David Dreman - Contrarian Investor

David Dreman Strategy Explanation Video

Dreman's Kemper-Dreman High Return Fund was one of the best-performing mutual funds ever, ranking as the best of 255 funds in its peer groups from 1988 to 1998, according to Lipper Analytical Services. At the time Dreman published Contrarian Investment Strategies: The Next Generation, the fund had been ranked number one in more time periods than any of the 3,175 funds in Lipper's database. In addition to managing money, Dreman is also a longtime Forbes magazine columnist.
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Since 2003, this portfolio has returned 116.0%, underperforming the market by 148.3% using its optimal tax efficient rebalancing period and 20 stock portfolio size.

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Contrarian
S&P 500
* Returns are model returns and do not reflect actual trading. Full performance disclaimer

David Dreman - Contrarian Investor

Validea used the investment strategy outlined in the book Contrarian Investment Strategies written by David Dreman to create our Contrarian Investor portfolio.

Dreman believed that investors are prone to overreaction, and, under certain well-defined circumstances, overreact predictably and systematically. They typically overvalue the popular stocks considered the "best", and undervalue those considered the "worst", often going to extremes in these over- and under-valuations. Because of that, he focused on stocks that most investors were shunning -- those with low price/earnings, price/book, price/dividend, and/or price/cash flow ratios. Then, to separate stocks that had been beaten down because of investor overreaction from those that were outright dogs, he applied a number of other fundamental tests, looking, for example, for a high current ratio, high return on equity, high pre-tax profit margins, and a low debt/equity ratio.

David Dreman Strategy Description Video

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Performance Disclaimer: Returns presented on Validea.com are model returns and do not represent actual trading. As a result, they do not incorporate any commissions or other trading costs or fees. Model portfolios with inception dates on or after 12/30/2005 include a combination of back tested and live model returns. The back-tested performance results shown are hypothetical and are not the result of real-time management of actual accounts. The back-testing of performance differs from actual account performance because the investment strategy may be adjusted at any time, for any reason and can continue to be changed until desired or better performance results are achieved. Back-tested returns are presented to provide general information regarding how the underlying strategy behind the portfolio performed in our historical testing. A back-tested strategy has the benefit of hindsight and the results do not reflect the impact that material economic or market factors may have had on advisor's decision-making if actual client assets were being managed using this approach.

Optimal portfolios presented on Validea.com represent the rebalancing period that has led to the best historical performance for each of our equity models. Each optimal portfolio was determined after the fact with performance information that was not available at portfolio inception. As a result, an investor could not have invested in the optimal portfolio since its inception. Optimal portfolios are presented to allow investors to quickly determine the portfolio size and rebalancing period that has performed best for each of our models in our historical testing.

Both the model portfolio and benchmark returns presented for all equity portfolios on Validea.com are not inclusive of dividends. Returns for our ETF portfolios and trend following system, and the benchmarks they are compared to, are inclusive of dividends. The S&P 500 is presented as a benchmark because it is the most widely followed benchmark of the overall US market and is most often used by investors for return comparison purposes. As with any investment strategy, there is potential for profit as well as the possibility of loss and investors may incur a loss despite a past history of gains. Past performance does not guarantee future results. Results will vary with economic and market conditions.