"Don't you read the papers?"

Bill Miller is getting pretty tired of that question. Fortunately, he has a pretty good response up his sleeve.

Do you at least watch Mad Money?
After a rough two-year stretch, Miller -- who famously beat the market for 15 consecutive years at the helm of the Legg Mason Value Trust Fund -- has of late had numerous clients call his investing prowess into question.

"It has been explained to me that it was obvious we should not have owned homebuilders, or retailers or banks, and that I should have known better than to invest in such things," he wrote in his second-quarter shareholder letter. "It was also obvious that growth in China and India and other developing countries would drive oil and other commodities to record levels and that related equities were the thing to own."

Trust me, that stuff was not obvious
As one of the few investors who actually did see this credit crisis coming, believe me when I say that the events of the past two years are obvious only in the rearview mirror.

Suppose you suspected back in 2006 that lax mortgage underwriting standards and risky new loans would result in increased foreclosures and decreased discretionary income. It was still far from a foregone conclusion that this would lead to the complete collapse of the securitization markets.

Similarly, even if you fully comprehended the tremendous commodity demand from China and India, was $147 oil really so inevitable in early 2007 when a barrel barely fetched $50? And could you have correctly predicted that Potash Corp. (NYSE: POT) would quadruple over the next 18 months? These outcomes were hardly obvious at the time.

Miller's five obvious truths
That's why Miller's simple response to his clients' question is so effective. "While I am quite aware of our mistakes, both of commission and omission, when I ask what is obvious NOW, there is little consensus," he wrote. "If there is something obvious to do that will earn excess returns, then we certainly want to do it."

Have homebuilders hit bottom? Are financials poised to rebound? Can the energy run continue? What's in store for Centex (NYSE: CTX), Bank of America (NYSE: BAC), and ExxonMobil (NYSE: XOM)? Miller has no clue -- and neither do his critics.

But that doesn't mean that Miller is powerless to profit from the panicked market environment. In fact, in his shareholder letter, Miller identified five obvious truths that the majority of the market seems to have missed:

  • The credit crisis will end;
  • The housing crisis will end;
  • The U.S. consumer will resume spending;
  • The U.S. economy will adapt and grow; and
  • Stock prices will be higher in the future than they are now.

What's obvious now
Allow me to submit another "obvious" insight: With the stock market punishing many quality companies over concerns that may turn out to be overblown and short-term, now is a great time to buy shares of companies with strong financials, dedicated leadership, and great growth prospects.

Take audio entertainment pioneer Dolby Labs (NYSE: DLB), for example. Led by founder Ray Dolby, this San Francisco-based company is responsible for enhancing the sound quality in movie theaters, DVD players, gaming systems, and portable electronic devices all around the world. You've probably seen the Dolby logo flash across the screen at the local movie theater shortly before your eardrums were serenaded by the ultra-sharp sounds of intergalactic battles, car chases, and shootouts.

When Tom Gardner first recommended Dolby to Motley Fool Stock Advisor subscribers in September 2006, he noted that the company "pretty much has all the characteristics I seek in an investment prospect: It's a dominant brand name in its field, and it boasts great financials, good growth potential, relative anonymity on Wall Street, and an involved management team."

Those qualities are still present today: Dolby boasts a rock-solid balance sheet, with about $420 million in cash and short-term investments, versus just $10 million in debt. And the company features rising returns on equity and widening margins, thanks to its low-cost licensing model with consumer electronics manufacturers like LG, Microsoft (Nasdaq: MSFT), and Sony (NYSE: SNE).

And the best may be yet to come: Dolby stands to benefit from the Blu-ray DVD and digital TV upgrade cycles, and the company's opportunities in high-end mobile communications devices appear quite promising.

However, due to the market's pessimism, Dolby shares are trading at a discount. Despite beating analysts' estimates for a 12th consecutive quarter, Dolby is selling for 25% off its 52-week high.

An obviously valuable service
Motley Fool co-founders Tom and David Gardner have identified plenty of promising companies that, like Dolby, have strong financials, dedicated leadership, great growth prospects, and a discounted share price. So far, this strategy has paid off for Stock Advisor subscribers: Since 2002, the brothers' picks are up 66%, versus 11% for the S&P 500. To see all of Tom and David's recommendations, as well as their best bets for new money now, simply click here for a free 30-day trial.

Rich Greifner obviously wishes he'd bought Dolby back in 2006. Rich does not own shares of any company mentioned in this article. Dolby is a Stock Advisor recommendation. Bank of America is an Income Investor selection. Microsoft is an Inside Value pick. The Fool has a disclosure policy.