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including the ran-up prior to the 1929 Crash. The price of stocks, relative to what we call "fundamentals," is higher than in 1929 or in 1987, the years of the two great market crashes of the twentieth century.

This market is different, said many experts who called it a "new era." The last time this consensus was prevalent was just prior to the 1929 Crash. Some have gained international reputations for calling the shots to date. Abby Joseph Cohen, of Goldman Sachs, a gracious and intelligent professional, is the most acclaimed market strategist of our day. Abby towers over all the other forecasters because of her accurate calls on the skyrocketing market for the past few years. Ed Yardini, the chief economist of Deutsche Morgan Grenfell, is another "Wall Street Wizard," as he was recently dubbed by a national financial periodical, for being right on the course of the market and heralding a Dow of 15,000 by the year 2005. Or as yet another money manager put it, "With fundamentals like these, what valuation do you put on this market?" Whee!

Ive been here before. I came to Wall Street from my native Canada back in the mid-sixties. Id hardly unpacked my bags and got my first job on the Street when, along with everyone else I Imew, I was swept up by the "go-go" market of the time. Back then the rage was exciting concept companies. We were all making many times our salaries buying them. In fact, a Street job was only the ticket to stay close to the game; our salaries seemed inconsequential-or so we naively thought. After all, the stocks we owned, like University Computing, Lesco-Data Processing, or National Student Marketing didnt just double. No indeed. They shot up five, ten, even twentyfold, all in a couple of years. In our eyes, investors who bought the staid old blue chips were fossils. They simply ignored the enormous money to be made in these fast-track stocks. Experts and average investors all agreed this market was unique.

It wasnt. Within months many of these sizzlers were down as much as 80% or 90%. Many of my colleagues not only lost their tenfold gains, but also their initial capital. I was luckier. Having studied market manias, I came out alive, but still left the better part of my gains on the table.

This humbling experience increased my curiosity about markets. In researching one of my earlier books, I logged a lot of library hours reading the daily financial pages from the years before 1929 to try and get a feel for the prevailing mood of the time. How could those silly investors in the era of flappers and speakeasies really think stocks could go up forever? It was hard to believe they did not realize the enormous folly they were swept up in. Of course, they could not see the future, but it was easy for me to smile, knowing the ending.

But as wild as the prevailing enthusiasm was in these periods, whats out there today seems to be in a different league. A historian reading

about this market, at the turn of the twenty-second century, might chuckle at the obvious aberrations taking place now, just as I was amused looking back at 1929. Perhaps he or she will wonder, what were those late-twentieth-century investors smoking?

Once again the experts state, "nothing can stop this market," and the public believes. The public backs that belief with a good part of its hard-earned savings. As a result, the number of American households owning stocks and the size of their holdings dwarf any period in the past.

Yes, many of us have heard it all before. But even hearing it and going through the gut-wrenching experience of portfolios literally melting away, as investor perceptions change suddenly and sharply, does not prevent most of us from continuing on a course that almost certainly will end in disaster.

But it doesnt have to be this way. There are methods to determine whether individual stocks or markets really are too high or too low, as well as how to consistently benefit from this knowledge. As this book will explain, in a period of ebullience, you should have a method to know that it is time to dive into the nearest bomb shelter, or better yet, evacuate from the market in an orderly fashion. One thing I can predict: it is almost axiomatic that the wild enthusiasm of today will be met with the equally unwarranted pessimism of tomorrow.

Yes, the times are very different from when I published The New Contrarian Investment Strategy in September of 1982. Back then the market had gone nowhere in seventeen years, and, adjusted for inflation, the Dow was almost back to its prices of the depressed thirties. People were buying art, collectibles, diamonds, precious metals-anything but stocks. All this, as hindsight tells us, just before the greatest bull market of the century began in the late summer of 1982.

I wondered back then if the American Stock Market was not one of the last truly undervalued investments left. I stated that the rally that had begun in August of that year might be only the opening salvo of a major bull market, possibly one that would go as far or even farther than any we have seen in this century. I asked, "If this is true, why is it so Uttle recognized?"

Both my conclusion and the question come from a method of investment analysis I had first developed in the mid-seventies. I called it then-and it is now generally known as-"contrarian strategy." I thought I had made a revolutionary discovery. The evidence overwhelmingly demonstrated that the original contrarian strategy-the low P/E approach-had worked flawlessly for decades. Whats more, it was relatively simple to use.

It seemed so obvious. Like a miner who had struck gold, I believed the "claim jumpers" would arrive in droves. The contrarian ideas would

be scooped up immediately, soon outdistancing my years of worlc, perhaps even before my first boolc was published. Today I laiow nothing is further from the truth.

Is it because contrarian strategies have proved to be a bust? No, they work far better than I would have hoped twenty years ago. This completely new work, in fact, represents a major expansion of contrarian methods from my original books in the late seventies and early eighties, a result of important new findings in the past few years. Back then, the low P/E method was the only contrarian strategy that had been proven over decades. In this work, I will introduce four new strategies. These substantially expand the contrarian tools available to you. These new strategies can often be used in conjunction with the original low P/E strategy of my earlier books, or in many cases enhance your returns on their own. All have the same rigorous empirical backing as low P/E. These methods have been tested with large numbers of stocks for periods up to fifty years, and display outstanding records. A number of recent academic studies corroborate this exciting work.

The book is written for both the individual and the professional investor, in what I hope is a nontechnical and easily readable style. There are a variety of strategies, some simple, others requiring more experience, but all should allow you to handily outperform the market-no small feat, as we shall see in the opening chapter. Even the detractors of contrarian methods concede this much.

These strategies have succeeded for me personally, but more important they have provided returns well above the market (as well as those of all but a small percentage of investors) for almost two decades for the hundreds of clients of our firm, Dreman Value Management L.L.C., and the hundreds of thousands of clients in the Kemper-Dreman High Retum Fund. This Fund, which I have managed since it started, has been ranked, by Upper Analytical Services, the major mutual fund ranking organization, as the top fund out of 255 in its peer group for the ten years of its existence. It has also been ranked number one in more time periods than any of the 3,175 funds in the Upper database.

Yet a perplexing question remains: If contrarian strategies work so well, why arent they more widely followed? This is the second important part of the work. is not enough to have winning methods, we must be able to use them. It sounds almost simplistic, but it isnt. Sure, the methods are easy to understand and initiate. But most investors, whether professional or individual, even with the best of intentions, cannot follow through.

There is an enormous but little recognized barrier in the way-investor psychology. A barrier so formidable that it bars all but a few, who

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