Contrarian Investment Strategies

David Dreman's name is synonymous with the term "contrarian investing," and his
contrarian strategies
have been proven winners year after year. His techniques have spawned countless
imitators, most of
whom pay lip service to the buzzword "contrarian," but few can match his perform
ance. His
Kemper-Dreman High Return Fund has been the leader since its inception in 1988 -
- the number one
equity-income fund among all 208 ranked by Lipper Analytical Services, Inc. Drem
an is also one of a
handful of money managers whose clients have beaten the runaway market over the
past five, ten, and
fifteen years. Now, as the longest bull market in the history of the stock marke
t winds down, there is
increasing volatility and a great deal of uncertainty. This is the climate that
tests the mettle of the pros,
the worries of the average investor, and the success of David Dreman's brilliant
new strategies for the
next millennium. Contrarian Investment Strategies: The Next Generation shows inv
estors how to
outperform professional money managers and profit from potential Wall Street pan
ics -- all in Dreman's
trademark style, which The New York Times calls "witty and clear as a silver bel
l." Dreman reveals a
proven, systematic, and safe way to beat the market by buying stocks of good com
panies when they
are currently out of favor. At the heart of his book is a fundamental psychologi
cal insight: investors
overreact. Dreman demonstrates how investors consistently overvalue the so-calle
d "best" stocks and
undervalue the so-called "worst" stocks, and how earnings and other surprises af
fect the best and
worst stocks in opposite ways. Since surprises are a way of life in the market,
Dreman shows you how
to profit from these surprises with his ingenious new techniques, most of which
have been developed
in the nineties. You'll learn: Why contrarian stocks offer extra protection in b
ear markets, as well as
delivering superior returns when the bull roars. Why a high dividend yield is ju
st as important for the
aggressive investor as it is for "widows and orphans." Why owning Treasury bills
and government
bonds -- the "safest investments" for centuries -- is like being fully margined
at the top of the 1929
market. Why Initial Public Offerings are a guaranteed loser's game. Why you shou
ld avoid Nasdaq
("the market of the next hundred years") like the plague. Why crisis, panic, and
even market downturns
are the contrarian investor's best friend. Why the chances of hitting a home run
using the Street's best
research are worse than being the big winner in the New York State Lottery. Base
d on cutting-edge
research and irrefutable statistics, David Dreman's revolutionary techniques wil
l benefit professionals
and laymen alike.
All stock-market investors embrace the motto "Buy low, sell high." Few act accor
dingly, however, for to
do so would require that we go against the crowd, buying stocks that are out of
favor and selling Wall
Street's darlings. Powerful psychological forces prevent us from pursuing a cont
rarian investment
strategy, although it consistently beats the market, according to David Dreman,
a seasoned money
manager and long-time columnist for Forbes magazine. One of the Street's best-kn
own and most
articulate contrarians, Dreman has updated his 1982 investment classic, Contrari
an Investment
Strategies, using recent research on investor psychology. His revised book combi
nes proven
techniques for selecting undervalued stocks with fresh insights on how to defy,
and thereby profit
from, the popular fears or enthusiasms of the moment. Dreman pays only cursory a
ttention to a
company's business fundamentals in deciding whether to invest in it. Instead he
looks for stocks
trading at below-market multiples of per-share earnings, cash flow, book value,
or dividend yield.
Historically, Dreman claims, stocks that are cheap by any of these measures have
tended to
outperform the market average, although this is disputed by those who believe th
e stock market is
efficient and therefore impossible to beat except by accident. Dreman devotes ma
ny pages to
debunking their research. He offers a new refinement of his low-price strategy,
which involves picking
the cheapest stocks within industries, to create a diversified, contrarian portf
olio. Contrarian
Investment Strategies: The Next Generation is full of practical and provocative
advice, but some of its
most interesting passages delve into the abstruse findings of cognitive psycholo
gy. This research has
proven that we are woefully inadequate as intuitive statisticians. Interpreting
data to make predictions
about the probability of future events, we consistently make the same mistakes.
For example, we
exaggerate the likelihood that current trends will continue, even when they are
historically exceptional.
(Logic dictates that trends are more likely to regress toward the mean.) This f
allacy explains why most
Wall Street insiders were gloomiest about stocks in 1981, after six years of fal
ling prices, just before
the beginning of the greatest bull market ever. Is today's widespread optimism a
mong investors a
reason for caution? Dreman thinks so. It seems our brains are hard-wired to unde
rperform the
market. That's why few investors can keep to a contrarian approach. Dreman recom
mends buying
stocks when prices fall, the worse the panic the better. But that requires overr
iding powerful instincts.
Besides reflecting Dreman's wide reading in finance, psychology, and history, hi
s book also displays
his sometimes windy and self-important writing style. At 464 pages, the book is
not a quick read. But
its intellectual depth and thoroughly tested advice make many other investment b
ooks look paltry and
superficial by comparison. Serious, independent investors will find it rewarding
. --Barry Mitzman
Low Price - Click Now!