Top 100 Klarman Quotes
#1. investors. I have been a student of the philosophy of value investing, which of course was established, executed, and popularized by superinvestors Benjamin Graham, Warren Buffet, and Seth Klarman among
Sundeep Bajikar
#2. Buying's easier, selling's hard - [it's] hard to know when to get out.
Seth Klarman
#3. 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
#4. 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
#5. Risk is not inherent in an investment; it is always relative to the price paid. Uncertainty is not the same as risk. Indeed, when great uncertainty - such as in the fall of 2008 - drives securities prices to especially low levels, they often become less risky investments.
Seth Klarman
#6. Almost no one will accept responsibility for his or her role in precipitating a crisis: not leveraged speculators, not willfully blind leaders of financial institutions, and certainly not regulators, government officials, ratings agencies or politicians.
Seth Klarman
#7. The single greatest edge an investor can have is a long-term orientation.
Seth Klarman
#9. We buy expecting to hold a bond to maturity and a stock forever.
Seth Klarman
#10. There's no such thing as a value company. Price is all that matters. At some price, an asset is a buy, at another it's a hold, and at another it's a sell.
Seth Klarman
#11. When a Wall Street analyst or broker expresses optimism, investors must take it with a grain of salt.
Seth Klarman
#12. People should be highly sceptical of anyone's including their own, ability to predict the future, and instead pursue strategies that can survive whatever may occur.
Seth Klarman
#13. You need humility to say 'I might be wrong.'
Seth Klarman
#14. The overwhelming majority of people are comfortable with consensus, but successful investors tend to have a contrarian bent,
Seth Klarman
#15. Investors need to pick their poison: Either make more money when times are good and have a really ugly year every so often, or protect on the downside and don't be at the party so long when things are good.
Seth Klarman
#16. Why should the immediate opportunity set be the only one considered, when tomorrow's may well be considerably more fertile than today's?
Seth Klarman
#17. 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
#18. A tipping point is invisible, as we just saw in Greece. In most situations, everything appears fine until it's not fine, until, for example, no one shows up at a Treasury auction.
Seth Klarman
#19. Successful investors must temper the arrogance of taking a stand with a large dose of humility, accepting that despite their efforts and care, they may in fact be wrong.
Seth Klarman
#20. Typically, we make money when we buy things. We count the profits later, but we know we have captured them when we buy the bargain.
Seth Klarman
#21. Investing is the intersection of economics and psychology.
Seth Klarman
#23. A commodity doesn't have the same characteristics as a security, characteristics that allow for analysis. Other than a recent sale or appreciation due to inflation, analyzing the current or future worth of a commodity is nearly impossible.
Seth Klarman
#24. It is crucial in a sound investment process to search a mile wide than a mile deep with they find something - also.. never stop digging for information.
Seth Klarman
#25. 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
#26. 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
#27. Never stop reading. History doesn't repeat, but it does rhyme.
Seth Klarman
#28. If an asset has cash flow or the likelihood of cash flow in the near term and is not purely dependment on what a future buyer might pay, then it's an investment. If an asset's value is totally dependent on the amount a future buyer might pay, then its purchase is speculation.
Seth Klarman
#29. We don't deal in absolutes. We deal in probabilities.
Seth Klarman
#30. There is an old saying, "How did you go bankrupt?" And the answer is, "Gradually, and then suddenly." The impending fiscal crisis in the United States will make its appearance in the same way.
Seth Klarman
#31. At the worst possible moment, when your fund is down because cheap things have gotten cheaper, you need to have capital, to have clients who will actually love the phone call and-most of the time, if not all the time-add, rather than subtract, capital.
Seth Klarman
#32. We are big fans of fear, and in investing it is clearly better to be scared than sorry.
Seth Klarman
#33. Almost every financial blow up is because of leverage,
Seth Klarman
#34. 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
#35. 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
#36. Having great clients is the key to investment success.
Seth Klarman
#37. 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
#38. There is no amount of bad news that the markets cannot see past.
Seth Klarman
#39. Ultimately, nothing should be more important to investors than the ability to sleep soundly at night.
Seth Klarman
#40. Value investing by its very nature is contrarian.
Seth Klarman
#41. Bad things happen, but really bad things do not. Do buy the dips, especially the lowest quality securities when they come under pressure, because declines will quickly be reversed.
Seth Klarman
#42. Don't short many stocks. Instead they hedge for tail risk with CDS and options. They are happy to incur illiquidity
Seth Klarman
#43. Flexible approach - will look at ALL asset classes.
Seth Klarman
#44. Do not suffer interim losses, relish and appreciate them
Seth Klarman
#45. Macro worries are like sports talk radio. Everyone has a good opinion which probably means that none of them are good.
Seth Klarman
#46. My experience is that short sellers do far better analysis than long buyers because they have to. The market is biased upward over time-as the saying goes, stocks are for the long run.
Seth Klarman
#47. Generally, the greater the stigma or revulsion, the better the bargain.
Seth Klarman
#48. 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
#49. When you buy bargains and they become better bargains, it is easy to start to question yourself, which can impair your judgement. Real or imagined concerns about client redemptions, employee defections can greatly influence behavior away from rational.
Seth Klarman
#50. Benjamin Graham wrote, "Those with enterprise haven't the money, and those with money haven't the enterprise, to buy stocks when they are cheap."
Seth Klarman
#51. The way to maximize outcome is to focus on the process.
Seth Klarman
#52. When a government official says a problem has been "contained," pay no attention.
Seth Klarman
#53. In a rising market, everyone makes money and a value philosophy is unnecessary. But because there is no certain way to predict what the market will do, one must follow a value philosophy at all times.
Seth Klarman
#54. 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
#55. We are not so brazen as to believe that we can perfectly calibrate valuation; determining risk and return for any investment remains an art not an exact science
Seth Klarman
#56. Value investing is predicated on the efficient market hypothesis being wrong.
Seth Klarman
#57. Costs and liabilities are rarely overstated.
Seth Klarman
#58. When all feels calm and prices surge, the markets may feel safe; but, in fact, they are dangerous because few investors are focusing on risk.
Seth Klarman
#59. You must buy on the way down. There is far more volume on the way down than on the way back up, and far less competition among buyers. It is almost always better to be too early than too late, but you must be prepared for price markdowns on what you buy.
Seth Klarman
#60. A simple rule applies: if you don't quickly comprehend what a company is doing, then management probably doesn't either.
Seth Klarman
#61. A value strategy is of little use to the impatient investor since it usually takes time to pay off.
Seth Klarman
#62. The trick of successful investors is to sell when they want to, not when they have to.
Seth Klarman
#64. Ratings agencies are highly conflicted, unimaginative dupes. They are blissfully unaware of adverse selection and moral hazard. Investors should never trust them.
Seth Klarman
#65. Always remembering that we might be wrong, we must contemplate alternatives, concoct hedges, and search vigilantly for validation of our assessments. We always sell when a security's price begins to reflect full value, because we are never sure that our thesis will be precisely correct.
Seth Klarman
#66. All an investor can do is follow a consistently disciplined and rigorous approach; over time the returns will come
Seth Klarman
#67. The government can indefinitely control both short-term and long-term interest rates.
Seth Klarman
#68. Right at the core, the mainstream has it backwards. Warren Buffett often quips that the first rule of investing is to not lose money, and the second rule is to not forget the first rule. Yet few investors approach the world with such a strict standard of risk avoidance.
Seth Klarman
#69. Loss avoidance must be the cornerstone of your investment philosophy.
Seth Klarman
#70. I think Buffett is a better investor than me because he has a better eye toward what makes a great business. And when I find a great business I'm happy to buy it and hold it. Most businesses don't look so great to me.
Seth Klarman
#71. 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
#72. When managers are afraid of redemptions, they get liquid. We all saw how many managers went from leveraged long in 2007 to huge net cash in 2008, when the right thing to do in terms of value would have been to do the opposite.
Seth Klarman
#74. 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
#75. Selling, in particular, can be a challenge; many investors are tempted to become more optimistic when a security is performing well. This temptation must be resisted; tax considerations aside, when a security reaches full valuation, there is no longer a reason to own it.
Seth Klarman
#76. Markets need not be in sync with one another. Simultaneously, the bond market can be priced for sustained tough times, the equity market for a strong recovery, and gold for high inflation. Such an apparent disconnect is indefinitely sustainable.
Seth Klarman
#77. The inability to hold cash and the pressure to be fully invested at all times meant that when the plug was pulled out of the tub, all boats dropped as the water rushed down the drain.
Seth Klarman
#78. All investors must come to terms with the relentless continuity of the investment process.
Seth Klarman
#79. Avoiding where others go wrong is an important step in achieving investment success. In fact, it almost assures it.
Seth Klarman
#80. The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.
Seth Klarman
#81. Depressions aren't good but the depression mentality is good.
Seth Klarman
#82. The strategy of buying what's in favor is a fool's errand, ensuring long-term underperformance. Only by standing against the prevailing winds - selectively, but resolutely - can an investor prosper over time. But for a while, a value investor typically underperforms.
Seth Klarman
#83. Value investing is at its core the marriage of a contrarian streak and a calculator.
Seth Klarman
#84. Excess capacity in people, machines, or property will be quickly absorbed.
Seth Klarman
#85. Investing today may well be harder than it has been at any time in our three decades of existence,
Seth Klarman
#86. At equal returns, public investments are generally superior to private investments not only because they are more liquid but also because amidst distress, public markets are more likely than private ones to offer attractive opportunities to average down.
Seth Klarman
#87. I think markets will never be efficient because of human nature.
Seth Klarman
#88. As Buffett has often observed, value investing is not a concept that can be learned and gradually applied over time. It is either absorbed and adopted at once, or it is never truly learned.
Seth Klarman
#89. In investing it is never wrong to change your mind. It is only wrong to change your mind and do nothing about it.
Seth Klarman
#90. Individual and institutional investors alike frequently demonstrate an inability to make long-term investment decisions based on business fundamentals.
Seth Klarman
#91. Do not trust financial market risk models. Despite the predilection of some analysts to model the financial markets using sophisticated mathematics, the markets are governed by behavioral science, not physical science.
Seth Klarman
#92. Sometimes buying early on the way down looks like being wrong, but it isn't.
Seth Klarman
#93. 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
#94. The best protection against risk is knowing what you are doing.
Seth Klarman
#95. 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
#96. We work really hard never to get confused with what we know from what we think or hope or wish.
Seth Klarman
#97. I find value investing to be a stimulating, intellectually challenging, ever changing, and financially rewarding discipline
Seth Klarman
#99. Great investments don't just knock on the door and say "buy me".
Seth Klarman
#100. Many LBOs are man-made disasters. When the price paid is excessive, the equity portion of an LBO is really an out-of-the-money call option. Many fiduciaries placed large amounts of the capital under their stewardship into such options in 2006 and 2007.
Seth Klarman
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