Dreman on Why to Buy Bank Stocks, and How the Credit Crisis has Hurt Value Investors

Showing the contrarian bent that made him one of the most successful investors of all time, David Dreman says it’s time for investors to jump into banking stocks. “They will come back at some point. It’s essential to the economy,” Dreman tells Q1 Publishing. “We need a banking system we’re confident in. We can’t work without a banking system. We can patch it up for a while and the government will probably take some stake in a lot of these banks they already had, but we need a banking system. So I would buy banks.” Dreman says he wouldn’t go […]

What Does It Mean to be a Value Investor?

In a piece written for Forbes.com’s “Gurus’ Guide to 2009“, John Heins and Whitney Tilson do a great job in examining just what makes an investor a value investor. While value investors come in all shapes and sizes — large-cap, small-cap, activist, non-activist, U.S.-focused, foreign-focused — Heins and Tilson list 12 similarities they share. A sampling: They focus on intrinsic company value and buy only when there is a substantial margin of safety, rather than trying to guess where the herd will go next. They understand and profit from reversion to the mean rather than projecting the recent past indefinitely […]

Ben Graham Portfolio at Top of The Charts

I always find it interesting to look at the guru portfolios I run on Validea, and ask the question “what is working” now? Over the last month, in a period where the S&P is up 0.4%, 11 out of Validea’s 13 portfolios have outperformed. The best performer is my Ben Graham strategy, up 9.4%. Incidentally, the Graham portfolio is also the best long term performer (up 89.3 percent vs. -12.9% for the S&P since July 15, 2003). The table below shows the performance of the 10-stock portfolios I run over the last 30 days. In looking at the specifics, Graham’s […]

Buffett’s “Timeless” Predictions

CNBC.com outlines eight timeless predictions by Warren Buffett on its Warren Buffett Watch blog. While CNBC labels these as predictions, we tend to think of these more like lessons that Buffett offers up to long-term stock market investors. After a year like 2008, Buffett’s lessons provide some perspective on dealing with recessions, bear markets and investor psychology. 1. Recessions can’t be avoided forever. 2. We’ll survive current and future recessions just as we’ve survived past problems. 3. Recessions will create opportunities. 4. All stocks won’t be cheap. 5. The crowd will make mistakes. 6. Investors will mistakenly think falling stock […]