Baron Rothschild

Simple Way of Investing
The time to buy is when there's blood in the streets

Baron Rothschild did this

Warren Buffett buy when there is fear in the market

Marty Whitman does it with great interest in distressed debts.

Sir John Templeton" buy during “point of maximum pessimism."

In fact, all great investors do this.

Baron Rothschild, an 18th century British nobleman and member of the Rothschild banking family, made a fortune buying in the panic after Napoleon’s lost at the Battle of Waterloo. He opined: "The time to buy is when there's blood in the streets."

A second part to Rothschild's quote attributed to Mark Mobius "even if the blood is your own."

Marty Whitman, of the Third Avenue Value Fund,  likes purchasing bonds in distressed companies with rebound potential. Whitman bought bonds in the oil-drilling company, Nabors Industries, which filed for bankruptcy protection in 1987. A year later the company emerged and the bondholders' debt was converted into equity. He also purchased bonds of K-Mart both before and after it filed for bankruptcy protection in 2002.  He only paid about 20 cents on the dollar for the bonds as there is a great danger that the company would shut its doors for good.  Whitman made a nice profit when the company emerged from bankruptcy and his bonds were exchanged for stock in the new K-Mart. The shares jumped much higher in the years following the reorganization. In 2009, Third Avenue Management LLC increased its stake in Forest City Enterprises Inc., the property developer whose shares have tumbled 83 percent in the past year.  The fund is investing in distressed debt while avoiding most stocks, reported Bloomberg on 28 May 2009. Whitman said that Third Avenue plans to invest in more companies that are seeking to pay down debt and is avoiding stocks because of short sellers’ ability to drive down prices. Whitman said he’s finding “huge, huge opportunities,” in distressed debt and may launch a new fund for those investments.

Sir John Templeton ran the Templeton Growth Fund from 1954 to 1992. He was a contrarian investor, buying into companies when they hit the "point of maximum pessimism." His investing style can be summed up as looking for He looked for value investments, or what he called "bargain hunting", by searching out such targets in many countries around the world that offered low prices and an excellent long-term outlook.  He pioneered international investing.

He is one of the past century's top contrarians. In 1939, with war raging in Europe, Templeton bought $100 of every stock trading below $1 on the New York and American stock exchanges of some 104 companies, 34 of which were bankrupt, for a total investment of roughly $10,400. Four years later he sold these stocks for more than $40,000! Templeton was also said to profited when he bought low during the Depression and sold high during the internet boom.

Templeton became a billionaire as a true pioneer of globally diversified mutual funds, including the Templeton World Fund, which was formed in 1978. His flagship Templeton Growth Fund posted a 13.8% annualized average return from 1954 to 2004, well ahead of the Standard & Poor's 11.1%.

Warren Buffett found the opportunity in the 1973-74 bear market to purchase a big stake in the Washington Post Company - an 100 bagger investment.   According to him, he was buying at a deep discount the company could have "… sold the (Post's) assets to any one of 10 buyers for not less than $400 million, probably appreciably more." The company had only an $80 million market cap at the time.

A useful reference for this topic where I obtain most of the above information:

Buy When There is Blood In The Streets

 by Daniel Myers, CFA

http://www.investopedia.com/articles/financial-theory/08/contrarian-investing.asp