David Dreman Low Price to Earnings is a value strategy developed by the renowned US fund manager and author David Dreman in his book Contrarian Investment Strategies. It uses a basic value filter of selecting the cheapest 40% of the market by P/E ratio and filtering further for quality according to company size, financial strength and growth. Dreman favoured the P/E strategy above all others: "Our money management firm uses the low-PE method as it's core strategy, but also utilizes the other 3 contrarian strategies extensively." Dreman's studies showed that the cheapest 20% of the market by P/E outperformed the most expensive 20% by 6.7% annually. It should be cautioned that Dreman's portfolio did suffer in the 2008 financial crisis due to an overweighting of low P/E banks. Dreman though continues to evangelise the power of contrarian investing to counter behavioural biases.
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Dreman is currently the founder, chairman and CIO of Dreman Value Management LLC. Author of 'Contrarian Investment Strategies: The Next Generation'. Regular columnist for Forbes magazine.
Contrarian Investment Strategies Dreman
by David Dreman
The 'contrarian guru' of investment shows today's financiers how to out perform professional money managers and profit from Wall Street panics.
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| Returns |  |
 |
 |
 |
 |
 |
 |
FTSE 100 |
|---|---|---|---|---|---|---|---|---|
| 1 week | 4.2% | 5.0% | 0.8% | 1.9% | -0.3% | 2.0% | 6.0% | 2.6% |
| 1 month | 14.0% | 9.0% | 0.4% | -3.2% | 0.1% | 5.2% | 9.0% | 2.8% |
| 3 months | 10.1% | 9.5% | 8.1% | -3.3% | 0.1% | 11.0% | 26.6% | 0.6% |
| 6 months | 22.4% | 29.9% | 10.9% | 10.3% | 19.3% | 19.2% | 63.9% | 14.9% |
| 1 year | 42.0% | 55.8% | 26.7% | 58.7% | 77.2% | 43.9% | 106.1% | 18.4% |
| 2 years | 8.4% | 25.1% | -21.4% | -22.4% | 46.3% | 22.5% | 9.0% | -6.9% |
| Annualised | 10.1% | 13.5% | 4.1% | 4.4% | 19.5% | 17.9% | 34.9% | |
| Risks | ||||||||
| Max Drawdown | -54.0% | -38.4% | -47.2% | -73.1% | -47.6% | -24.1% | -58.6% | |
| Avg Holdings | 9.3 | 24.4 | 14.5 | 14.6 | 0.8 | 25 | 4.3 | |
| Diversification | Moderate | Good | Moderate | Moderate | Low | Good | Low | |
