A few years ago, it was SARS (Severe Acute Respiratory Syndrome). Then came bird flu, which spread throughout Asia.

Now, several parts of the world are in the grips of another nasty disease - this time, born in Mexico: Swine flu.

Unsurprisingly, Mexican stocks are taking a hit as the death toll from the disease increases - just as Asian shares got hammered as the SARS and bird flu outbreaks ran wild in the various countries.

For example, stock shares of Mexican telecom giant Telefonos de Mexico (NYSE: TMX) got slammed, as investors worried about the impact that the flu may have on companies.

This is a perfect example of mass selling with no basis in logic. In fact, Telmex reported today that its customers have actually used the company’s services more over the past few days, as people decided to use the phone instead of going outdoors and risking infection.

Looking back, the long-term effects of SARS and bird flu were muted. From an investment standpoint, the plays offered - vaccine companies, mask manufacturers, etc. - proved to be short-term bets that didn’t work.

So what lessons can we apply from SARS and bird flu to the current swine flu news.

This is not an outright advocate to a “buy” on Mexican stocks today… or even tomorrow. After all, the global economic contraction is a much bigger story.

However, if an investment opportunity presents itself, then we should be ready to act. And with swine flu, the news may get much worse in the short-term. That means we could have a chance to pick up shares or buy long-term options at very attractive valuations.

It’s essentially the potential “double whammy trade:” An already weak Mexican market is further weakened by an unexpected event, whose duration and final impact will likely not be as serious as many think.