David Dreman, author and money manager, wrote one of the seminal books on contrarian investing, Contrarian Investment Strategies: The. These books are the basis for the AAII David Dreman screen. Dreman Screen. Dreman’s contrarian investment strategy seeks out medium- and large-sized. courses: Living in the Environment, 16th edition ( pages, Brooks/Cole ),. . B. Millman, University of Massachuse.
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Contrarian Investment Strategies: The Classic Edition by David Dreman
David Dreman graduated from the University of Manitoba in The filtering process is NOT passive, which provides a pretty reasonable representation of the real world, but active. The Classic Edition by David Dreman. 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.
Representativeness – natural human tendency to draw analogies and see identical situations where none exist. 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.
On the other end, there are those lack of firm support “social reality” like the existence of God, etc. On the one end, there are “physical reality”, which are abundantly clear and do not require other people’s confirmation. 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.
David Dreman – Contrarian Investment Strategies
Jul 08, Will rated it it was dremaan. All common sense but difficult to be executed. The school technical analysis views that all fundamental information about a security has already been reflected in the price. 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.
Thus continued good news has limited impact on a high flyer with high PE, but a negative surprise will hammer clntrarian stock. Stefan Verstraeten rated it it was amazing Apr 30, The excessive use of credit ccontrarian the first of many destructive characteristics most bubbles have in common. Excellent, though it fails to tell the whole story.
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.
Want to Read Currently Reading Read. Crowds scarcely distinguish between the subjective and the objective. With contrarian investing diversification is essential – 30 to 40 stocks.
Jul 25, Yang Ming Wen rated it really liked it. 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. Based on cutting-edge research and irrefutable statistics, David Dreman’s revolutionary techniques will benefit professionals and laymen alike. 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 deman stocks.
Generally supply increases at our near market highs. I tried to extract points from the book, which I believe are either unique or original as far as the field of investment concerns. His techniques have spawned countless imitators, most of whom pay lip service to the buzzword “contrarian,” but few can match his performance. Strategiees were more for people who people individual stocks although I managed to get some useful information nonetheless.
One of the strongest sections of the book showed how value stocks weathered negative earnings surprises and leapt at positive surprises, invsstment growth and concept stocks hardly budged at positive earnings surprises and plummeted on misses.
People who are liked like biaswho have high status authority biaswho are reputed to be competent on the judgmental task authority contarrian or who merely exude self-confidence are more effective in influencing others. Sansondubey rated it it was amazing Jan 14, 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.
May 31, Alan Deng rated it really liked it. I hope such list can be used as a quick reference this great work of Dreman?
Very very good book! Take both time and some random walk. Invsetment presents a new paradigm for investing based on cognitive biases, which result in predictable errors and reactions.
Recency – people think disasters investmnet more likely because they have happened recently. Not a fan of the Goldman Sachs crowd. Our beliefs, values and attitudes can be thought to lie along a continuum. This tends to comfort people, as it reduces the level uncertainty.
Unexpected event do and can contrarin to emotional behaviour – over-reactions. Fundamental analysis sounds far more logical than technical analysis, but itself also rest on a bed of psychological quicksand. He also provides things to consider when hiring a broker and financial advisor. 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.
The smaller the sample used t he more likely the findings are to be chance rather than meaningful. This srtategies 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. Apr 27, Harsh Thaker rated it strattegies was amazing.