Read Contrarian Investment Strategies: The Classic Edition by David Dreman Online


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 1988 -- thDavid 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 1988 -- the number one equity-income fund among all 208 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." Dreman reveals a proven, systematic, and safe way to beat the market by buying stocks of good companies when they are currently out of favor. 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 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 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....

Title : Contrarian Investment Strategies: The Classic Edition
Author :
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ISBN : 9780684813509
Format Type : Hardcover
Number of Pages : 464 Pages
Status : Available For Download
Last checked : 21 Minutes ago!

Contrarian Investment Strategies: The Classic Edition Reviews

  • Yang Ming Wen
    2019-05-23 04:52

    David Dreman's Contrarian Investment Strategy should occupy the 3rd place in the Hall of Investment Classics, which puts it only after Graham's Intelligent Investor and Fisher's Common Stocks and Uncommon Profits. 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. "Rational market", as the basic assumption the Efficient Market Hypothesis (EMH), is also the hypothesis cornerstone. 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). They have been grouped into 3 categories: Psychology in Group Thinking, Psychology in Statistics and Psychology in Investments. I hope such list can be used as a quick reference this great work of Dreman?€?s. 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.), which requires social proof to uphold. 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 SimonHuman 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. "We only see what we set out to see." Humans are much worse in solving configural problem, when different aspects of the problem interact, than serial problem, when a complex problem can be broken down sequential steps. (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.Avoid over-reliance on non-reprehensive data (data drawn from a small sampling size or from only a short period of time)Avoid over-reliance on unreliable or irrelevant case data Avoid over-emphasis on abnormally high / low one time data deviated sharply from the norms, because such abnormally is bond to regress back to the mean. Data with a higher variance are no less reliable that data with a lower variance, in determining trends / averagePeople count more on experience that they can remember: recent, vivid or emotionally charged. 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.

  • Steve Bradshaw
    2019-04-25 00:06

    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 essence invest in low P/E, low P/CF, low P/BV and high DY stocks that have strong balance sheets and good defensible business models - nothing new here but he does a great job laying it all out alongside the research. 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-90'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.

  • Yushi Wei
    2019-05-21 00:56

    Very very good book! Despite it being written almost 20 years ago, the strategies outlined here are still applicable. Remember to think for yourself and do not follow the crowd!

  • Joel Gray
    2019-04-26 04:44

    STATISTICS DRAG US TOWARD THE VALUE CAMP BUT OUR EMOTIONS JUST AS SURELY TUG US THE OTHER WAY.Hindsight bias seriously impairs proper assessment of past errors and significantly limits which can be be learned from experience.Treasury bills, supposedly the safest investment there is, have cost investors 77% of their purchasing power since 1946.The excessive use of credit is the first of many destructive characteristics most bubbles have in common.The Nasdaq fell 83% from 1996 to 2002.When the enormous surge of speculative enthusiasm ends and the bubble begins to implode the crowd becomes as extreme in its panic as it was euphoric.Graham- don't buy a stock with a PE >20x regardless of its outlook.Recency - people think disasters are more likely because they have happened recently. The recent trend is thought to be the new permanent trend.Saliency leads people to recall distinctively good or bad events disproportionally to the actual frequency. It is so automatic that we barely recognise we are doing it.In 1999 and Q1 2000 the average IPO premium was 90%. This compares to 10% historically and 20% from 1994-1998. The recency and saliency of the enormous price movements resulted in investors vividly recalling the share gains these stocks provided while downplaying the considerable risks.The average return for an IPO from 1970-1990 was 5%pa vs 10% pa for a non-IPO stock.Recency and saliency play a big part in IPO investing. Generally supply increases at our near market highs.Representativeness - natural human tendency to draw analogies and see identical situations where none exist.The smaller the sample used t he more likely the findings are to be chance rather than meaningful.Volatility takes inputs that seemed to correlate with it in the past and states that it will work again in the future.With contrarian investing diversification is essential - 30 to 40 stocks.When managers look at the downside, they generally describe a mildly pessimistic future, rather than the worst possible future.Getting what you expected produces no dopamine rush. Unexpected event do and can lead to emotional behaviour - over-reactions.Never buy a company that is losing money.There are very few traders who want to sell puts on the market so the cost of buying is normally high.

  • Brian Zheng
    2019-05-01 00:56

    This book is updated recently by the author, David Dreman, a pioneer on behavioral investing and a true contrarian. He used well-organized studies to argue against the Efficient Market Hypothesis and CAPM. Although EMH has been disproved by black swan events in many circumstances, it still has a large support base due to the lacking of a better theory. CAPM was rejected by Eugene Fama, father of EMH as early as 1992, who stated that "Beta as the sole variable in explaining returns on stocks is dead." Beta/volatility, although a good measure of the daily fluctuation of the stock or market risk, has limited explaining power on long term risk and return.The author's extensive research supports that deep value stock with low P/E, P/BV, P/CF and High yield will outperform the market over the long run. He showed that a positive surprise has much more impact on low P/E stocks compared to high P/E stocks, while a negative surprise has much bigger impact on high P/E stocks. He also showed that compared to the initial event trigger (the surprise), a reinforcing event has limited impact to the performance. Thus continued good news has limited impact on a high flyer with high PE, but a negative surprise will hammer the stock. With this psychological factor in mind, by buying deep value stock with existing negative sentiment, an investor will have limited downside even when bad news continues but will have substantial upside gain if there is any good surprise.

  • Steve
    2019-05-01 23:08

    Dreman makes a good case for Low P/E, P/B, P/CF and high Yield stocks, urging buying lowest quintile stocks in each.This 2012 update is useful because he spends time discussing the current economic conditions and offering some strategies.Basically he states to stay away from bonds and use stocks and real estate for the inflation he expects. Not a fan of the Goldman Sachs crowd. That alone earns kudos from me.

  • Tirath
    2019-05-07 02:43

    It's a good book for newbies in the investment world or for people who are disillusioned with growth investing prospects or for retail/ passive/ hobby investors.I expected much more from the book but it kept going on and on about low P/E, low P/BV, low P/Cash flow strategies and how they make more sense than growth investing. And then it went on about the recent 2008-09, etc crisis. It's a decent book for the library - not much else.

  • Will
    2019-05-02 21:52

    Outstanding. Dreman cuts through the clutter of prevailing investment fads and delivers a solid approach to investing based on his experiences and careful statistical research. My only wish is that I had read his newl updated 2012 book, which seems to be receiving excellent reviews on Goodreads too.

  • Randy
    2019-04-27 02:58

    Excellent, though it fails to tell the whole story. Beware of market manipulation....

  • Alan Deng
    2019-05-12 00:10

    Fallacies in investments. Psychological detrimental factors that prevent one from being a successful investor. All common sense but difficult to be executed.

  • Jeffrey
    2019-05-15 22:11

    Basically a book on value, buy and hold investing.

    2019-05-14 21:47

    On Contrarian Investment Strategy

  • pavana Kumar Varanasi
    2019-05-09 01:55

    A very good basic introduction on how value strategies outperformed all other strategies etc.

  • Harsh Thaker
    2019-05-06 01:45

    Key take away is the difference is a great investor knows when to be a contrarian & when to be a conformist whereas a less successful value investor doesn’t