Nassim Nicholas Taleb's best-selling book The Black Swan is probably loaded with more good advice than any other single source available. Read the book a few times, and you'll have a better understanding of risk and uncertainty than the vast majority of fancy-pants financial experts.

One common theme from the book is focusing on the ability to separate the empirical from the emotional, to sift out the noise from the numbers -- the significant developments from the total ballyhoo. It's one of the most important lessons to remember.

That’s especially true in a market like this, where fear, uncertainty, and raw emotion are in the driver's seat. More investment opportunities are being created from market temper tantrums than we've seen since the Great Depression. The trick to finding great investments -- and the kind of behavior that's made investors like Warren Buffett madly successful -- lies in shoving aside emotional barricades and focusing on the empirical facts. It's anything but easy, but the results are rarely disappointing.

To find a few stocks whose empirical details far outweigh their emotional fears, I called on the wisdom of our 135,000-member-strong CAPS community. In my opinion, these three stocks have too much fear and too little fact baked into their current prices:


1-Year Return

Recent Share Price

Forward P/E Ratio

TTM Return on Equity

CAPS Rating  
(out of 5)

Morgan Stanley (NYSE:MS)






Gannett (NYSE:GCI)






Altria Group (NYSE:MO)






Sources: Motley Fool CAPS, Google Finance, and Yahoo! Finance, as of July 25.

Here's a closer look at each one.

Accountants can be interesting people
Morgan Stanley reported a quarterly loss last week. Rivals JPMorgan Chase (NYSE:JPM) and Goldman Sachs (NYSE:GS) are minting money as investment banking bounces back, so losing money stigmatizes Morgan Stanley as the industry's equivalent of Lenny Dykstra.

But what was overlooked was the composition of the loss: An absurd mark-to-market accounting rule, designed to help failing banks, paradoxically forces losses when credit default spreads on a company's own debt contract. As optimism over Morgan Stanley's future gains, default spreads contract, producing short-term "losses." These aren't real losses in any sense of the word, but simply accounting shenanigans that gum up reality. Strip out the imaginative accounting, and Morgan Stanley would have produced a nice quarterly profit proportionally competitive with its rivals.

This is what cheap looks like
Publishing giant Gannett has been decimated as the newspaper industry implodes. Print media is a dead man walking, we hear, causing investors to flee, assuming death must be imminent.

And for some publishers, it is. But Gannett is actually still quite profitable, and its debt load is under control after pushing some maturity dates several years down the road. On average, analysts expect per-share earnings of $1.46 this year, which equates to a P/E ratio of about 4. The risk-reward here is, to put it mildly, astounding.

Profitable regulation?
We love to hate Altria. Its business, making cigarettes, isn't exactly morally admirable, after all.

Investors also love to hate this company because it's constantly mired in regulatory and legal squabbles. A recently passed bill that prohibitively crimps tobacco advertising has investors worried that the Marlboro maven could lose its grip on the market, regulated into oblivion with stringent new laws.

In reality, the opposite is true: Crimping advertising helps Altria, as smaller competitors' chances of gaining market share are crushed by advertising restrictions. As CAPS member AlexStaunton writes:

the new FDA rules make it tougher for new cigarette companies to break into an already difficult market. Also, the new regulations will allow them to spend less on advertising.

For a market leader like Altria, and to a lesser extent competitors Reynolds American (NYSE:RAI) and Lorillard (NYSE:LO), the new regulations cement a market moat by increasing barriers to entry.

Your turn to chime in
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Fool contributor Morgan Housel owns shares of Altria Group. The Fool has a disclosure policy.