Fundamentally Strong Picks for the Contrarian Investor

The Citigroup Economic Surprise Index, which measures how current economic data is comparing to expectations, is on the rise along with investor confidence regarding the expanding economy, writes Validea CEO John Reese in a recent article for Forbes. Historically, however, markets perform best not during times of economic expansion, but rather when the economy is improving despite lower expectations, writes Reese. When things are going relatively well, he argues, “forecasters tend to extrapolate forward using recent trends and assume the good news will continue.” Reese outlines the contrarian investment approach of guru David Dreman, who argues that investors can beat […]

Contrarian Picks Based on David Dreman’s Philosophy

The famous investor David Dreman, who Kiplinger once referred to as the “consummate contrarian”, follows a strategy which capitalizes on the emotional, knee-jerk reactions that make unpopular stocks underpriced, writes Validea CEO John Reese in TheStreet. This is no coincidence, given Dreman’s knowledge and experience in the area of behavioral finance. Dreman identifies such undervalued companies, Reese explains, by comparing their share prices to four different financial variables that gauge the strength of the underlying business: earnings, cash flow, book value and dividend yield. Reese describes the findings of studies conducted by Dreman from 1970 to 1996 and elaborates on […]

Murky Outlook Suggests Selecting Value Stocks Says Dreman

David Dreman of Dreman Value Management says, “the outlook for the market couldn’t be murkier” in a Forbes column. He notes that corporate revenues and profits for the S&P 500 are slightly down from 2014 to 2015, but that the P/E ratio for the S&P 500 is above its long-term average. Overall, he predicts “that 2016 will be a year without significant movement up or down.” Further, he recommends value stocks, particularly in cyclical, energy companies, and mining outfits. Along with noting their cheap price and highlighting the importance of investing in solid companies, he observes that it is possible […]

Dreman: It's Time To Buy Banks

Contrarian guru David Dreman says that, while he sees a couple of big economic risks for the US right now, he’s still bullish on the stock market. Why? Because there just aren’t other attractive options. In his latest Forbes column, Dreman says that the lack of wage growth for the middle and working classes and misguided Federal Reserve policies are big concerns. But there’s nowhere else to turn for decent returns, he says. “The chance of a 5% to 10% return on equity investments sure beats 3% on 30-year Treasurys,” he writes. “Remember that inflation is the enemy of long […]

Dreman: It’s Time To Buy Banks

Contrarian guru David Dreman says that, while he sees a couple of big economic risks for the US right now, he’s still bullish on the stock market. Why? Because there just aren’t other attractive options. In his latest Forbes column, Dreman says that the lack of wage growth for the middle and working classes and misguided Federal Reserve policies are big concerns. But there’s nowhere else to turn for decent returns, he says. “The chance of a 5% to 10% return on equity investments sure beats 3% on 30-year Treasurys,” he writes. “Remember that inflation is the enemy of long […]