The New Contrarian Investment Strategy book club questions

1. 1.

   Dreman's argument is that investors systematically overreact. How does that claim square with the efficient market hypothesis, and which evidence do you find more persuasive?

2. 2.

   The contrarian strategy requires buying stocks that feel uncomfortable — stocks whose stories are bad, whose charts are ugly, whose analysts have abandoned them. Have you ever deliberately bought something on a bad narrative? What happened?

3. 3.

   Dreman identifies the availability heuristic as a core driver of mispricing. Where else in your financial or business decisions does the availability of vivid recent information distort your judgment?

4. 4.

   The strategy has historically worked, but any strategy that becomes widely known faces pressure from arbitrage. Is the contrarian approach still exploitable, or has awareness of it closed the gap?

5. 5.

   Dreman says the psychological difficulty of staying contrarian is itself part of why the returns persist. What mechanisms do you use to maintain a position that consensus views as obviously wrong?

6. 6.

   Low P/E stocks can be low-P/E for fundamental reasons — genuine business deterioration — not just for behavioral reasons. How do you distinguish value traps from genuine mispricing?

7. 7.

   Analysts' forecasts are systematically optimistic about high-growth companies. Why doesn't competition among analysts correct that bias, and what does its persistence tell you about incentive structures in the industry?

8. 8.

   Dreman published this in 1982. Which of his behavioral arguments have accumulated more empirical support since then, and which have been challenged?

9. 9.

   The book recommends three-to-five-year holding horizons. What institutional structures — quarterly reporting, career incentives, fund mandates — work against that kind of patience?

10. 10.

    Dreman is critical of technical analysis and chart-reading. Is that dismissal supported by the same evidence base as his defense of value investing, or is it a separate argument?

11. 11.

    If you could apply the contrarian approach to a domain outside investing — to talent acquisition, urban development, research priorities — what would that look like?

How to run the discussion

• Pick six to eight, not all of them. An hour of real discussion covers fewer questions than anyone expects, and racing the list is what makes a book club feel like homework.
• Open with what people noticed, not what they concluded. Asking for a verdict first hardens opinions before anyone has heard each other.
• Let the disagreement run. The questions below that split a room are the ones worth the time; the ones everyone answers the same way can be skipped.
• Ask the quiet person a specific question. A direct, narrow question is far easier to answer than an open invitation to contribute.