Today the Dow Jones Industrial Average bounced back from yesterday's poor showing. It ended the trading day at 11,397.56, that's plus 266.48 (+2.39%) returning more than it had lost only 24 hours ago.

There are plenty of prognosticators explaining why this happened and so I am not going to join the crowd this afternoon with my own version. Leave it to say we are in a period of uncertainty where investors and traders alike are a bit jumpy. We did have a 5.4 magnitude earthquake today in Southern California, only fitting for this type of market.

In the meantime I have been wondering how to take advantage of the lousy situation in the financial sector of the market. How can I maximize my gains and control risk at the same time? I guess we are all trying to do this, but few will appreciate my contrarian, 'no guts no glory' approach.

I think you have to be buying banks and investment companies and I have decided that ten is the right number. Sir John Templeton (RIP) is the catalyst for this notion. I am already on record (Serious Money: More signs the market has bottomed) that this is the time to be selectively buying and 'my pal Warren' said as much at the Berkshire Hathaway (NYSE: BRK.A) annual meeting when he suggested the financials have seen the worst of the storm.

The maximum gain is to be had by buying the worst performers while everyone else still hates them. But this brings risk and I have already seen this strategy fail with IndyMac Bancorp, so why continue the foolishness? Because, IMB did not have to fail and because there is some luck involved. So I will choose ten stocks knowing that 3 or 4 may go to zero, a few more will survive with modest gains, and 3 or 4 will rise not returning to their old glory soon, but more than covering the ones that fail.

I could just buy a sector fund or ETF, but that would not be the same because it would also include the stronger companies and reduce the upside. It would be a reasonable approach, but I am not looking to be too reasonable, I want to beat the market.

Here are the first four of the sad companies that have reported billions and billions of dollars of losses, and counting; and had their stocks pummeled. All of them have had someone question the viability of these companies sometime over recent months.

• Citigroup Inc. (NYSE: C)
• Lehman Br Holdings (NYSE: LEH)
• Merrill Lynch (NYSE: MER)
• MBIA Inc (NYSE: MBI)

One of my criteria is that the stocks must have lost at least 70% of their value over the last year to be included. Shareholders of these four would be happy to have only lost that much. Remember, I am not recommending any one of these disaster stocks I am recommending a pool of them. Maybe I'm playing with fire and maybe not. This will be a running series.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of BRK.B and MBI.