Down Is the New Up

For Wall Street's Bottom-Feeding Investors, When Stocks Tank, It's Time to Dive In

It's a Wall Street sell-off. Sell, sell, sell. A crescendo of selling.

But what about the buying? How come we barely hear about that? Why isn't it a buy-in, a buy-fest, a buying scramble? Isn't someone buying every share that gets sold?

Sure they are. And they plan to get rich doing it. Feeding at what they believe is the bottom of the market cycle, at the jumbly-tummy base of our fears, an opportunistic species of American investor has been gorging on all those stocks everyone else is so busy dumping. This is the Moment of the Bottom-Feeder.

Their faith has been bolstered by the greatest bottom-feeder of them all, the Oracle of Omaha, Warren Buffett. The Oracle sayeth -- in a New York Times op-ed, no less -- that thou shalt buy, and buy American, and maketh long-term profits.

"Be fearful when others are greedy, and be greedy when others are fearful," the gazillionaire has decreed.

So, at a time when no one seems to be having fun, the bottom-feeders are rocking. It's as though Filene's Basement threw open its doors just for them.

Bargains galore. Or so they hope.

"You could throw a dart and it would be hard not to hit a stock that isn't at the best price it's ever been," says Terry Murphy, a 56-year-old Chicago-area investor. "Five years from now there are going to be stories about people who accumulated fabulous wealth from this."

Murphy called his financial adviser, John Montgomery, when the Dow was doing its best yo-yo imitation, swinging 1,000 points on Oct. 10. That was the day it finally settled down 40 percent from its all-time high exactly one year before. Montgomery was at his office on 19th Street in downtown Washington because he'd canceled his 30th-wedding-anniversary cruise. He knew he'd be, well, busy.

Sounding a bit like field generals, the two men decided to "deploy" one-third of Murphy's cash reserves to buy stocks. Montgomery, who makes his pronouncements from behind the curtain of a bushy white mustache, went prowling.

He wanted rock-solid stocks that "had been beaten to a bloody pulp."

* * *