Seth Klarman Quotes
373 Seth Klarman Quotes
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[In January 2009.] In investing, certainty can be a serious problem, because it causes one not to reassess flawed conclusions. Nobody can know all the facts. Instead, one must rely on shreds of evidence, kernels of truth, and what one suspects to be
true but cannot prove.
Seth Klarman
[In January 2009.] 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
[In May 2009.] It’s always smart to prepare for disaster… I like to store some extra bottled water in the basement, but my wife thinks it’s too much clutter. I told her I’d share my water with her anyway.
Seth Klarman
[In May 2009.] The overwhelming majority of people are comfortable with consensus, but successful investors tend to have a contrarian bent.
Seth Klarman
[In May 2009.] 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
[In May 2010.] When I think of Graham and Dodd… it’s not just in terms of investing but also in terms of thinking about investing… It is easy to be persuaded that buying bargains is better than buying overpriced instruments.
Seth Klarman
[In May 2010.] Having great clients is the real key to investment success. It is probably more important than any other factor in enabling a manager to take a long-term time frame when the world is putting so much pressure on short-term results.
Seth Klarman
[In May 2010 on how investors actions cause fund managers to sell even when shares are cheap.] When [fund] managers are afraid of redemptions, they get liquid.
Seth Klarman
[In May 2010.] We don’t have a pharmaceutical analyst, an oil and gas analyst, a financials analyst. Instead, we are organized by opportunity. We have analysts whose focus is on spinoffs or distressed debt or post-bankrupt equities.
Seth Klarman
[In May 2010.] Our approach has always been to find compelling bargains. We are never fully invested if there is nothing great to do.
Seth Klarman
[In May 2010.] In investing, whenever you act, you are effectively saying, ‘I know more than the market. I am going to buy when everybody else is selling. I am going to sell when everybody else is buying.’ That is arrogant, and we always need to temper it with the humility of knowing we could be wrong, that things can change…
Seth Klarman
[In May 2010.] I… think indexing is a horrendous idea… That said, the average person who spends a very small amount of time on investing doesn’t have a lot of good choices out there.
Seth Klarman
[In May 2010.] I am much more inclined to buy a stock that has been kicked out of an index because then it may have value characteristics – it has underperformed.
Seth Klarman
[In May 2010.] The prevailing view has been that the market will earn a high rate of return if the holding period is long enough, but entry point is what really matters.
Seth Klarman
[In May 2010.] Over time, politicians find it easier to create inflation and debase currency than to tackle hard problems…
Seth Klarman
[In May 2010.] I am hopeful that people will understand that we can’t all just exist on handouts and no taxes…
Seth Klarman
[In May 2010.] Buying anything that is a collectible, has no cash flow, and is based only on a future sale to a greater fool – is speculating.
Seth Klarman
[In May 2010.] The line I draw in the sand is that if an asset has cash flow or the likelihood of cash flow in the near term and is not purely dependent on what a future buyer might pay, then it’s an investment. If an asset’s value is totally dependent on what a future buyer might pay, then it’s an investment.
Seth Klarman
[In May 2010.] The investing game has historically been closer to checkers, but now it is more like chess – almost in three dimensions. The possibility that the dollars you make could be worth much less in the future leads an investor to think, ‘How can I protect myself?’
Seth Klarman
[In May 2010.] We would rather underperform in a huge bull market than get clobbered in a really bad bear market.
Seth Klarman
[In May 2010 on hiring for intellectual honesty.] We dwell a lot on past experiences. We ask people, ‘What is the biggest mistake you’ve ever made?’ It’s a very open-ended question because it’s not solely an investment question…
Seth Klarman
[In May 2010.] We don’t sell short at Baupost, but my experience is that short sellers do far better analysis than long buyers because they have to… Short sellers are the market’s police officers.
Seth Klarman
[In May 2010.] We are highly opportunistic, and I will be buying what other people are selling, what is out of favor, what is loathed and despised, where there is financial distress, litigation – basically where there is financial trouble. That is how we direct our search. We don’t have a crystal ball, and so we don’t know what those asset classes will be.
Seth Klarman
[In May 2010.] 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
[In May 2010.] Price is the essential determinant in every investment equation. At some price, every company is a buy; at some price, every company is a hold; and at a still higher price, every company is a sell.
Seth Klarman
[In May 2010.] The problem is that government intervention interfered with the lesson investors needed to learn. Those who stared into the metaphorical abyss are right back at it… Almost everybody… is drinking the Kool-Aid again…
Seth Klarman
[In May 2010.] Jim Grant has a wonderful expression: In Science, progress is cumulative, and in finance, progress is cyclical. Fads will come and go, and people will think we are on to a new thing in finance or investing; but the reality is that it is probably not really new, and if we have seen the movie or read the book, maybe we know how it turns out.
Seth Klarman
[In January 2011.] There comes a responsibility with success, and that is leaving the world better than you found it.
Seth Klarman
[In September 2011 on value investing.] It’s simple enough for anyone to follow, logical, commonsensical, and proven to work.
Seth Klarman
[In November 2011 and history being a series of little steps leading up to something happening.] History doesn’t just happen.
Seth Klarman
[In November 2011 on philanthropy – giving money away being much harder than making money.] Way harder… It’s hard to measure… We want to make sure the money is being used effectively. In fact we are drawn to things that have the possibility of measuring because you’d like to do it well. It’s easy to do it badly.
Seth Klarman
[In November 2011.] I’m a contrarian at heart.
Seth Klarman
[In November 2011.] I’ve had a lot of great mentors in my life.
Seth Klarman
[In November 2011 on why his book ‘Margin of Safety’ sells for over $1,000 on eBay.] The idea for Margin of Safety came when a business school classmate called me up and said ‘Virginia Smith here I’m working at Harper Collins and they’ve asked me to find aspiring authors. Would you like to write a book on investing?’ And I said ‘Yeah I’ll think about that.’ So I wrote the book and they didn’t do a very good job. They didn’t advertise it. Editors kept getting fired, I don’t think because of me. And by the third editor we finished the book and it sold about 5,000 copies and died out… And then it started to get a cult following. And I thought maybe I’ll bring it back someday and raise money for charity and that’s the truth... And I’ve not [yet] found the time or energy to do that.
Seth Klarman
[In November 2011 more on his book ‘Margin of Safety’.] I tried to write it to be accessible to the lay person… In some ways it was meant to be the intellectual successor to ‘The Intelligent Investor’ which was the more accessible of Benjamin Graham’s books. I think it’s another book in that tradition… Maybe if people can’t get something they want it even more.
Seth Klarman
[In November 2011.] I wish I met Ben Graham, I never was fortunate enough to do that.
Seth Klarman
[In November 2011.] Value investing is like an inoculation. You either get it right away or you never get it. And I think it’s just true. I actually think there is a gene for this stuff. Whether it’s a value investing gene or a contrarian gene.
Seth Klarman
[In November 2011.] I think that everybody appreciates a bargain, but when the markets going down most people overreact and get scared. My stock is going down – ‘What am I going to do?’ So if you are buying a sweater and it goes on sale from $400 to $150 you get excited when you get into the store. But if you have a stock or you’re bought the sweater at $400 maybe you’re not so happy. For me it’s natural but for most people it’s fighting human nature.
Seth Klarman
[In November 2011 on a person first finding out about value investing and it ‘clicking’.] When you find out about it, it’s like being let in on this little secret.
Seth Klarman
[In November 2011.] If you can remember that stocks aren’t pieces of paper that gyrate all the time. That stocks are fractional interests in businesses. It all makes sense.
Seth Klarman
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