Rating: 
Summary: Enter the 'Green Room' of Investing
Review: "Contrarian Investment Strategies: The Next Generation" is an excellent investing book by David Dreman. Dreman mentions the stock market went nowhere for the seventeen years prior to 1982. This is a reality that many "investors" couldn't imagine, until recently. Dreman says, "Before all else, a successful strategy requires a strong defense: it must preserve your capital." Preservation of Capital is a key factor that many ride-the-hot-IPO investors missed. Many investors are seeking excitement in the "red" room of investing. In "Contrarian Investment Strategies," Dreman uses a hypothetical example of a casino with two rooms. One room, the "green" room lacks excitement, but stacks the chances of success in favor of the gambler. Few people are in the green room placing their bets, and the casino manager says it's a good thing, too, because the casino would go broke if people participated. The other room is active and exciting, but in the "red" room, the odds are stacked in favor of the casino and people tend to lose. Most investors spend their time in the "red" room of investment because they are seeking excitement. Long-term, this fails to build wealth. Dreman introduces investors to the green room of investing-- contrarian investing. Dreman shows that technical analysis doesn't work. (So, what else is new? We knew this.) But, then Dreman goes on to examine the performance of professional money managers, most of whom use fundamental analysis. After allowing for the fact that career pressures and short-term performance demands significantly affect professional stock analysts, Dreman concludes professional fundamental analysts are still bound to fail simply because the great majority of people are very incapable of effectively processing large amounts of data and coming to a meaningful and accurate conclusion about the meaning of the data. Yet, the more specific information investors are fed, the more confident they become in their predictions of a stock's behavior and value. Note, we said, they become more confident, not any more accurate. Effective securities analysis is impossible due to the scope of the endeavor. For example, Dreman casually mentions of Hewlett Packard, "In 1996, it had revenues of over $38 billion and net profit of $2.675 billion and employed 102,300 people domestically and abroad. Foreign sales in 75 countries accounted for 56% of total revenue." Do you really think you can do fundamental analysis of such a company? Dreman goes on to show that most analyst's earnings' estimates for the next upcoming quarter are usually off significantly and that valuation methods demanding precision are very dubious. Further, Dreman notes that often company earnings follow their own random walk and that you can't use the past to predict the future in today's dynamic economy. So, what's an investor to do? Take advantage of the one thing you can be certain of--the chronic overreaction of other investors. Buy out-of-favor stocks, as measured by low price-to-earnings ratios, low price-to-book values, low price-to-cash-flow ratios, or high dividend yields. Surprisingly, Dreman doesn't mention price-to-sales ratios at all, despite the fact that much evidence supports their use as a great measure of value. Dreman points out that volatility is not the best measure of investment risk for the investor and he destroys the efficient market hypothesis and that higher reward is correlated with higher risk. Dreman suggests that one category of stocks, GARP stocks (Growth at a reasonable price), can offer both value (i.e., low risk) and significant appreciation potential. The pharmaceutical stocks of 1993 are an example. These pharmaceutical companies offered significant capital appreciation potential, solid financial positions, and high dividend yields. Buying out-of-favor GARP stocks "allows you the possibility of a home run, while staying safely in the value camp." "Contrarian Investment Strategies" offers an eclectic investment strategy based upon Dreman's approach to investing. Dreman recommends using some basic fundamental analysis to assure the out-of-favor companies you buy are financially strong. This book should be read by any serious investor who wishes to move into the "green" room of investing. Peter Hupalo, Author of "Becoming An Investor: Building Wealth By Investing In Stocks, Bonds, And Mutual Funds"
Rating: 
Summary: This book provides you with an excellent strategy
Review: As one of the best in the industry, David Dreman did a very good job in underlying the strategy used in contrarian investing. He present a lot of good stats about contrarian investments strategy. One thing that I would like to mention, I think with his reputation, he is capable to get deeper than what had been illustrated in this book. A low P/E ratio does not means a low "reported accounting" earnings. You need to make adjustments to financial statements. Similar situation also applied to low P/BV. David Dreman's strategy is very similar to those of the Graham and Doddville, especially Tweedy Browne, Michael Price, Peter Cundill and other value investors. His strategy is similar to mine. I give this book a four stars, because I believe that there are level of depth on every books about investments that are written. If you had been doing research for some time like I do, this book would be rated between beginners and intermediate level. If you are intermediate or advance level, try Benjamin Graham's Security Analysis. It will be a very good challenge.
Rating: 
Summary: Catch the falling knife
Review: Google, the world's most-used Web search engine, plans to raise up to $3.3 billion in an initial public offering, which would value the company at about $36 billion. Now the question looms, should you jump on the bandwagon and buy yourself a piece of Google? Here are some hard facts: assuming Google sells its shares at the minimum offering price of $108, the stock's Price-to-Earnings, or P/E, ratio will be 108. Which means that it will take the company 108 years to earn the price of its projected initial market valuation.
Why, then, are so many people still willing to make that bet? And have been willing to make that bet throughout history even though there are sure-fire investment opportunities available? This is where David Dreman's 'Contrarian Investment Strategies' steps in.
Dreman's major thesis is that contrary to the so-called efficient market theory, investors big and small overreact to market events. Powerful psychological forces play havoc on the human mind to the extent that most of us cannot make rational decisions when buying or selling stocks. But what about the professional investors, you wonder, the Security Analyst folks and other Wall-Street gurus; surely they, having devoted their lives to gauging the best possible deal, know what they are talking about. Not so, says Dreman. In fact, the majority of stock market analysts are in the wrong so consistently that their recommendations can be used as contrarian indicators, Dreman claims. Which really comes as no surprise to anybody after the 'New Economy' and the dot.com bubble.
What then is an investor to do? The answer, according to Dreman, is to go against the grain - a simple feat in theory, yet nearly impossible for a herd animal like the human being to accomplish in the real world. What you should do is buy when others are selling, and vice versa. Hence the title of the book, 'Contrarian Investment Strategies'.
You should look for unsexy, out-of-favor stocks, shunned by the irrational market for whatever reason. These stocks tend to appear boring, safe, uncool, and a lot other synonymous adjectives. What these stocks should have, Dreman says, is low P/E ratio, low Price-to-Book value, and a habitually high dividend yield. The markets will correct the undervaluation of these stocks over time, and their prices are more likely to go up in the event of positive news.
I found this book enlightening and well-written, even if it did not have many surprises in store for me, nor, I suspect, will it have many surprises for the majority of its target audience. And isn't that exactly the point? Most people know the facts and still cannot stick to the plan. The 'story' is always lurking out there, ready to pounce on the unsuspecting investor. You will walk into the red wing of Dreman's casino; you will buy into that Google story.
If one were to provide one point of criticism, it is perhaps best exemplified by the great bull market of the 1990s. Yes, in hindsight the market was grossly overvalued, but that fact doesn't provide much consolation if you missed out on the greatest run in stock-market history. So, it is not always enough to be in the right, sometimes it pays to be wrong along with everybody else as long as you remember to quit while you're still ahead.
Rating:
Summary: Timely advice, but what to buy now?
Review: Having just gone to 80% cash, and sold all Nasdaq stocks, I found Dreman's 'Contrarian Investing Strategies' an enjoyable read. He's a little disorganized in his presentation, but he's dead right about this market's behavior, particularly since March of 2000... Before that no one wanted to hear the contrarian/value message, and his funds were languishing (i.e.the Kemper Dreman Value... KDHAX). But he admits he's not interested in calling the top of a mania like the one weve just seen. The shoe is on the other foot now, and his 5 year record of 17.3%/yr has beaten the S&P (14.6%/yr) handily. After reading the book, I decided I didnt want to spend that much time on the markets, nor do I want to buy a fund like KDHAX with a 6% load and a 1.2% yearly fee. So I found a couple of similar value funds with no loads and lower fees... The Clipper fund CFIMX (18.9%/yr past 5 years) and the Oakmark Eq Inc fund (16.7%/yr for 5 years). Though right in the long run, contrarians may get too much press this year. The market may overly punish growth stocks, and the Nasdaq could become worth buying again... if it approaches 1000!! Im grateful Dreman for his insights, and staying in cash for now.
Rating:
Summary: A good Read
Review: I pretty well agree with the other reviews. One thing I found somewhat contradictory was that Dreman gives Graham and Dodd (and fundamentalists) bit of serve in the methods that don't work section. Yet it is Grahams method of low p/es and having a diverse portfolio of at least 25 stocks that Dreman espouses. This made his message a little confusing. Why not give credit where it is due. Ps I loved Dremans assualt on the chartists, talk about trying to read entrails.....
Rating:
Summary: David Dreman is a pro's pro
Review: I've written several books on investing and know how much research goes into the final product. David's books have always stood out as outstanding examples of everything a good investment book should be-filled with facts, not opinions; useful for novice and professional alike; and above all, beautifully written and thought out. David's works have stood the test of time and show that while fads may come and go, successful investing always comes back to understanding and controlling human nature. I highly recommend this and all of Dreman's books.
Rating:
Summary: Read this Book!
Review: If you read only one book on investing, this is it. Dreman backs up his thesis with experience and facts, and makes the point that companies and economies are unpredictable in the short run (i.e. forget market timing), and discusses risk in a realistic way. His point that stocks selling at low P/E, book value, and dividend yield react to market events in a very different way then high P/E, book value, no dividend stocks is something every investor should be aware of (I'll bet many have already learned the hard way). This book will limit your risk in the stock market and keep you out of investing "bubbles." You give up the 100%-200% gains per year which happens form time to time but these gains are illusory unless you are a successful market timer which is impossible.
Rating:
Summary: A must read if you go with the flow
Review: If you want to invest in stocks and not just buy mutual funds, Dreman's book is your guide. Current market activity clearly substantiates his opinions. The herd mentality is at work. While Dreman gives too much space to justify his stance, it is good reading for those who have never been contrarian stock pickers. His guidelines not only make good sense, but they've been proven correct over time. Don't buy another stock or fund without reading this book.
Rating:
Summary: Makes you step back reevaluate the market
Review: Much has been said about contrarian investment strategies, and just as it has begun to fall out of favor, Dreman has answered the questions. Offering in-depth analysis of current and past financial markets, Dreman provides well supported theories and strategies for beating the market. For those who can't justify following the absolute contrarian strategy, Dreman includes a new twist to the traditional which makes sense and has a proven history. This book is the most interesting I have read on the securities markets, and a must read, even if you are die hard anit-contrarian.
Rating: 
Summary: The author does not share
Review: One of the best books on investing and finance the individual investor will ever read. Fully documented and wonderfully researched, this is classic how-to book on long term investing. This is one for your home bookshelf.
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