Editor's Note: The following article was written by Raymond James Chief Investment Strategist Jeff Saut. It has been reproduced with permission for the benefit of the Minyanville community.

Last week, I spoke to a financial adviser I haven’t heard from since March. I told him to buy Bryan Elliott’s “Scorched-Earth List.” As I wrote in Rally Till Spring?:

"The 4 ‘scorched earth’ likely survivors for a package (in case I'm wrong on one of them) are: Ruth’s Hospitality Group (RUTH); Morton’s (MRT); Carrols (TAST); and O’Charley’s (CHUX). Each company has high leverage - but at very manageable levels, if cash flow remains anywhere near the current run rate. These are strong brands with very long-term histories, recently restructured credit agreements, and large private equity ownership, so the ultimate backstop is they can get equity to retire debt as a last resort.

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The last option, of private equity, only becomes necessary in a true soft-depression scenario (e.g., if total restaurant demand goes from the current down 3-5% to something like down 15% quickly). Once valuations normalize, these are likely $5-7 stocks, and perhaps $10+, as each has $1.00 EPS power and sustained expansion potential in an economic recovery."

If you bought this list of stocks at their respective March lows, and sold them on their subsequent highs, you made roughly 290%. Even if you waited until I wrote them up in my report, and held them until last Friday, the return has been nearly 150%.

So I asked the advisor, “Hey, how’d you do?” His response: “I made back the 40% I lost in 2008, so I broke even and sold because I didn’t want any of the cheese – all I wanted was out of the trap.

And that’s what the majority of investors are doing. They don’t want any of the cheese; all they want is to make back the money they lost in 2008, break even, and get out. And I think that may be a mistake.