David Dreman

The good news is that the worst of the liquidity crisis seems to be over. After a slow start the Federal Reserve Board under Chairman Ben S. Bernanke has done an outstanding job containing the panic in the financial system and dispelling the fear of a total meltdown. Despite all this, the market is beginning to show signs of a comeback. The underlying fundamentals of the U.S. economy are still strong. David Dreman of Dreman Value Management gives us three relatively well behaved banks.

Famed Value Investor David Dreman appeared in WealthTrack.

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Famed Value Investor David Dreman and Contrarian says "The market right now is as tricky a one as we've seen since the implosion of the high-tech bubble eight years ago. Federal Reserve Chairman Ben S. Bernanke has a problem on his hands: a very wide-ranging panic surrounding financial institutions. This is a problem that mere cuts in interest rates cannot cure."

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Wow, What a way for Mr. Buffett to end the year with a couple of hits. First, Buffett purchases conglomerate Marmon Holdings for $4.5 Billion. The size of the acquisition makes it a Buffett play all along. An easy way to find out who is doing the investments for Berkshire is looking at the size of the deals. Warren Buffett’s investments are usually in billions of dollars, whereas Lou Simpon and others make investments range in the millions (i.e. Carmax).

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Thomas Jefferson once said that banks are more dangerous than standing armies. Certainly with Chairman Alan Greenspan at the helm of the Federal Reserve this was the case. Under his leadership the Fed was instrumental in creating two bubbles. The dot-com bubble of 1995--99 was followed by a grand loosening of credit that resulted in a second bubble, the housing mania of 2001--05. Still, when a bubble implodes there are always good opportunities for folks who have the courage to take risks.

Washington Mutual Chief Executive Kerry Killinger has made some big mistakes and ranks among the major executives who have mismanaged their companiesHe's up there with the senior executives who steered these major institutions the wrong way," said David Dreman, chairman and chief investment officer of Dreman Value Management LLC.

"He's made some pretty big mistakes," Dreman said in a telephone interview. "He's been very good at building the company, but he's been very bad at some of his decisions."

It's times like these, when Wall Street is littered with the bloodied remains of problematic companies, that David Dreman, one of the biggest contrarians in the mutual-fund industry, lives for. Amid the dregs, there are also battered companies with few if any problems. Dreman, the chairman and chief investment officer of Dreman Value Management, looks for cheap, down-and-out companies with low price-to-earnings ratios, then buys up the innocent victims and profits as they recover.

David Dreman, who oversees $22 illion as founder and chairman of Dreman Value Management LLC, talks with Bloomberg's Brian Sullivan from Aspen, Colorado, about the firm's holdings in Citigroup Inc. and Altria Group Inc., and strategy for investing in financial stocks. Citigroup, the largest U.S. bank, fell to the lowest in four years in New York trading after three analysts cut their ratings and CIBC World Markets said the company may have to reduce its dividend to shore up capital.

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Famed Value Investor David Dreman says "The capital markets have suffered mightily in the mortgage meltdown. Mortgage-backed securities--whether backed by nasty subprime loans, slightly better Alt A ones or even highly rated borrowings, have sunk. Junk bonds, often linked to MBSs, are hard to float. Private equity deals, frenetic not so long ago, are iffy now that high-yield funding is harder and costlier to provide.