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David Dreman: Value Keeps Steaming On

January 13, 2006 | About:

David Dreman is happy with the fact that for the sixth consecutive year, value stocks outpowered growth, with the S&P Barra Value Index appreciating 3.5% last year compared with 2.5% for the S&P Barra Growth Index. What should we look for during 2006? I expect a reasonably good one with the S&P 500 rising 10% or more."

He wrote: "Stocks tend to get hurt by inflation in its early stages, but then they catch up after the first year or so of an ascending Consumer Price Index. I think we are at this inflection point now.

With few exceptions every one of the stocks I write about is held in the portfolios I manage. This is known as putting your money where your mouth is. In most cases these are long-term holdings.

The news from companies is encouraging: Earnings should continue to increase. Large-size issues, which have trailed mid- and small-cap stocks for five years, should outpace them this year. Large-caps are much cheaper at this stage of the cycle.


Rating: 1.0/5 (1 vote)


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