CYBERSPACE (CNN/Money) - I get plenty of e-mails wondering why I insist on being so negative all the time. Harrumph. You'd think I'd get e-mails thanking me for being so negative, because believe me, I didn't cause this market to fall.

In any event, I set out recently to find something positive to say about the markets. I zapped an Instant Message to a fund manager I know, a smart guy who's worked as an engineer, as a sell-side analyst for a prestigious firm and, now, as an investor for a private fund. My guy's been around and his insights might surprise you. An edited and annotated version of our cyberchat follows.

Me: i'd love an opportunity to be positive for a day, if only to silence my hate mailers! whatcha got?

Fundguy: look, we all drank the kool-aid on the way up, and now we are being prompted to swallow cyanide on the way down. as positive as everyone was 2-3 yrs ago regarding the "new economy", everyone is becoming so bearish that i would bet we are getting close to the bottom.

You tell me -- can it get much worse than this? daily terrorism news, U.S. on constant alert, corrupt CEO's, greedy CEO's, wall street conflicts of interest, unethical accountants, zero fiscal discipline from the entire telecom and cable industry, India/Pakistan flares, and i'm sure others that i have missed.

What could possibly be next? A part of me is afraid to ask......

Me: but if it's a bottom, what from here?

Fundguy: in the end Darwinian theory will prevail. the strong will survive, in fact thrive. i think sustainable business models, real products and services (instead of hype), and strong (clean) balance sheets will be the common attributes of the market winners, in all sectors.

The only real unknown is time. from a pure research perspective, valuation arguments aside, who is fundamentally going to beat msft, dell, intel, cisco, and amat? who is going to beat walmart or citigroup or ge?

Me: are you saying they're the stocks to have at the bottom of the market (now)?

Fundguy: i'm just saying that each of these companies is well positioned in their respective markets. they each have sustainable competitive advantages, are well (sensibly) managed for the long term, have strong balance sheets, and will ultimately prevail.

Unfortunately, we're in a bear market so short term trading dominates. there simply isn't enough good news to sustain a rally and scare the bears, and stocks aren't cheap enough (in aggregate) to tempt massive value buying.

But i think buying the industry leaders and averaging in as they go on sale (a buffett line) is a strategy that has worked well in the past. i don't see why it wouldn't work again, the question is how long do you have to wait to get a 7 to 8 percent annualized return? someone once told me about patience. i think that went out with the new economy as well.

EMC is a great example. how can everyone love it at $90 and hate it at $7? you mean at $90 it was a buy but at $7 its a sell?

Did the fundamentals really change that dramatically in 2 years? to be fair, the truth lies probably somewhere in between. emc was probably never fundamentally worth $90/share and probably is fundamentally worth a bit more than $7/share.

However, when it rains it pours. in both directions.

Me: but what about the argument that yesterday's leaders are never tomorrow's leaders? think: kodak, xerox, at&t, etc. In other words, isn't there a long-term risk that msft, csco, wmt, etc., don't make 7 to 8 percent long-term gains?

Fundguy: my view is one of evolving with the industry. take a look at GE. from light bulbs to financial services and jet engines. That's evolving.

Today's technology is tomorrow's commodity, that's why you can't afford to be static. microsoft beat ibm in operating systems because ibm protected its lucrative mainframe business. that was the short-term correct decision, long-term incorrect.

RECENTLY BY ADAM LASHINSKY       Would someone take a bite out of Apple? Now Intel's a buy -- right? Telecom hell

Dell's willingness to accept lower margins initially, and ultimately transition that into the lowest cost delivery is a sustainable competitive advantage. you are right, dell will clearly lose, and in effect would be losing already, if they stuck with the desktop PC. but they evolved into notebooks, workstations, servers, and now storage, networking and services, but all with the common denominator of industry standards and low cost.

Intel and msft are two more examples. any applicable feature that msft can add to the os [operating system] they do. similarly with intel -- cache used to be a separate chip, now its embedded into the processor.

To your point, i would suggest that kodak and xerox did not innovate properly. they became stagnant. they had large installed bases that they took for granted and a cheaper, better, more innovative solution came along. zerox should be the number 1 printer company, not hp. kodak should be much further ahead in digital photography than it currently is. hp is an interesting bird. they have close to 200 million installed printers that they reap massive margins from. is it any wonder dell is looking at the printer mkt? stay tuned.

Me: i love Zerox!! Thanks for all this. Good luck.

Fundguy: you bet.

Adam Lashinsky is a senior writer for Fortune magazine. Send e-mail to Adam at adam_lashinsky@timeinc.com.

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