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David Dreman Booted from His Own Fund


JEast
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The situation was that Dreman is/was a legendary value investor. However, he was also proud to be a contrary investor which in this case got him in trouble with his DCS closed end fund as it blew up as he went both contrary and with leverage.

 

The point about the Munger's mental model is that we should be very aware of both our previous successes or people that we admire previous successes (i.e. always remember the Napoleon and Hitler's mistake).

 

Yes, some were in denial by purchasing or holding onto DCS.

 

 

Cheers

(Formally 653211)

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653211,

 

Did not know it was you!  I thought you were saying the exact opposite with the Munger quote but instead I think we agree completely.  If anyone has not, they should really read Grantham's last 3 letters: Part 1, Part 2, and the short one he issued March 10th.  At least two of them touch on the idea of these value managers that just doubled down on value stocks and how that worked for years - like the last 50.  But then finally, you have a situation like this where these value stocks, which are normally of lower business quality relative to the high-fliers typically with higher P/Es, and that lower quality actually bites as if we go into very very harsh economic times, these value stocks will actually go bankrupts thus closing the gap somewhat between low p/e and high p/e. 

 

Anyway, he explains it much better than I and it is worth a read.  I think everyone here should read it - its very important.  If Bill Miller was not smart enough to see it, and Dreman, and others - and the list goes on and many of these former value greats are now toast for good, they aren't ever going to be called great again - anyway they had these decent records and experience  ... so its worth a read as to Grantham's take on how they went wrong.  www.gmo.com and all three are available with no password requirement

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