... in the stock market is to focus on the fundamentals of why you originally got interested in a stock (and whether those fundamentals have changed), and to not let emotions come into play.
The private corrections industry still has very strong fundamentals and some very good companies (WHC and CRN IMHO are the best). These stocks have been hurt by many things (none of which are fundamantal changes in the industry though), with one of the biggest problems coming from management issues at PZN and PZN's REIT/OPCO structure.
Many other industries have gone through cycles (Oil and Gas, Financial Institutions, etc.), only to recover many times over. The bottom line is that the need for housing inmates and various treatment methods needed for them will, unfortunately, never go away. This is a function that MUST be performed, and the private sector can do it as well as (and sometimes better) as the public sector and save taxpayers $$$. At the end of the day, that's what gets votes (i.e. tough on crime AND saving tax dollars), and the shear strength of the fundamentals will remain strong. The only question is which companies will prosper the best ... but this industry has so much growth that there is plenty of room for several successful players.
These down cycles are great times to let the sheep run away, while we average down and wait for the inevitable rebound.
I'm long on WHC and CRN ... I'd keep an eye on both of them.