Seth Klarman Quotes
373 Seth Klarman Quotes
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[In November 2011.] It’s almost like you have to slow the game down. Like they talk about baseball speeding up on you. You need to slow it down. I can buy this thing for a huge fraction of what it’s worth. What am I worried about if it goes down a little.
Seth Klarman
[In November 2011.] I think the analysis is the easy part.
Seth Klarman
[In November 2011.] 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
[In November 2011.] You need to balance arrogance and humility… When you buy anything it’s an arrogant act. You’re saying the markets are gyrating and someone wants to sell it to me and I know more than everybody else and I’m going to stand here and buy and I’m going to pay an eighth more than the next guy wants to pay and buy it. That’s arrogant. And you need the humility to say ‘I might be wrong.’ And you have to do that on everything.
Seth Klarman
[In November 2011.] Warren [Buffett] evolved through three stages. He went from buying cigar butts and getting the last few puffs for free to buying great businesses at really cheap prices to buying and holding great businesses at so-so prices. And maybe even this new area of buying weird securities from crappy businesses at better than market prices. Like BoA preferred or whatever. I’m still in phase one. We’re still buying cigar butts – there’s a good business there in buying them and it’s a lot of fun.
Seth Klarman
[In November 2011.] I think that Buffett’s a better investor than me because he has a better eye towards what makes a great business. And when I find I great business I’m happy to buy it and hold it [but] most businesses don’t look great to me.
Seth Klarman
[In November 2011.] I don’t have a Bloomberg on my desk. I don’t care.
Seth Klarman
[In November 2011 on what is on his desk if there is not a Bloomberg.] Giant piles of paper that are at risk of falling onto me at any one moment. And I have a computer and a phone.
Seth Klarman
[In November 2011 on what he does at his desk.] Thinking big thoughts.
Seth Klarman
[In November 2011.] We’re not traders. There’s a wonderful story -
Chris Browne at Tweedy Browne tells a story of how they were interviewing somebody to come join their firm. And after the interview he’s walking the fellow to the elevator and the fellow says ‘You know it’s amazing here at Tweedy Browne, at most firms you can tell from the atmosphere and the place whether the markets up or the markets down. At Tweedy Browne you can’t even tell if the market’s open.’ And I think it’s like that at our firm.
Seth Klarman
[In November 2011.] We’re making long term investments 3-5 years or longer… The only reason we care about the gyrations is if we can buy something even cheaper.
Seth Klarman
[In November 2011.] We benefit from volatility. We provide liquidity when people want to sell something in a hurry. Presumably it’s a transaction between two consenting adults. When somebody owns a bond that was AAA and is now CCC… our rhythm is opposite most of the markets rhythm. We buy something when the markets down, we sell something when the market’s up.
Seth Klarman
[In November 2011.] Buying’s easier. Selling’s harder. It’s hard to know when to get out.
Seth Klarman
[In November 2011.] You can never tell how big a bargain you might get offered tomorrow.
Seth Klarman
[In November 2011 on his biggest mistake.] I’ve been fortunate if you’re talking about at work. I’ve never really screwed up a lot. We went through tumultuous times, we stuck to our discipline. We’ve made mistakes where we’ve often underestimated the leverage in the situation… Getting into bed with bad people.
Seth Klarman
[In November 2011.] Leverage can magnify your returns but it can also magnify your losses.
Seth Klarman
[In November 2011.] A lot of stocks are cheap for a reason.
Seth Klarman
[In November 2011.] Good managements add value… Bad managements will think only about themselves.
Seth Klarman
[In November 2011.] If we put the clients first, we’re going to do great. And if we put the clients second the whole thing can blow up.
Seth Klarman
[In November 2011.] If you said ‘Seth I need you to make me some money by the end of the year.’ I would tell you - talk to somebody else… It’s not only not what I do but no-one would know how to do that. How would we guess where things are trading in three months or even in twelve months. Over five or ten years we know how to do that. Over a few months we don’t.
Seth Klarman
[In November 2011 on large publicly listed institutions who manage money.] There’s a giant separation between the interests of the money and the interests of the stewards of the money.
Seth Klarman
[In January 2013.] When buyers are numerous and sellers scarce, opportunity is bound to be limited. But when sellers are plentiful and highly motivated while potential buyers are reticent, great investment opportunities tend to surface.
Seth Klarman
[In January 2013 on the Federal Reserve and European Central Bank interest rate and QE policies.] When today’s aggressive policies finally end and market forces reassert themselves, those who grabbed desperately for return and bore excessive risk to do so will encounter substantial market value declines.
Seth Klarman
[In January 2013.] If economics were a hard science like chemistry, you’d mix a little of this with a bit of that and the concoction would lead to strong economic growth, full employment, rising home prices, buoyant financial markets, and low inflation every time. But economics is a soft science, and real life simply doesn’t work so predictably. Though economists might wish otherwise, economics is, at its core, behavioral.
Seth Klarman
[In January 2013 on the actions of investors on low/zero interest rates.] When investors come to believe that downside tail risk has been extinguished, it emboldens them to pay higher prices, there by accepting more risk with less return.
Seth Klarman
[In January 2013.] The content, though not the timing of the next chapter in market history is quite predictable. Few will say they saw it coming, though, in fact, everyone could have seen it if they had only chosen to look.
Seth Klarman
[In January 2013.] People tend to underestimate the odds of extreme events that haven’t occurred recently.
Seth Klarman
[In January 2013.] Just because a reversal of something unsustainable hasn’t happened yet doesn’t mean it won’t. Risk avoided aren’t risks nullified; often, they fester and grow even more dangerous.
Seth Klarman
[In January 2013.] We have stuck to the bedrock principles of value investing and are far better off for it.
Seth Klarman
[In January 2013.] We pursue opportunity largely off the beaten path, sifting through the debris of financial wreckage, out-of-favor securities and asset classes in which there is limited competition. We specialize in the highly complex while mostly avoiding plain vanilla, which is typically more fully priced. We happily incur illiquidity but only when we get paid well for it, which is usually when others rapidly seek liquidity and rush to sell.
Seth Klarman
[In January 2013.] For thirty years, we’ve been more focused on risk than on return… We’ve suffered market-value declines in only two years out of thirty.
Seth Klarman
[In January 2013.] Some twenty-one years ago, ‘Margin of Safety’ was published, which spelled out why financial markets weren’t, and never would be efficiently priced and what we intended to do about it. I endeavoured to make the book timeless – more about how to think about investing than about what one should buy or sell at any given moment.
Seth Klarman
[In January 2013.] We clear a high bar before making an investment, and we resist the many pressures that other investors surely feel to lower that bar. The prospective return must always be generous relative to the risk incurred.
Seth Klarman
[In January 2013.] A bargain price is necessary but not sufficient for making an investment, because sometimes securities that seem superficially inexpensive really aren’t. ‘Value traps’ are cheap for a reason – perhaps an inept and entrenched management, a poor history of capital allocation, or assets whose value is in inexorable decline. A catalyst for the realization of underlying value is something we seek, but we will also make investments without a catalyst when the price is sufficiently compelling.
Seth Klarman
[In January 2013.] It is easy to find middling opportunities but rare to find exceptional ones.
Seth Klarman
[In January 2013.] When bargains are lacking, we are comfortable holding cash. This approach has been rewarding…
Seth Klarman
[In January 2013.] We prefer to invest with near-anonymity because good ideas are scarce and not to be advertised, while selling is best done in the absence of energetic competition from others.
Seth Klarman
[In January 2013.] Avoiding and managing risk is a 24/7/365 obsession for us.
Seth Klarman
[In January 2013.] We will never put our faith in computer risk models; instead we apply sound judgment and common sense to our assessment of risk.
Seth Klarman
[In January 2013.] We invest the vast majority of our capital directly alongside client capital.
Seth Klarman
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