Dykstra: Make Money Off the Fear

Editor's note: Lenny Dykstra will explain his deep-in-the-money calls (now 68-0 for the year) at TheStreet.com Investment Conference on Saturday, Oct. 25. Click for details.

It's a scary market out there, and that's an understatement. The Dow down 777 points!!!! We have not seen anything like this, and everyone is recommending that if you are out of this market, stay out. Sit on your hands. Do not go back in the water... yet. And if you do, tread carefully.

Well, I can't say that is the worst philosophy, because there are a lot of unknowns. But if you want to guarantee that you will not lose any money -- but not make any, either -- go ahead and do nothing.

However, everyone is panicking -- selling off of fear. One of my favorite quotes is from Warren Buffett. He says: "Be fearful when others are greedy and greedy when others are fearful." I don't believe that you could find a more fearful market. Commentators on television are saying this is the worst crisis in this country since World War II or the Great Depression.

With talk like that, do investors have a reason to worry? Yes. Does every stock that is being dumped deserve to be shown the door? A lot do, but not all. This means people are making mistakes. They are leaving money on the table because they are scared. They are selling good stocks at low prices. Do I understand it? Yes. However, business is business, and if other people want to give money away, I will surely be glad to take it. They are dragging down the good with the bad.