Chris Davis

R.I.P., Bill Miller (Legg Mason Opportunity fund, -59% for 2008 through October 30). And Mason Hawkins (Longleaf Partners, -47%), Bill Nygren (Oakmark Select, -36%), Chris Davis and Ken Feinberg (Selected American Shares, -36%), Ron Muhlenkamp (-37%) and the guys and gals at Dodge & Cox Stock (-41%).

When the markets get tough, the tough go shopping. That's what  Selected American Shares  comanagers Chris Davis and Ken Feinberg are doing. Davis and Feinberg are in their 40s, so they've seen a couple of brutal markets. But they have wisdom beyond those years.

Chris is the third generation of the Davis family to manage money, and he learned quite a few lessons from his father and grandfather. Davis and Feinberg are also big fans of Warren Buffett and Charlie Munger of Berkshire Hathaway. They try to put their lessons to use in times like these.

Davis Selected Advisers said in a filing with the Securities and Exchange Commission that it holds 6.4 million shares of MBIA (MBI) . On Sept. 30, Davis held 481,021 shares, according to FactSet Research Systems. Shares of MBIA jumped more than 9% to $21.99 in afternoon trading. The skippers at Davis Advisors have wracked up stellar long-term performance records as value-minded investors. Their portfolios tend to emphasize financials at a money-management firm founded by Davis' father, Shelby M.C. Davis, former head of research at Bank of New York.

When Chris and Ken buy a company for the Davis New York Venture Fund, they do so on the basis of what is often called bottom-up, as opposed to top-down, research. This means they do fundamental research and analysis on each individual company they consider, with the goal of arriving at an estimated range of each company's intrinsic value. This process includes studying the company's financial statements, regulatory filings, competitive advantages, management, and corporate culture. Having completed this work, they invest only when we believe that the company's stock price is below the low end of their estimated range for the company's intrinsic value.

Currently, Chris and Ken of Davis Financial fund see several negative as well as several positive trends affecting the various financial sectors. On the negative side, today's inverted yield curve is providing a formidable headwind for the earnings of banks and other spread lenders by compressing their net interest margin. On the positive side, America continues to be an adaptable and dynamic economic powerhouse with a GDP approaching $12 trillion or almost 25% of global GDP. One critical economic indicator to monitor closely is job creation and over the past three years more than five million new jobs have been created. Significantly, there are approximately 146 million Americans working today and 70% of Americans own their homes. Also, U.S. household net worth is now approximately $54 trillion, up from $25 trillion just 10 years ago. These are just a few of many enormously important factors behind the long-term robustness of the American economy.