Last week, I had lunch with one of my investing heroes? David Dreman.
A few moments after lunch, I introduced him to speak to a crowd of 400 or so investors.
Today, I?ll share with you why Dreman is a legend to me? and what he thinks right now?Dreman is a legend because of what he did in 1979. I explained it as I introduced him at an investment conference. Here?s what I said:
David Dreman literally wrote the book on contrarian investing strategies. Consider this: His book called Contrarian Investment Strategies came out in 1979?
You have to realize, when the book came out, stocks had done nothing for a dozen years. David said that it was time to buy stocks ? that they were incredibly cheap.
I bet David and his mom were the only people to buy the book? NOBODY wanted to buy stocks back then.
But he got it exactly right. The greatest two decades in the entire history of stocks was from 1979 to 1999. And Dreman, more than anyone else, called it.
I love that Dreman didn?t listen to what anyone else had to say. In 1979, he trusted his own research.
He understood that stocks were dirt-cheap and out of favor. After a dozen years of poor performance in stocks, investors were busy buying gold and bonds and avoiding the stock market. Sound familiar to today?
What?s Dreman saying today?
These days, he?s fearful of inflation, and he believes stocks are the place to have your money? He?s been writing a column for Forbes for 30 years. Here?s what he said in his most recent column:
Smoldering inflationary fires will burst into an inferno once the unemployment rate falls below 7.5%, if not sooner. In this environment, good stocks, not Treasuries, are the place to be.
What?s he doing with money now?
Given my bullish views, I am in buying mode? We will undoubtedly have more scares and volatility ahead, but if you?ve taken an ultraconservative ?approach to date, it?s time to revamp your assets in preparation for rising ?inflation and interest rates.
Dreman wrote a white paper on ?The Case for Inflation? in 2011. In it, he said:
We think it?s unquestionable that inflation is in our future for some time? it?s just as certain that a portfolio of great companies will protect an investment portfolio from the challenges to come.
Dreman doesn?t follow the crowd. He is the ultimate contrarian.
And right now, this contrarian is expecting inflation, and he believes high-quality stocks (like cigarette giant Altria and banking giant Wells Fargo) are the best place to be positioned.
I suggest you follow his lead?
Good investing,
?Dr. Steve SjuggerudSource: Daily Wealth
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