In his daily column, Street Dogs, Michel Pireu ( tells the story of David Dreman's "two rooms".

"In his book, Contrarian Investment Strategies in the Next Generation, David Dreman paints a scenario where you enter into a casino with two gambling wings, one red, the other green.

You enter the green room. The atmosphere is unhurried, the tables are sparsely attended, and every player sits behind a pile of green and black chips. You see ordinary people playing ordinary games. You wonder how they made such big piles of money. Then you realise, they’re all winning. There’s hardly a losing player.

You know, of course, that the average house take on table games is 5%, but as you count winning and losing hands, you realise these players are getting a better break. They seem to be winning at a rate of 60% to 40%. A pit boss appears at your shoulder. “Excuse me," you say, “but can this be right? The odds favour the players?"

“Yes, indeed,” he replies. “The odds in the green room usually run 60:40 in favour of the players. It’s been that way since we opened."

“But ... most of the players must go away winners." You say. “ Sure do,” he says. “We calculate that 9999 out of every 10000 players make money. It’s a good thing we get so few, or they’d break the house."

Somewhat amazed, you wander across into the red wing. The action level is much, much higher. The room is crowded and fairly roars with excitement. Curious, you go in.

Players bet multiple table positions, wave frantically for change, entreat the gods for luck. You see few winning players. The piles of chips in front of them are dwindling with each hand. In fact, the odds are worse than normal. Again, you start to count. This time, the odds appear to be 60:40 in favour of the house. You walk over to a pit boss, who confirms that, indeed, those are the odds. This is obviously not the place you want to be.

So you go home, get your stash and return to the casino. But then a strange thing happens. You walk into the red wing and start to play.

Which Dreman maintains is what most people do when it comes to investing. “Some investments steadily make money,” he says, “while others lose consistently. And while most people want investments that have a good chance of beating the market, they gravitate toward investments where swarms of enthusiastic players are endangering their savings at odds similar to those in the red room.”