David Dreman

Investment Style
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.

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."

Publications
-> "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)