The world seems turned upside-down -- but it's all a matter of perspective.

If you're an America's Car-Mart (NASDAQ:CRMT) shareholder, you're probably thinking that things are finally looking up. But if you own CarMax (NYSE:KMX), as I do, I'm guessing you feel more like you just suffered a catastrophic rollover. After falling 7% in the wake of Wednesday's third-quarter earnings report, CarMax dropped another 5% yesterday -- and that's great news.

Are you insane?
Quite possibly. But if I am, I'm in good company. You see, while rival billionaire Eddie Lampert was busy buying up shares of AutoNation (NYSE:AN) recently, master investor Warren Buffet has been investing Berkshire Hathaway's (NYSE:BRK-A) (NYSE:BRK-B) copious cash in CarMax.

But that was before ...
Yes, granted, this was all before CarMax reported flat comps, 7% sales growth, and a crushing 34% decline in net profit for last quarter. But we learned back in September, when CarMax revised 2008 projections, that the company's income would be hurt by increased funding costs. The CEO warned that when all was said and done, CarMax would earn just $0.92 to $0.98 per share for the year. 

So what do you make of all this?
Right now, CarMax is selling for 19 times trailing earnings. Analysts on average expect it to eventually clear its current potholes, and resume growing at about 18% per year over the next half-decade. Seems to me, that's an entirely reasonable price to pay for a company that has changed the face of auto retailing, and has no credible competition in the used-car megastore space. 

You see, there are probably a few people like me, crazy enough to buy a Chevy S-10 on eBay (NASDAQ:EBAY) sight unseen -- to write a check and have the truck shipped cross-country from Texas. But by and large, America is populated by sane shoppers who want to kick the tires before laying out several grand on a new-to-them vehicle.

These shoppers basically have two options: Shop among a few dozen offerings at the local used car lot, or go to the only place in town where you can comparison-shop among hundreds of vehicles: CarMax. This is what we call a "moat."

And while CarMax may be in a ditch today, rolled over and smoldering, its moat remains intact.  

Test-drive CarMax with reports on its previous performance:

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.