Guru Grades
David Dreman: About Value (Last Updated 1/1/09)
We evaluate here the commentary of David Dreman at Forbes.com regarding the stock market via his archived articles since the beginning of 2001. David Dreman is chairman of Dreman Value Management. His investing philosophy is " that the markets are not perfectly efficient and that, in particular, behavioral finance plays a considerable role in investor actions and over-reactions and subsequently in stock price movements." The table below extracts highlights from his commentary and shows the performance of the S&P 500 index over the 21, 63, 126 and 254 trading days after the publication date for each item. Red plus (minus) signs to the right of specific items indicate those that the market has subsequently proven right (wrong). We conclude that:
- Since David Dreman makes few comments on overall stock market direction, we augment such forecasts with a few of his most prominent sector recommendations. We test the latter for timing by checking subsequent sector performance.
- He is a committed value investor, which has made him mostly tech-averse the past few years.
- Based on subsequent stock market performance and our judgments about his forecasts, David Dreman's stock market outlooks are right 54% of the time, which is above average. His forecast sample size is small, as is our confidence in this conclusion.
In summary, David Dreman is a tortoise (contrarian value investor), not a hare (trader), and perhaps an above average resource for market outlooks. Confidence in this conclusion is low.
Note that we use the Forbes.com magazine publication dates for the table entries, and they post-date their issues, meaning that Mr. Dreman actually prepares columns at least two weeks before the publication/entry date.
See Guru Grades for a snapshot of the accuracy of various experts in predicting the direction of the U.S. stock market, including links to evaluations of the commentaries of other individual market pundits and gurus.
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