I assume this is talking about investing in, giving a most recent example, the mortgage industry or homebuilders.

I have a little bit of this kind of investing in my portfolio. I thought I would try it because I wanted a small portion of high risk, high reward portion in my portfolio.

I invested in a telecom stock when that sector went bust (AVNX)
also Internet incubators, CMGI and ICGE
then the mortgage crisis came and I chose FBR because they seemed to divest of the subprime portion of their business, and were not financed with a lot of short term debt.

I just had a hard time imagining these industries being dead forever, so my thought was to take some risk and pick up these stocks on the cheap. Since I only allocated a small portion of my portfolio to these picks, I'm ok with the risk... I'm just hoping there will in the end be big rewards to go with those risks.