Contrarian Investment Strategies: The Next Generation shows investors how to outperform professional money managers and profit from potential Wall Street panics.
Introduction:
The book is written for both the individual and the professional investor in what David Dreman hope is a nontechnical and easily readable style. There are a variety of strategies, some simple, others requiring more experience, but all should allow you to handily outperform the market-no small feat, as we shall see in the opening chapter. Even the detractors of contrarian methods concede this much.
The major thesis of this book is that investors overreact to events. Overreaction occurs in most areas of our behavior, from the booing and catcalls of hometown fans if the Chicago Bulls or any other good team loses a few consecutive games, to the loss of China and the subsequent outbreak of McCarthyism. But nowhere can it be demonstrated as clearly as in the marketplace.
Under certain well-defined circumstances, investors overreact predictably and systematically. This well-documented discovery has sweeping implications within the fields of finance and economics, as well as in many other areas. It is also the key to improving your investment performance.
The final aspect of the book is the influence on the reader of widely accepted but spurious investment thinking. Our inherent psychological makeup is not the only danger to our investment health. Not only do we need usable strategies, and the ability to execute them, we must also avoid the all-permeating influence of powerful but fallacious investment mores of our time.
There are a number of seductive theories that have dominated the mainstream of Wall Street thinking for years, which can beckon you away from the proven approaches we’ll examine. We will also look at the major intellectual fads of the day to see how they hold up in practice, as well as some of the torpedoes hidden within the current framework of “smart” investing.
Contrarian Investment Strategy will also look at a number of important issues not related to contrarian strategies. The most important of these is how to invest for the long term. As we will see in chapter 13, the rules of prudent investing have been turned upside down in the postwar decades, yet your investment advisor, your banker or your broker, probably has little awareness of the fact.
If you follow their advice, as well-meaning as it is, you will often come up short in your savings goals. The work will also examine how to create tax-efficient portfolios, which are only now starting to get the attention they deserve.
The subject deals with methods to protect yourself from taking inordinate long- or short-term capital gains, whether by managing your own portfolio or by placing it in the hands of an investment advisor or mutual fund.
Contents:
- The Sure Thing Almost Nobody Plays
- From Technical Analysis to Astrology
- Bigger Game Ahead
- Dangerous Forecasts
- Would You Play a 1 in 50 Billion Shot?
- Nasty Surprises
- Contrarian Investment Strategies
- Boosting Portfolio Profits
- A New, Powerful Contrarian Approach
- Knowing Your Market Odds
- Profiting from Investor Overreaction
- Crisis Investing
- An Investment for All Seasons
- What Is Risk?
- Small Stocks, Nasdaq, and Other Market Pitfalls
- The Zany World of Rationality
- Beyond Efficient Markets