The Greatest Investors: David Dreman
|Most Famous For:||David Dreman\'s name is synonymous with contrarian value investing strategies. His first book, "Contrarian Investment Strategy: The Psychology of Stock Market Success" (1980) is an investment classic. He has authored numerous scholarly investment articles in the Journal of Investing, Financial Analysts\' Journal and The Journal of Financial Behavior. Dreman has also written the highly respected "The Contrarian" column in Forbes magazine for some 22 years.|
It is reported that Dreman came to contrarian investing the hard way. In 1969, Dreman, a junior analyst at the time, was following the crowd as the shares of companies with negligible earnings skyrocketed. He is quoted as saying, "I invested in the stocks du jour and lost 75% of my net worth." As a result of that painful lesson of following the herd, he became fascinated with how psychology affects investor behavior and became a contrarian investor. (For related reading, see Finding Profit In Troubled Stocks.)
In an interview for Kiplinger's Personal Finance Magazine in 2001he explained his approach: "I buy stocks when they are battered. I am strict with my discipline. I always buy stocks with low price-earnings ratios, low price-to-book value ratios and higher-than-average yield. Academic studies have shown that a strategy of buying out-of-favor stocks with low P/E, price-to-book and price-to-cash flow ratios outperforms the market pretty consistently over long periods of time."
- "Contrarian Investment Strategy: The Psychology of Stock Market Success" by David Dreman (1980)
- "The New Contrarian Investment Strategy" by David Dreman (1982)
- "Contrarian Investment Strategies: The Next Generation by David Dreman (1998)
"Psychology is probably the most important factor in the market – and one that is least understood."
"I paraphrase Lord Rothschild: ‘The time to buy is when there's blood on the streets.'"
"One of the big problems with growth investing is that we can't estimate earnings very well. I really want to buy growth at value prices. I always look at trailing earnings when I judge stocks."
"If you have good stocks and you really know them, you'll make money if you're patient over three years or more."
The Greatest Investors: Philip Fisher
The practice of targeting large companies or customers.
A clearly defined route to profitability as described in a business ...
A freelancer is an individual who earns money on a per-job or ...
Known as "the Oracle of Omaha", Buffett is Chairman of Berkshire ...
Donation-based crowdfunding is a way to source money for a project ...
An insurance syndicate that bases its organizational structure ...
Understand what a company's breakeven point is and what its payback period is. Learn why a company would want to track both ...
Discover how syndicated loans work, why they are beneficial for businesses, and what is considered a reasonable interest ...
Find out why it is important to safeguard your general partnership in the even that one member becomes disabled, dismembered ...
Discover the significant barriers to entry, such as the necessity for high capital expenditures, for new companies in the ...