The Contrarian Shopping List

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." -- Warren Buffett

Out of the quadrillions of quotations quarried from that most loquacious of quotationists, this one holds a special place in the hearts of Foolish investors. Are you looking to "buy low" so as to later "sell high?" If so, your best chance of getting that initial, low entry price comes when panicked sellers are unloading their shares at whatever price is on offer.

In today's column, we search the ranks of Wall Street's motivated sellers, and note which stocks they're most frantic to unload. Therein may lie the makings of a contrarian investor's shopping list. But don't just take our word for it. Before you decide to go in through Wall Street's out door, check your thinking against the collective intelligence of Motley Fool CAPS investors.

Today's contenders include:

The problem with pessimism
The problem with going against the grain on Wall Street is that when professional traders get pessimistic, their grim outlook can become a self-fulfilling prophecy -- at least in the short term. The more desperate institutions become to abandon a stock, the lower the price they'll accept to get rid of it. And as their "ask" prices drop, the "bid" prices of buyers will fall in tandem, creating the very price decline that they feared in the first place.

Until the selling stops.

In through the out door
When it will stop is anybody's guess. But until it does, savvy investors have a chance to "get greedy," and snap up some bargains from these fearful sellers (if bargains they truly be).

Which of the above seven stocks looks primed (foreshadowed pun) to rise? Apparently, none. Not a single stock on today's list gets so much as an ambivalent 3-star rating from CAPS investors. Each and every one is rated a likely underperformer. Perversely, that frees me to pick the most interesting story of the lot, rather than the most popular. In today's imploding subprime mortgage market, one stock fits this bill: "non-prime" mortgage originator, financier, securitizer, servicer, and seller Accredited Home Lenders.

Reviewing the company's CAPS page, we see that 191 out of the 364 investors who have rated the company think it's a dud. Even so, within the subgroup of CAPS players who've proven themselves the best stockpickers around -- our All-Stars -- Accredited gets a bare majority of thumbs-up ratings. Here's what a few of these brave souls are preaching into the subprime whirlwind:

• Taking point in our commando team of risk-defying all-stars, MaidhoffFool whispers: "if you can steal a pick from a genius like [hedge fund advisor Tom Brown] and get in at probably half the price he paid, well... that's a good thing."
  
  
• Slydo concurs, reminding investors that that: "Tom Brown believes [Accredited] is the strongest of the subprime lenders. I view this more as a short-term play of a year or so rather than a long-term investment, as I think the survivors should rebound as the picture clears."
  
  
• Imperial1964 echoes the purpose of this column, arguing that "Subprime is bad right now, but to me it smells like time to be a contrarian." Still, Imperial1964 warns that "I would have to do a lot more diligence to call it an 'investment' at this point instead of 'speculation'."

Time to sound off
It's hard for a Fool to know which way to go on this one. The clear majority view is that Accredited will follow Novastar and New Century over the cliff. And yet, some of the smartest voices around whisper that it just ain't so, that "this time it's different."

At times like these, investors need each other's counsel the most. That's where Motley Fool CAPS comes in. Whatever your position, at CAPS, you've got a chance to make yourself heard, and help your fellow investors in the process. Join us.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked 38 out of more than 24,000 raters. The Fool has a disclosure policy.