Like you, I haven't enjoyed watching my investments take a hit over the past year. It's been both painful and disheartening. And no one is really sure how much worse it might get.

But the value investor in me is excited because blue-chips like Microsoft (Nasdaq: MSFT) are on sale for less than half their customary multiples. And there's an even greater aspect of this market drop that I am excited about ... and I'll share this with you below.

Honesty is such a lonely word
Until recently, the mutual fund industry profited from the tailwinds of the bull market that began after the tech bubble burst. As stocks went up, up, and even further up, so too did the historical returns of these funds.

This was both good and bad. Good because fund investors profited as stocks rose, but bad because these returns are typically what funds use to attract new clients.

When mutual fund companies spend millions of dollars advertising such "hot" returns -- like, for example, the $104 million T. Rowe Price (Nasdaq: TROW) spent in 2008 on promoting its funds -- they frequently attract "hot money," those speculators lured by recent performance who are eager to get in ... but also just as quick to flee.

A vicious cycle
For a case study on how disastrous this hot money can become, look no further than Legg Mason 's (NYSE: LM) Bill Miller and the downfall of his fund, Legg Mason Value Trust . Year after year for more than a decade, Miller posted strong positive performance thanks to well-timed investments in big tech names like Time Warner 's (NYSE: TWX) AOL and Dell (Nasdaq: DELL).

This would have been fine, had his company not touted these returns year after year, attracting this precarious hot money. But money management firms are scalable and the temptation to use this tactic is strong. Most give in. And when they do, they risk losing control of their fund.

Which is exactly what happened to Bill Miller.

After he made a few bad calls on companies like Citigroup (NYSE: C) and Yahoo! (Nasdaq: YHOO), the hot money rapidly fled. And now during the most attractive buying opportunity of his lifetime, he is plagued by investor redemptions. Rather than put excess cash to use, he's had to use it to meet investor redemptions. And rather than hold cheap stocks until they turn around, he's had to sell them to replenish this cash, leading to poorer performance and more redemptions.

That's simply the worst possible position for Miller to be in during the conditions for which he has waited his whole career.

It's a good thing
So back to why I'm excited about this market tumble. Continued...