Rational Advisor

Yep, I am off again

This time to meet one of my favrote investment guru’s David Dreman

Here’s an excerpt about him from the web

David Dreman

This expatriate Canadian wrote the book - literally - on contrarian investing. His key finding? You can achieve great results by choosing cheap stocks that the market hates.

After graduating from the University of Manitoba in the 1950s David Dreman got his start as an analyst at his father’s Winnipeg-based commodities trading firm. But Wall Street beckoned and he soon moved stateside where he has run a money management firm in Jersey City, N.J., for decades.

Dreman is perhaps best known as an author. His Contrarian Investment Strategies: The Next Generation deserves a spot on every investor’s bookshelf. But he’s no slouch when it comes to putting his book learning to the test and beating the market. His firm’s large-cap value composite has bested the S&P 500 index by an average of 3.9 percentage points annually over the last 10 years, before fees. His small-cap value composite beat the Russell 2000 by 6.6 percentage points over the same period.

Dreman looks for stocks with low price-to-earnings ratios (P/E). These stocks are typically out of favor with investors for one reason or another. But often that’s because investors have overreacted to bad news. As a group, low P/E stocks have a tendency to bounce back and perform well. In fact, Dreman calculates that U.S. stocks with the lowest 20% of P/E ratios provided average annual returns of 16.8% from 1920 to 2004, beating the market by four percentage points.

You might think that people would look at those figures and be lining up to buy low P/E stocks. The reality, though, is that investing in these firms requires courage. A good example is Dreman’s investment in Altria, the cigarette company formerly known as Philip Morris. Altria has been a phenomenal performer over the long term, but it’s been pummeled in recent years by tobacco-related litigation. You have to be confident in your judgment to buy a stock like Altria in the face of such overwhelming uncertainty.

Buffett and Dreman on Financials
http://www.lacontra.net/2007/12/30/buffett-dreman-and-financials/

The Six greatest Value investors

http://www.bloomberg.com/apps/news?pid=10000039&refer=columnist_dorfman&sid=av_uz5ifDbJE

The greatest investors ever
http://archives.tcm.ie/businesspost/2004/03/14/story233976334.asp

Really looking forward to it.

While I am there I will also be meeting with
Credit Suisse and Citigroup

Catch up with you later

Rational

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