Understanding stock markets is something that has interested the investing
community for the past many decades. And although there has not been much to
differentiate one boom or bust from the earlier one at a basic level, more of
these wild fluctuations occur again simply because of the inability to learn
from past mistakes.
For instance, what would you do when we are in a firm bull market and most of the stocks keep gaining every day? Most often than not, during a bull market investors jump the bandwagon in the hopes that the markets will rise further and will reward them handsomely. Similarly, when pessimism takes over, some of the most solid companies are dumped. And although these present very good value, there are hardly any takers for these stocks. Many market participants also try the ever futile exercise of TIMING THE MARKETS. Stock markets may be volatile but that does not mean that they do no reward investors. They do. So how should one go about taking advantage of these fluctuations and reap good returns?
These questions have been answered by noted investor David Dreman in his book "Contrarian Strategy: The Next Generation'. Dreman has come out with some investment rules that address topics such as the reliability of future estimates, whether the past trend should be an indicator of analyzing the future, how to handle nasty surprises and so forth. More importantly, he talks about how to avoid herd mentality and has also outlined 4 strategies aimed at boosting portfolio profits. Interestingly, although many a time most of the true and tested principles of investing are known to us, we fail to follow them time and again. This has also prompted Dreman to address the topic of investor psychology all of which makes for fascinating reading. Indeed, if you want to equip yourself with some contrarian rules of investing and take advantage of market fluctuations, this book must surely find a place on your bookshelf.
For instance, what would you do when we are in a firm bull market and most of the stocks keep gaining every day? Most often than not, during a bull market investors jump the bandwagon in the hopes that the markets will rise further and will reward them handsomely. Similarly, when pessimism takes over, some of the most solid companies are dumped. And although these present very good value, there are hardly any takers for these stocks. Many market participants also try the ever futile exercise of TIMING THE MARKETS. Stock markets may be volatile but that does not mean that they do no reward investors. They do. So how should one go about taking advantage of these fluctuations and reap good returns?
These questions have been answered by noted investor David Dreman in his book "Contrarian Strategy: The Next Generation'. Dreman has come out with some investment rules that address topics such as the reliability of future estimates, whether the past trend should be an indicator of analyzing the future, how to handle nasty surprises and so forth. More importantly, he talks about how to avoid herd mentality and has also outlined 4 strategies aimed at boosting portfolio profits. Interestingly, although many a time most of the true and tested principles of investing are known to us, we fail to follow them time and again. This has also prompted Dreman to address the topic of investor psychology all of which makes for fascinating reading. Indeed, if you want to equip yourself with some contrarian rules of investing and take advantage of market fluctuations, this book must surely find a place on your bookshelf.
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