Value Investing Legend, David Dreman: “Terrified of Bonds”
David Dreman is one of the greatest contrarian investors of the last 50 years.
He literally wrote the book on contrarian investing back in 1980 where he recommended buying stocks at the bottom of the decade-long bear market. He looks for stocks with a low P/E ratio and is truly focused on the long-term. And his results, over the long-term, rank among the best on Wall Street.
When we sat down for an exclusive interview with David Dreman a few months ago, he stayed true to his contrarian strategy. At the time, Dreman recommended buying bank stocks when no one else was willing to buy. Since then, many bank stocks have tripled or quadrupled.
Basically, when Dreman talks, we here at Q1 Publishing listen.
So when Dreman recently said he was “Terrified of bonds,” we paid close attention:
"I'm terrified of bonds," Dreman, the chief investment officer at Dreman Value Management LLC, told Reuters. "I think we're going to have some of the worst inflation, with all the printing presses around the world running 24/7."
For fund managers who can invest in real estate, now may be a time to buy, he said.
"Probably the two worst investments over the past two, three years have been stocks and real estate," Dreman said. "They could be the best investments two or three years out."
Dreman said he does not invest in real estate, and he is also avoiding bonds, including corporate debt, Treasuries and TIPS, or Treasury Inflation-Protected Securities.
"People are starting to worry about inflation," he said in New York, on the sidelines of a conference sponsored by the New York Society of Security Analysts and Thomson Reuters. "Even TIPS you have to pay taxes on them."
This is a very strong warning from one of the world’s best investors. It’s one we haven’t been taking lightly either.
Inflation is coming and there’s no better time than now to get prepared. The key thing to remember though is all of this is not going to play out overnight. The inflation vs. deflation debate is likely to go on for a few more years. And by the time inflation does perk up, it will be too late to get prepared.
But, as we say at Prosperity Dispatch (our 100% free e-letter) though, it’s better to be too early than too late when it comes to ensuring you have a safe and secure retirement.
