Contrarian view: the crowd may be stampeding, but the wise course is elsewhere.

Two days after Katrina hit New Orleans - where I was born d raised, and most of my family still lives--I had a message from an investor to whom I once peddled stocks and bonds on behalf of Salomon Brothers.

When I worked on Wall Street my customers were generally viewed by my firm's traders with condescension: They were the morons who existed only to be on the wrong side of whatever trade Salomon Brothers wanted to make. This fellow was different. When he did something that some trader suggested, it usually worked out well for him, and badly for the trader.

He was at his very best in volatile markets, when he looked to take the risks shunned by others. Occasionally he was wrong, but more often he was spectacularly fight, and in the two years we did business together he did so well for himself that the Salomon traders routinely stopped by my desk to ask what he was up to. Eventually they became terrified of him. He was one of those people who, when he poked his nose into a market, picked up scents undetectable to most humans.

It had been many months since I had last heard from him, but 48 hours after Katrina struck home he sent me an e-mail from London to say that now was the perfect time to buy New Orleans property.

Just then the television played images of anarchy, and of a city completely destroyed. The mayor of New Orleans told reporters that 10,000 people were dead, that the entire city was under 15 feet of water, and that lots of people were being raped and murdered. (This all proved wildly exaggerated, if not completely untrue.) The consensus was that New Orleans had just been wiped off the map. And this investor, sitting in his London home, without any sort of hard information, wanted to go long. The city wasn't going to be just fine, he said, it was going to emerge from the storm better than ever.

Most people would say he was just guessing, and I might agree--except that I'd seen him guess fight so often in the past, about people and places he knew little about, that I had come to think of whatever went on inside his weirdly wired brain as more than guesses. In the reaction to Hurricane Katrina he had smelled hysteria very like the panic he had so often exploited in volatile financial markets.

Boom waiting to happen

Three days-later I flew down to New Orleans and discovered, broadly, that he was onto something. The city's most precious physical assets were perfectly preserved, the old lovely houses were all high and dry, and the people were behaving a lot better in the flesh than they were on the television--for instance, the murder rate after the storm was no higher than it had been before the storm.

Some of what had been destroyed by the flood the city was a lot better off without. The destruction of the public housing projects, for instance, was a godsend. One telling piece of information was that New Orleans real estate after the storm was being offered on the Internet at "pre-Katrina prices." As if that were widely understood to be an enticement!

The place felt, and feels, like a boom waiting to happen, a bit like Eastern Europe after the fall of the Berlin Wall: a clean slate of sorts, a society ready and waiting to be rebuilt and reinvented. The difference is that there will be tens of billions of dollars in federal aid to rebuild with, property rights will be respected and enforced, and everyone in New Orleans speaks English, more or less.

My old customer's prescience was a reminder, first, of what oddly tuned instruments are the heart and mind of the financial speculator.

Most people aren't contrarians, in their lives or their investment decisions. They have no gift for leaning against prevailing sentiment, and if the hysterical reaction to Hurricane Katrina did anything, it created a prevailing sentiment: Everything was insistently desperate, terrifying, doomed, and it was deeply unfashionable to think or feel excited or interested or opportunistic. (You don't get fear in moderation, or in just the right dosage; you always get 10 times more than you need.)

The speculator not only understands this, he exploits it; other people's emotions are his raw material. He isn't self-conscious about his reaction to the suffering of others. If he has to think, consciously, "Everyone is frightened, but as I'm supposed to be one of those contrarians, I'll now be brave," he'll never make his move. No, the mere sight of a herd stampeding in one direction causes him to leap in the other. The consensus that New Orleans is a place to get out of inspires in him a genuine desire to get into it.

Someone, somewhere is about to make a killing in New Orleans. Somewhere there is a hedge fund manager stealthily buying up New Orleans real estate, or a venture capitalist quietly creating a New Orleans fund, or a 26-year-old would-be entrepreneur who, having been rejected by Harvard and Stanford business schools, is deciding to make his empire in the ruins. And, as loathsome as he will seem in retrospect, I find him hard to dislike right now.

Michael Lewis is the author of "Liar's Poker," "MoneyBall" and, most recently, "Coach."