As the New York Times says about Devaney, "As the powerfully fickle market has gone through several giddy booms and wrenching shake-ups in the last decade, he and other nimble traders in a small fraternity of investors have been able to profit handsomely by taking advantage of the market's wide swings." People in the industry speak highly of him as well: "I don't think there is anyone in the business who wouldn't want to be John Devaney," said Mark H. Adelson, a senior analyst with Nomura Securities in New York, "to have the insights and guts to do what he did, as well as the managerial skills, the analytic skills to pull it off."

Devaney seems to follow the classic Warren Buffett mantra of being greedy when others are fearful, and being fearful when others are greedy. He has bought up large quantities of New Century Financial's bonds for 50 cents on the dollar, after discovering that, even if 30% of mortgages defaulted, he would still get his money.

Here are the three things that I think investors can take from Mr. Devaney.

-Don't be afraid to go against the crowd. No one makes money by following the herd.

-Do extremely thorough research, and then act with conviction. Being a contrarian by itself is not enough. You have to back it up with thorough research.

-Be flexible. As Jim Cramer says, it's okay to vote for a stock -- Before you vote against it. Mr. Devaney made money by betting against subprime lenders, and now he's hoping to make even more money by betting on them.