Contrarian Investment Strategies, the Next Generation: Beat the Market by Going Against the Crowd Book

Dremen's name is eponymous with successful contrarian investing and this book methodically shows why (along with the impressive records of the Kemper-Dremen funds). A modern Ben Graham, Dremen is driven by fundamentals and underlying data, an approach that oddly marks him as a contrarian investor in today's emotion-driven markets.

Contrarian Investment Strategies provides a clear synthesis of the research that backs value investing. It also packs a good dose of simple executable advice - in essence invest in low P/E, low P/CF, low P/BV and high DY stocks that have strong balance sheets and good defensible business models - nothing new here but he does a great job laying it all out alongside the research.

One of the strongest sections of the book showed how value stocks weathered negative earnings surprises and leapt at positive surprises, while growth and concept stocks hardly budged at positive earnings surprises and plummeted on misses. This is something I've noticed anecdotally, but it's pleasing to see in the research - and, of course, provides a big justification for value investing through times of turmoil. Backing up the data is a lengthy but good discussion on investor psychology (along the lines of Shiller's Irrational Exuberance) that goes through the main behavioral biases that provide opportunities for value investors. The book ends by exposing the pitfalls of IPOs, small caps and index investing.

All in all, I believe the book remains as relevant today as it was in the mid-90's, particularly as the IPO market gears up again, this time with social networking stocks. It's as good a starting point as any if you're interested in investing in stocks for the long run.