 2011, lifting a prior estimate of $400 million to the $415 to $425 million range.

It also issued a forecast for a double in net income to the 80 to 85 cents per share range. In addition to China, the company is enjoying robust order growth in the US, where full-year growth of 70 percent is more than twice the industry average.

American shares have tumbled -27.7 percent this year and -33 percent from their mid-January highs. But as these numbers show, that’s had nothing to do with the company, which continues its rapid growth track.

Rather, the stock is something of a proxy for the global economy’s prospects, soaring when perceptions rise and plummeting when they fall. In my view, however, this is going to end well for investors and the stock remains a solid buy up to 30, for investors willing to live with near-term volatility and a lack of yield for the promise of explosive returns over the next 12 to 18 months.

Hewlett-Packard Company (NYSE: HPQ) has taken over the top spot in global server sales, pushing out IBM (NYSE: IBM) in the first calendar quarter of 2010. Sales were $3.4 billion, or 31.5 percent of the worldwide market.

The driver is corporate customers, who are now upgrading equipment after delaying purchases during the recession, as overall server shipments rose 23 percent from last year’s levels. Servers were a big part of HP’s expectation-beating fiscal second quarter results, as well as management’s boost in its full-year profit forecast to $4.45 to $4.50 a share, adjusted for one-time items.

Second quarter adjusted earnings were up 22 percent, also fueled by a 31 percent year-over-year jump in HP Networking excluding acquisitions. The company saw revenue growth in all of its major operating regions.

Adjusted for the effects of currency swings, the Americas’ sales were up 9 percent, the Middle East and Africa were up 19 percent, Asia was up 10 percent and even Europe was up 7 percent. Revenue outside the US was 66 percent of the total, while BRIC country sales (Brazil, Russia, India and China) were up 15 percent, or 10 percent of overall company revenue.

If there was a point of decline it was in services, where sales dipped 2 percent. But that’s dwarfed by the changing nature of HP’s revenue as it tacks to become a 21st century dominant player in its fast-moving sector.

Global economic worries have taken the stock off roughly $10 per share from recent highs. But again, that’s no fault of the company’s underlying business, which ensures a strong recovery. We’re still buyers of Hewlett-Packard.

Hyflux Water Trust (OTC: HXWTF) recorded cash available for distribution of SGD3.5 million in the first quarter of 2010, enabling it to pay a distribution of 1.16 cents Singapore.

Income from its two key lines of business—operating and maintenance—came in roughly in line with last year’s totals, as water throughput and tariffs from its 18 water treatment facilities was stable.

For its part, management restated its commitment to distribute 90 percent of the trust’s cash flow, which is derived from activities of Hyflux Inc (OTC: HYFXF).

Hyflux itself came in with solid first quarter results as it continued to execute expansion plans and operations well. Profits were up 25 percent, in line with expectations for the quarter, which accounts typically for 7 to 9 percent of full-year earnings.

Gross margins rose to 41 percent from 32 percent the year earlier, as cost efficiencies continued to kick in. Hyflux’ plans for a major project in Libya have apparently hit a snag, which could crimp growth. But other projects in China, India, Japan and Singapore appear to be right on track, which could increase order backlog by 90 percent according to some estimates.

All that should be good news for Hyflux Water Trust, which this month has taken a hit on worries about the global economy. That’s given investors a solid opportunity to buy its yield of more than 10 percent tied to one of the world’s surest trends: the need to secure shrinking water supplies increasingly stretched and threatened by population growth and pollution. Hyflux Trust is a buy all the way up to 1.

Here are earnings announcement dates for the rest of the Portfolio 2020 Holdings. Look for updates in my bi-weekly review articles.

AeroVironment (NSDQ: AVAV)–June 23

China High Speed Transmission Eq. (HK: 658)–Sept 20

China Resource Power (HK: 836)–August 24

Qinetiq (London: QQ, OTC: QNTQY)–May 27

Starpharma (OTC: SPHRY)–August 24