funds are selling (to who?)

Buffett's been busy lately putting his money where his mouth is. He has made high-profile investments in General Electric and Goldman Sachs' preferred stock, and he's likely licking his chops right now at the prospect of deploying capital in this target-rich environment.

So if Buffett's buying, why aren't fund managers following suit?

Many fund managers likely agree with Buffett's sentiments. And at today's prices, they wish they could be like Buffett and buy stocks. However, due to a panicked investing populace, that's simply not possible.

You see, when individual investors elect to withdraw their money from a mutual fund, the fund manager must quickly come up with the cash to redeem those investors. For the week ended Oct. 8, equity investors withdrew a whopping $43 billion from mutual funds, spurring a wave of selling by fund managers -- even though those managers likely still believed in the prospects of the stocks they were selling!

As Morningstar's Director of Equity Research Pat Dorsey explained in a recent video, these stock sales had "nothing to do with fundamentals, nothing to do with the underpinnings of our economy ... no matter what the stocks are, no matter how attractive those assets may be, [fund managers] have to sell them because they need to raise the cash to send those checks out" to their investors.

And that $43 billion figure doesn't even include hedge fund managers who are forced to sell stocks due to investor redemptions and margin calls!

As master money manager Ken Heebner -- skipper of the CGM Focus fund -- told USA Today, "The reason for the sharp decline is massive selling from hedge funds, not because they want to, but because they have to reduce their leverage ... it's the biggest margin call since 1929."

This indiscriminate selling likely explains why shares of quality companies have stumbled over the past month, even though the prospects of many of these companies have remained strong.

Mutual fund and hedge fund managers can't buy shares in these companies right now -- but you can. If you have money sitting around that you're comfortable committing for the next three to five years, and if you can stomach a little short-term volatility, now is a great time to scoop up shares of quality companies on the cheap.

[unless the market crashes further on Monday of course]