Seth Klarman famous quotes

The single greatest edge an investor can have is a long-term orientation.
-- Seth Klarman

#Long #Term #Long Term

Ultimately, nothing should be more important to investors than the ability to sleep soundly at night.
-- Seth Klarman

#Sleep #Night #Important

Value investing is at its core the marriage of a contrarian streak and a calculator.
-- Seth Klarman

#Intelligent #Investing #Calculators

Most investors are primarily oriented toward return, how much they can make and pay little attention to risk, how much they can lose.
-- Seth Klarman

#Risk #Pay #Return

The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.
-- Seth Klarman

#Intelligent #Investing #Stories

In reality, no one knows what the market will do; trying to predict it is a waste of time, and investing based upon that prediction is a speculative undertaking.
-- Seth Klarman

#Reality #Trying #Waste

Investment success cannot be captured in a mathematical equation or a computer program.
-- Seth Klarman

#Computer #Investment #Program

Value investing is risk aversion.
-- Seth Klarman

#Risk #Investing #Aversion

Investors should always keep in mind that the most important metric is not the returns achieved but the returns weighed against the risks incurred. Ultimately, nothing should be more important to investors than the ability to sleep soundly at night.
-- Seth Klarman

#Sleep #Night #Risk

Interestingly, we have beaten the market quite handsomely over this time frame, although beating the market has never been our objective. Rather, we have consistently tried not to lose money and, in doing so, have not only protected on the downside but also outperformed on the upside.
-- Seth Klarman

#Consistently

Sometimes buying early on the way down looks like being wrong, but it isn't.
-- Seth Klarman

#Investing #Way #Buying

Here’s how to know if you have the makeup to be an investor. How would you handle the following situation? Let’s say you own a Procter & Gamble in your portfolio and the stock price goes down by half. Do you like it better? If it falls in half, do you reinvest dividends? Do you take cash out of savings to buy more? If you have the confidence to do that, then you’re an investor. If you don’t, you’re not an investor, you’re a speculator, and you shouldn’t be in the stock market in the first place.
-- Seth Klarman

#Fall #Makeup #Saving

A simple rule applies: if you don't quickly comprehend what a company is doing, then management probably doesn't either.
-- Seth Klarman

#Simple #Management #Company

As Graham, Dodd and Buffett have all said, you should always remember that you don't have to swing at every pitch. You can wait for opportunities that fit your criteria and if you don't find them, patiently wait. Deciding not to act is still a decision.
-- Seth Klarman

#Opportunity #Decision #Waiting

In a world in which most investors appear interested in figuring out how to make money every second and chase the idea du jour, there's also something validating about the message that it's okay to do nothing and wait for opportunities to present themselves or to pay off. That's lonely and contrary a lot of the time, but reminding yourself that that's what it takes is quite helpful.
-- Seth Klarman

#Lonely #Opportunity #Waiting

There are only a few things investors can do to counteract risk: diversify adequately, hedge when appropriate, and invest with a margin of safety. It is a precisely because we do not and cannot know all the risks of an investment that we strive to invest at a discount. The bargain element helps to provide a cushion for when things go wrong.
-- Seth Klarman

#Safety #Risk #Helping

The cost of performing well in bad times can be relative underperformance in good times.
-- Seth Klarman

#Good Times #Bad Times #Performing

Rather, risk is a perception in each investor's mind that results from analysis of the probability and amount of potential loss from an investment. If an exploratory oil well proves to be a dry hole, it is called risky. If a bond defaults or a stock plunges in price, they are called risky. But if the well is a gusher, the bond matures on schedule, and the stock rallies strongly, can we say they weren't risky when the investment after it is concluded than was known when it was made.
-- Seth Klarman

#Loss #Risk #Mind

Unlike return, however, risk is no more quantifiable at the end of an investment that it was at its beginning. Risk simply cannot be described by a single number. Intuitively we understand that risk varies from investment to investment: a government bond is not as risky as the stock of a high-technology company. But investments do not provide information about their risks the way food packages provide nutritional data.
-- Seth Klarman

#Risk #Investment #Vary

In the financial markets, however, the connection between a marketable security and the underlying business is not as clear-cut. For investors in a marketable security the gain or loss associated with the various outcomes is not totally inherent in the underlying business; it also depends on the price paid, which is established by the marketplace. The view that risk is dependent on both the nature of investments and on their market price is very different from that described by beta.
-- Seth Klarman

#Loss #Risk #Different

Macro worries are like sports talk radio. Everyone has a good opinion which probably means that none of them are good.
-- Seth Klarman

#Sports #Mean #Worry

If only one word is to be used to describe what Baupost does, that word should be: 'Mispricing'. We look for mispricing due to over-reaction.
-- Seth Klarman

The risk of an investment is described by both the probability and the potential amount of loss. The risk of an investment-the probability of an adverse outcome-is partly inherent in its very nature. A dollar spent on biotechnology research is a riskier investment than a dollar used to purchase utility equipment. The former has both a greater probability of loss and a greater percentage of the investment at stake.
-- Seth Klarman

#Loss #Risk #Investment

At Baupost, we constantly ask: 'What should we work on today?' We keep calling and talking. We keep gathering information. You never have perfect information. So you work, work and work. Sometimes we thumb through ValuLine. How you fill your inbox is very important.
-- Seth Klarman

#Perfect #Important #Today

If you can remember that stocks aren't pieces of paper that gyrate all the time --they are fractional interests in businesses -- it all makes sense.
-- Seth Klarman

#Paper #Pieces #Remember

It turns out that value investing is something that is in your blood. There are people who just don't have the patience and discipline to do it, and there are people who do. So it leads me to think it's genetic.
-- Seth Klarman

#Thinking #Blood #Discipline

You need to balance arrogance and humilitywhen you buy anything, it's an arrogant act. You are saying the markets are gyrating and somebody wants to sell this to me and I know more than everybody else so I am going to stand here and buy it. I am going to pay an 1/8th more than the next guy wants to pay and buy it. That's arrogant. And you need the humility to say 'but I might be wrong.' And you have to do that on everything
-- Seth Klarman

#Humility #Guy #Arrogance

While knowing how to value businesses is essential for investment success, the first and perhaps most important step in the investment process is knowing where to look for opportunities
-- Seth Klarman

#Opportunity #Knowing #Important

The real secret to investing is that there is no secret to investing.
-- Seth Klarman

#Real #Secret #Investing

A value strategy is of little use to the impatient investor since it usually takes time to pay off.
-- Seth Klarman

#Littles #Pay #Use

Value investing is predicated on the efficient market hypothesis being wrong.
-- Seth Klarman

#Investing #Hypothesis #Values

Value investing is the discipline of buying shares at a significant discount from their current underlying values and holding them until more of their value is realised. The element of a bargain is the key to the process.
-- Seth Klarman

#Keys #Discipline #Investing

While it might seem that anyone can be a value investor, the essential characteristics of this type of investor-patience, discipline, and risk aversion-may well be genetically determined.
-- Seth Klarman

#Intelligent #Discipline #Risk

If another person were to enter the building, it would once again be empty.
-- Seth Klarman

#Building #Empty #Persons

Value investing is simple to understand but difficult to implement. Value investors are not supersophisticated analytical wizards who create and apply intricate computer models to find attractive opportunities or assess underlying value. The hard part is discipline, patience, and judgment. Investors need discipline to avoid the many unattractive pitches that are thrown, patience to wait for the right pitch, and judgment to know when it is time to swing.
-- Seth Klarman

#Opportunity #Simple #Swings

The trick of successful investors is to sell when they want to, not when they have to.
-- Seth Klarman

#Successful #Want #Tricks

I know of no long-time practitioner who regrets adhering to a value philosophy; few investors who embrace the fundamental principles ever abandon this investment approach for another
-- Seth Klarman

#Regret #Philosophy #Long

We suppose that could be considered a hedged position for the awards committee, one that would never occur in the hard sciences such as physics and chemistry, where a prize shared among three with divergent views would be an embarrassing mistake or a bad joke. While a Nobel Prize might well be the culmination of a life’s work, shouldn’t the work accurately describe the real world?
-- Seth Klarman

#Real #Mistake #Views

Having great clients is the key to investment success.
-- Seth Klarman

#Keys #Clients #Investment

A margin of safety is achieved when securities are purchased at prices sufficiently below underlying value to allow for human error, bad luck, or extreme volatility in a complex, unpredictable and rapidly changing world.
-- Seth Klarman

#Errors #Safety #Luck

Targeting investment returns leads investors to focus on potential upside rather on downside risk ... rather than targeting a desired rate of return, even an eminently reasonable one, investors should target risk.
-- Seth Klarman

#Focus #Risk #Target

Successful investors like stocks better when they’re going down. When you go to a department store or a supermarket, you like to buy merchandise on sale, but it doesn’t work that way in the stock market. In the stock market, people panic when stocks are going down, so they like them less when they should like them more. When prices go down, you shouldn’t panic, but it’s hard to control your emotions when you’re overextended, when you see your net worth drop in half and you worry that you won’t have enough money to pay for your kids’ college.
-- Seth Klarman

#Kids #Successful #College

The overwhelming majority of people are comfortable with consensus, but successful investors tend to have a contrarian bent,
-- Seth Klarman

#Successful #People #Majority

Investing today may well be harder than it has been at any time in our three decades of existence,
-- Seth Klarman

#Investing #May #Today

While some might mistakenly consider value investing a mechanical tool for identifying bargains, it is actually a comprehensive investment philosophy that emphasizes the need to perform in-depth fundamental analysis, pursue long-term investment results, limit risk, and resist crowd psychology.
-- Seth Klarman

#Philosophy #Intelligent #Long

Investing is the intersection of economics and psychology.
-- Seth Klarman

#Intelligent #Psychology #Investing

Generally, the greater the stigma or revulsion, the better the bargain.
-- Seth Klarman

#Intelligent #Investing #Revulsion

Successful investors tend to be unemotional, allowing the greed and fear of others to play into their hands. By having confidence in their own analysis and judgement, they respond to market forces not with blind emotion but with calculated reason. Successful investors, for example, demonstrate caution in frothy markets and steadfast conviction in panicky ones. Indeed, the very way an investor views the market and it’s price fluctuations is a key factor in his or her ultimate investment success or failure.
-- Seth Klarman

#Successful #Views #Hands

Value in relation to price, not price alone, must determine your investment decisions. If you look to Mr Market as a creator of investment opportunities (where price departs from underlying value), you have the makings of a value investor. If you insist on looking to Mr Market for investment guidance however, you are probably best advised to hire someone else to manage your money.
-- Seth Klarman

#Opportunity #Decision #Looks

Almost every financial blow up is because of leverage,
-- Seth Klarman

#Blow #Financial

The average person can’t really trust anybody. They can’t trust a broker, because the broker is interested in churning commissions. They can’t trust a mutual fund, because the mutual fund is interested in gathering a lot of assets and keeping them. And now it’s even worse because even the most sophisticated people have no idea what’s going on.
-- Seth Klarman

#Average #Ideas #People

We work really hard never to get confused with what we know from what we think or hope or wish.
-- Seth Klarman

#Confused #Thinking #Wish

All an investor can do is follow a consistently disciplined and rigorous approach; over time the returns will come
-- Seth Klarman

#Return #Approach #Investors

I find value investing to be a stimulating, intellectually challenging, ever changing, and financially rewarding discipline
-- Seth Klarman

#Discipline #Challenges #Investing

We continue to adhere to a common-sense view of risk - how much we can lose and the probability of losing it. While this perspective may seem over simplisticor even hopelessly outdated, we believe it provides a vital clarity about the true risks in investing.
-- Seth Klarman

#Believe #Views #Common Sense

It sounds kind of crazy, but in times of turmoil in the market, I've felt a sort of serenity in knowing that I've checked and re-checked my work, one plus one still equals two regardless of where a stock trades right after I buy it.
-- Seth Klarman

#Crazy #Two #Knowing

Warren Buffett once wrote that value investing is like an inoculation--it either takes or it doesn't--and when you explain to somebody what it is and how it works and why it works and show them the returns, either they get it or they don't.
-- Seth Klarman

#Return #Investing #Warren Buffet

Most institutional investors feel compelled to swing at almost every pitch and forgo batting selectivity for frequency.
-- Seth Klarman

#Swings #Feels #Investors

Occasionally we are asked whether it would make sense to modify our investment strategy to perform better in today's financial climate. Our answer, as you might guess, is: No! It would be easyfor us to capitulate to the runaway bull market in growth and technology stocks. And foolhardy. And irresponsible. And unconscionable. It is always easiest to run with the herd; at times, it can take a deep reservoir of courage and conviction to stand apart from it. Yet distancing yourself from the crowd is an essential component of long-term investment success.
-- Seth Klarman

#Running #Technology #Long

Gold is unique because it has the age-old aspect of being viewed as a store of value. Nevertheless, it’s still a commodity and has no tangible value, and so I would say that gold is a speculation. But because of my fear about the potential debasing of paper money and about paper money not being a store of value, I want some exposure to gold.
-- Seth Klarman

#Unique #Age #Gold

We worry top-down, but we invest bottom-up
-- Seth Klarman

#Worry #Bottom

Warren Buffett is right when he says you should invest as if the market is going to be closed for the next five years. The fundamental principles of value investing, if they make sense to you, can allow you to survive and prosper when everyone else is rudderless. We have a proven map with which to navigate. It sounds kind of crazy, but in times of turmoil in the market. I’ve felt a sort of serenity in knowing that if I’ve checked and rechecked my work, one plus one still equals two regardless of where a stock trades right after I buy it.
-- Seth Klarman

#Crazy #Years #Two

To achieve long-term success over many financial market and economic cycles, observing a few rules is not enough. Too many things change too quickly in the investment world for that approach to succeed. It is necessary instead to understand the rationale behind the rules in order to appreciate why they work when they do and don't when they don't.
-- Seth Klarman

#Order #Appreciate #Long

Because investors are not usually penalized for adhering to conventional practices, doing so is the less professionally risky strategy, even though it virtually guarantees against superior performance.
-- Seth Klarman

#Practice #Guarantees #Strategy

When a stock is selling at a discount to liquidation value per share, a near rock-bottom appraisal, it is frequently an attractive investment.
-- Seth Klarman

#Rocks #Investment #Selling

Analysts recommendations may not produce good results. In part this is due to the pressure placed on these analysts to recommend frequently rather than wisely.
-- Seth Klarman

#May #Pressure #Recommendations

Value investing requires a great deal of hard work, unusually strict discipline, and a long-term investment horizon. Few are willing and able to devote sufficient time and effort to become value investors, and only a fraction of those have the proper mind-set to succeed.
-- Seth Klarman

#Hard Work #Long #Discipline

My view is that an investor is better off knowing a lot about a few investments than knowing a little about each of a great many holdings. One's very best idea's are likely to generate higher returns for a given level of risk than one's hundredth or thousandth best idea.
-- Seth Klarman

#Ideas #Knowing #Views

Once you adopt a value-investment strategy, any other investment behavior starts to seem like gambling.
-- Seth Klarman

#Gambling #Strategy #Investment

If you are predisposed to be patient, disciplined and psychologically appreciate the idea of buying bargains, then you're likely to be good at it. If you have a need for action, if you want to be involved in the new and exciting technological breakthroughs of our time, that's great, but you're not a value investor, and you shouldn't be one.
-- Seth Klarman

#Ideas #Appreciate #Want

The avoidance of loss is the surest way to ensure a profitable outcome.
-- Seth Klarman

#Loss #Way #Outcomes

Loss avoidance must be the cornerstone of your investment philosophy.
-- Seth Klarman

#Philosophy #Loss #Investment

In contrast to the speculators preoccupation with rapid gain, value investors demonstrate their risk aversion by striving to avoid loss.
-- Seth Klarman

#Loss #Risk #Aversion

When a Wall Street analyst or broker expresses optimism, investors must take it with a grain of salt.
-- Seth Klarman

#Wall #Optimism #Salt

By investing at a discount, Benjamin Graham knew that he was unlikely to experience losses.
-- Seth Klarman

#Loss #Investing #Unlikely