The Forecasting Pitfall of Fundamental Analysis

The Association methodology is ‘contrarian’ because it is quite different than most applications of fundamental analysis. The fundamental analysis technique is generally used by banks, pension funds and the majority of security analysts.  There are different styles of fundamental investing which range from momentum and growth investing to value and contrarian investing. In general, a fundamentalist believes that a company’s true value can be determined by analyzing financial indicators such as sales, inventory etc.  A fundamentalist believes that a stock price can diverge from the company’s true value and he is convinced that the market must recognize this discrepancy over time. Momentum and growth …Read more »

Benj Gallander Investment Philosophy

Benj Gallander

Benj Gallander has among the highest returns, both short- and long-term, in North America. Co-editor of Contra the Heard Investment Letter, columnist for The Globe and Mail, writer for Bloomberg and Canadian MoneySaver, Gallander’s approach has the investment world buzzing. His approach to investing is decidedly Contrarian. He does not believe in buying and holding until perpetuity. He thinks that stop losses are idiotic, like playing cards with your hand open. He redefines conventional norms of the risk-reward relationship. He rarely buys a stock that does not have a chance of a minimum 100 per cent return. He remains unconcerned …Read more »

Contrarian Investing Philosophy

A Contrarian Investor, generally focuses on turnaround situations and stocks currently out of favor, practicing patience and long-term investing.  Contrarian investors known as Contrarians looks for strongly financed, growing companies that are undervalued by the market for the wrong reasons, believing that the market will come to appreciate their true value over time.  This investing approach can also be described as Contrarian, since such stocks are purchased when most investors believe that they are unattractive. It is also believed that by owning an undervalued quality stock, is a lower-risk method for seeking superior long-term returns. These stocks tend to be …Read more »

David Dreman Investment Philosophy

David Dreman

David Dreman summarized his investment philosophy as the following: Psychological biases tend to interfere with sound investment decisions, but investors who understand these biases can prevent them from affecting their own judgment and can profit from the biases in others. To prevent the biases from affecting your own decisions: Don’t be influenced by a hot performance record. Don’t rely solely on the specific situation, but take into account prior probabilities of similar situations. Don’t be seduced by recent rates of investment return for individual stocks when they deviate sharply from past norms; use long-term stock characteristics. Don’t expect the strategy …Read more »

Relative P/E, P/CF, P/D and P/BV Strategy

Contrarian Investing Strategy Two

This strategy looks at relative industry strength.  The lowest P/E companies within an industry regardless of how high or low the general price of the industry group. The advantage of this strategy is that buying the lowest values stocks in each major industry opens a much larger investment universe than just using strategy #1. The relative industry method can be used with the entire market.  The relative contrarian strategy has more diversification by industry than strategy #1.  Looks for companies that have greater than 20% discount to its peers. Also used are the Low P/CF (Price relative to Cash Flow), P/BV ( Price …Read more »