David Dreman, "The markets are probably cheaper than maybe in the 1950s"

By on March 10, 2009

Andrew Mickey recently interviewed long-time money manager and pundit David Dreman. Mr. Dreman advised buying SPDR KBW Bank Index Fund (KBE) and Financial Select Sector SPDR (XLF) versus attempting to buy individual financial stocks given their propensity to implode. Dreman expects these indexes to double or triple your investment in time. Dreman also sang the praises of General Electric (GE) and high-yield bonds.

Dreman characterized our current predicament as “a very serious panic” and advised buying stocks, but not all at once. Dreman stated, “remember, when the market does turn, maybe about 43% of the upswing comes in the first 15 to 20 days. So you have to have some exposure to stocks to get in on the biggest part of the upturn.”

Toward the end of the interview Dreman was cloudy about the timing of any conclusion to the crisis by saying, “It’s going to be painful but anybody who can hold through this crisis will be well rewarded. I can’t say – nobody can say – whether it’s going to be 6 months, 18 months, or 24 months. But I think they are going to see the value there in many different securities. When it comes to equities, you’ll be in for a double or triple if you have good quality stocks.”



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