Seth Klarman a famous value investor and philanthropist is the founder and CEO of the Boston-based hedge fund Baupost Group which manages $30 billion in assets.
Born in 1957 Klarman grew up with an early interest in investing purchasing his first stock at age 10.
He pursued economics at Cornell University and later attended Harvard Business School. Klarman’s investment approach influenced by Benjamin Graham focuses on buying undervalued assets and has resulted in a 20% compounded return since Baupost’s inception in 1982.
His book “Margin of Safety” is considered a cult classic among investors selling for up to $3000 on Amazon.
Klarman’s foundation holds assets worth $640 million. Although he was once a major Republican donor he publicly denounced Trump in 2016 and has since supported the Democratic Party.
Let’s go through some of the best quotes by Seth Klarman on investing and finance.
Best Seth Klarman Quotes
When a Wall Street analyst or broker expresses optimism, investors must take it with a grain of salt. ~ Seth Klarman.
Investors will frequently not know why security prices fluctuate. ~ Seth Klarman.
One must understand the importance of an endless drive to get information and seek value. ~ Seth Klarman.
An investor’s time is required both to monitor current holdings and to investigate potential new investments. ~ Seth Klarman.
Financial market innovations are good for Wall Street but bad for clients. ~ Seth Klarman.
Avoiding where others go wrong is an important step in achieving investment success. In fact, it almost assures it. ~ Seth Klarman.
Being fully invested at all times will at best generate mediocre returns; at worst they entail both a high opportunity cost – foregoing the next good opportunity to invest – and the risk of appreciable loss. ~ Seth Klarman.
The disciplined pursuit of bargains makes value investing very much a risk-averse approach. ~ Seth Klarman.
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.
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.
Do not suffer interim losses, relish and appreciate them. ~ Seth Klarman.
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 realized. The element of a bargain is the key to the process. ~ Seth Klarman.
The avoidance of loss is the surest way to ensure a profitable outcome. ~ Seth Klarman.
By investing at a discount, Benjamin Graham knew that he was unlikely to experience losses. ~ Seth Klarman.
Value investing is predicated on the efficient market hypothesis being wrong. ~ Seth Klarman.
The hard part is discipline, patience and judgement. ~ Seth Klarman.
Indeed, investors should expect prices to fluctuate and should not invest in securities if they cannot tolerate some volatility. ~ Seth Klarman.
Loss avoidance must be the cornerstone of your investment philosophy. ~ Seth Klarman.
I find value investing to be a stimulating, intellectually challenging, ever changing, and financially rewarding discipline. ~ Seth Klarman.
Top Seth Klarman Quotes
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.
The trick of successful investors is to sell when they want to, not when they have to. ~ Seth Klarman.
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.
We worry top-down, but we invest bottom-up. ~ Seth Klarman.
Value investors should completely exit a security by the time it reaches full value; owning overvalued securities is the realm of speculators. ~ Seth Klarman.
We work really hard never to get confused with what we know from what we think or hope or wish. ~ Seth Klarman.
The future is not predictable except within fairly wide boundaries. ~ Seth Klarman.
Value investors have to be patient and disciplined, but what I really think is you need not to be greedy. If you’re greedy and you leverage, you blow up. Almost every financial blow up is because of leverage. ~ Seth Klarman.
Always look for forced urgent selling. ~ Seth Klarman.
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.
Value investing is at its core the marriage of a contrarian streak and a calculator. ~ Seth Klarman.
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.
Once you adopt a value-investment strategy, any other investment behavior starts to seem like gambling. ~ Seth Klarman.
Popular Seth Klarman Quotes
How do value investors deal with the analytical necessity to predict the unpredictable? The only answer is conservatism. ~ Seth Klarman.
Since value investors attempt to buy securities trading at a considerable discount from the value of a business’s underlying assets, a liquidation is one way for investors to realize profits. ~ Seth Klarman.
A simple rule applies: if you don’t quickly comprehend what a company is doing, then management probably doesn’t either. ~ Seth Klarman.
Generally, the greater the stigma or revulsion, the better the bargain. ~ Seth Klarman.
Patience and discipline can make you look foolishly out of touch until they make you look prudent and even prescient. ~ Seth Klarman.
Financially distressed and bankrupt securities are analytically complex and often illiquid. ~ Seth Klarman.
Since no investor is infallible and not investment is perfect, there is considerable merit in being able to change one’s mind. ~ Seth Klarman.
Investment opportunity is a function of price, which is established in the marketplace. ~ Seth Klarman.
Investors who are out of touch with the markets will find it difficult to be in touch with buying and selling opportunities regularly created by the markets. ~ Seth Klarman.
Value investing is predicated on the efficient market hypothesis being wrong. ~ Seth Klarman.
We don’t deal in absolutes. We deal in probabilities. ~ Seth Klarman.
It is helpful to recognize that there are cycles of investment fashion. ~ Seth Klarman.
Famous Seth Klarman Quotes
Investing is the intersection of economics and psychology. ~ Seth Klarman.
Buying is easier, selling is harder. You can never know how big a bargain you will get tomorrow. So always keep a little in reserve. Buying a dollar for 50 cents could become 40 cents tomorrow. ~ Seth Klarman.
In contrast to the speculators preoccupation with rapid gain, value investors demonstrate their risk aversion by striving to avoid loss. ~ Seth Klarman.
Investment success cannot be captured in a mathematical equation or a computer program. ~ Seth Klarman.
Once you adopt a value-investment strategy, any other investment behavior starts to seem like gambling. ~ Seth Klarman.
Most institutional investors feel compelled to swing at almost every pitch and forgo batting selectivity for frequency. ~ Seth Klarman.
The cost of performing well in bad times can be relative underperformance in good times. ~ Seth Klarman.
Investors believe that over the long run security prices tend to reflect fundamental developments involving the underlying businesses. ~ Seth Klarman.
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.
Inspiring Seth Klarman Quotes
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.
Having clients with a long-term orientation is crucial. Nothing else is as important to the success of an investment firm. ~ Seth Klarman.
A value strategy is of little use to the impatient investor since it usually takes time to pay off. ~ Seth Klarman.
Never stop reading. History doesn’t repeat, but it does rhyme. ~ Seth Klarman.
The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions. ~ Seth Klarman.
Only when they cannot find bargains should they default to holding cash. ~ Seth Klarman.
Be focused on process and not outcome. ~ Seth Klarman.
The single greatest edge an investor can have is a long-term orientation. ~ Seth Klarman.
You cannot ignore the market – ignoring a source of investment opportunities would obviously be a mistake – but you must think for yourself and not allow the market to direct you. ~ Seth Klarman.
Sometimes buying early on the way down looks like being wrong, but it isn’t. ~ Seth Klarman.
Over the long run, the crowd is always wrong. ~ Seth Klarman.
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.
I don’t have a Bloomberg on my desk. I don’t care. ~ Seth Klarman.
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.
Hold cash when opportunities are not presenting themselves. ~ Seth Klarman.
I think markets will never be efficient because of human nature. ~ Seth Klarman.
