David Dreman born is an investor , who founded and is Chairman of Dreman Value Management, an investment company. Dreman has published many scholarly articles and he has written four books. Dreman also writes a column for Forbes magazine. Dreman is on the board of directors of the Institute of Behavioral Finance , publisher of the Journal of Behavioral Finance.
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Goodreads helps you keep track of books you want to read. Want to Read saving…. Want to Read Currently Reading Read. Other editions. Enlarge cover. Error rating book. Refresh and try again. Open Preview See a Problem? Details if other :. Thanks for telling us about the problem. Return to Book Page. 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 performance.
His Kemper-Dreman High Return Fund has been the leader since its inception in -- th David Dreman's name is synonymous with the term "contrarian investing," and his contrarian strategies have been proven winners year after year.
His Kemper-Dreman High Return Fund has been the leader since its inception in -- the number one equity-income fund among all ranked by Lipper Analytical Services, Inc. Dreman 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 market 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 investors how to outperform professional money managers and profit from potential Wall Street panics -- all in Dreman's trademark style, which The New York Times calls "witty and clear as a silver bell.
At the heart of his book is a fundamental psychological insight: investors overreact. Dreman demonstrates how investors consistently overvalue the so-called "best" stocks and undervalue the so-called "worst" stocks, and how earnings and other surprises affect 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 bear markets, as well as delivering superior returns when the bull roars. Why a high dividend yield is just as important for the aggressive investor as it is for "widows and orphans.
Why Initial Public Offerings are a guaranteed loser's game. Why you should 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. Based on cutting-edge research and irrefutable statistics, David Dreman's revolutionary techniques will benefit professionals and laymen alike. Get A Copy. Hardcover , pages. Published May 18th by Free Press first published January 12th More Details Original Title.
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Showing Average rating 3. Rating details. More filters. Sort order. Jul 25, Yang Ming Wen rated it really liked it. The most important value of this book is Dreman's commitment into the treacherous water of "market irrationality", which both Graham and Fisher recognized, but neither made serious attempts to explain. Through this book, Dreman systematically demonstrated the absurdity of such an assumption, and proved that the market is everything but rational.
This landed a crucial piece of theoretical support on fundamentalists analysts like Graham and Fisher, whose investment thesis lies on the mis-valuation of the market. I tried to extract points from the book, which I believe are either unique or original as far as the field of investment concerns.
I hope such list can be used as a quick reference this great work of Dreman? Psychology in Group Thinking: Gustave LeBon's theory of "psychological crowd" Crowds think, and only think, in images. To capture the crowd, this image must be extremely simple. Crowds scarcely distinguish between the subjective and the objective. Individuals in the crowd are primitive beings. Our beliefs, values and attitudes can be thought to lie along a continuum.
On the one end, there are "physical reality", which are abundantly clear and do not require other people's confirmation. On the other end, there are those lack of firm support "social reality" like the existence of God, etc. The more vague and complex the situation is, the more we rely on other people whose intelligence we respect. This tends to comfort people, as it reduces the level uncertainty. When the dependency on physical realty is low, the dependency on social reality is bond to be high, as man, psychologically, can only take up to a certain level of uncertainty.
The "autokinetic effect" experiment on the convergence of opinion in group: People who are liked like bias , who have high status authority bias , who are reputed to be competent on the judgmental task authority bias or who merely exude self-confidence are more effective in influencing others. The opinion of a group "converges" as the group interacts. Nobel Laureate Herbert Simon Human processes very small proportion of info he receives.
The filtering process is NOT passive, which provides a pretty reasonable representation of the real world, but active. So one should always try to transfer a complex configural problem into a serial problem before trying to solve it Psychology in Statistics: Amos Tversky and Daniel Kahneman's "law of small numbers" - when too much faith has been put on too small sampling size.
When analyzing, one should try to avoid drawing conclusion bases on too small sampling size law of small numbers , or drawing conclusion from unreliable or irrelevant "case rate" the available info in a specific situation. The more "case rate" is considered to be unreliable, the more one should rely on the "base rate" in general info statistical for the entire category.
Psychology in Investment: The realignment of price and value is neither immediate nor consistent. Take both time and some random walk. People prefer to see strong and immediate correlation between the price and the perceived value of a stock, as it offers an immediate explanation reason bias of the prevalent phenomenon, which provide comfort psychologically by reducing the level of uncertainty. The school technical analysis views that all fundamental information about a security has already been reflected in the price.
Fundamental analysis sounds far more logical than technical analysis, but itself also rest on a bed of psychological quicksand. Nov 30, Steve Bradshaw rated it it was amazing Shelves: investment. Dremen's name is eponymous with successful contrarian investing and this book methodically shows why along with the impressive records of the Kemper-Dremen funds. A modern Ben Graham, Dremen is driven by fundamentals and underlying data, an approach that oddly marks him as a contrarian investor in today's emotion-driven markets.
Contrarian Investment Strategies provides a clear synthesis of the research that backs value investing. It also packs a good dose of simple executable advice - in essen Dremen's name is eponymous with successful contrarian investing and this book methodically shows why along with the impressive records of the Kemper-Dremen funds.
One of the strongest sections of the book showed how value stocks weathered negative earnings surprises and leapt at positive surprises, while growth and concept stocks hardly budged at positive earnings surprises and plummeted on misses. This is something I've noticed anecdotally, but it's pleasing to see in the research - and, of course, provides a big justification for value investing through times of turmoil.
Backing up the data is a lengthy but good discussion on investor psychology along the lines of Shiller's Irrational Exuberance that goes through the main behavioral biases that provide opportunities for value investors. The book ends by exposing the pitfalls of IPOs, small caps and index investing. All in all, I believe the book remains as relevant today as it was in the mid's, particularly as the IPO market gears up again, this time with social networking stocks.
It's as good a starting point as any if you're interested in investing in stocks for the long run. Dec 29, Liam Polkinghorne rated it really liked it.
Predictable, systematic investor errors stem from psychology, notably overreaction, overconfidence and inability to process complex data. Even understanding these forces, it is hard to stay unaffected by psychological pressures. Consistently push up the prices of the best stocks and ignore the poor stocks - not being able to see any issues pushes prices up to levels that are too high. If there is total pessimism, any good news will result in prices rebounding.
Low PE, low price to book value, lo Predictable, systematic investor errors stem from psychology, notably overreaction, overconfidence and inability to process complex data. Low PE, low price to book value, low price to cash flow, dividend yield. They extrapolate positive or negative outlooks well into the future, pushing prices of favoured stocks to excessive premiums and out of favour stocks to deep discounts. After earnings of other surprises, investments previously considered to be the best underperform, while those considered to be the worst significantly outperform, as both regress towards a more average valuation.
The hypothesis also states that the maximum price swing is produced by negative surprises on best stocks and positive surprises on worst. Finally, the overreaction hypothesis holds that even without the occurrence of an event trigger, the best and worst investments regress towards the market average. It is not changes in underlying outlooks that appear to be the primary cause of the major price re-evaluations of best and worst stocks, rather it is the overreaction to the exciting or lacklustre prospects of companies that often results in best stocks being priced too dearly, and worst stocks much too cheaply.
The push toward an average rate of return is a fundamental principle of competitive markets. Author prefers an eclectic approach, adding five fundamental research indicators to picking the low PE stocks: strong financial position, favourable operating and financial ratios, higher earnings growth, conservative earnings estimates, above average dividend yield.
Your Ultimate Guide to David Dreman Investing
Investing Book Summaries. The complete opposite of their prophecies are often what plays out. Hence, David explains that these experts are extremely skilled at being wrong. Furthermore, analysts are often blacklisted from receiving information from companies that they have granted a sell recommendation. For these reasons, there are 7 times as many buy recommendations than there are sell recommendations. Increase that streak to 10 quarters in a row, and your chances are 1 to , Be the contrarian fish who swims upstream The previous section was a long run-up to the message: Forget the experts!
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Contrarian Investment Strategies: The Classic Edition
David Dreman, author and money manager, wrote one of the seminal books on contrarian investing, "Contrarian Investment Strategies: The Next Generation". We've studied, extracted and computerized the methodology allowing stocks to be screened and ranked based on the value method. A contrarian style of investing has had a tough run since the financial crisis, but that could lead to an interesting opportunity when value stocks eventually turn. It almost always has to do with the fact that they're able to make good decisions and be correctly contrarian in adversity. Put another way, choosing unpopular stocks to invest in doesn't ensure you'll make money, but using solid, fundamental analysis as part of your decision-making process can help you be "correctly" contrarian. In his book Contrarian Investment Strategies: The Next Generation , famed contrarian investor and longtime Forbes columnist David Dreman delves into investor psychology and outlines a deep value, contrarian investment methodology for stock selection.