Investment success cannot be captured in a mathematical equation or a computer program. Seth Klarman More Quotes by Seth Klarman More Quotes From Seth Klarman 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 strategymaypeople 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 risklevelsfall 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 targetriskfocus 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 matterviewslong Like to have a catalyst - reduces dependence on the market: Distressed debt inherently has a catalyst - maturity. Seth Klarman catalystdebtmaturity 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 decisionopportunitylooks Short-term performance envy causes many of the shortcomings that lock most investors into a perpetual cycle of underachievement. Watch your competitors not out of jealousy but out of respect and focus your efforts not on replicating others' portfolios but on looking for opportunities where they are not. The only way for investors to significantly outperform is to periodically stand far apart from the crowd, something few are willing, or able, to do. Seth Klarman envyfocusopportunity In contrast to the speculators preoccupation with rapid gain, value investors demonstrate their risk aversion by striving to avoid loss. Seth Klarman aversionriskloss The real secret to investing is that there is no secret to investing. Seth Klarman investingrealsecret Avoiding where others go wrong is an important step in achieving investment success. In fact, it almost assures it. Seth Klarman investment-successimportantfacts We are big fans of fear, and in investing it is clearly better to be scared than sorry. Seth Klarman investingfanssorry The government - the ultimate short-term-oriented player - cannot withstand much pain in the economy or the financial markets. Bailouts and rescues are likely to occur, though not with sufficient predictability for investors to comfortably take advantage. The government will take enormous risks in such interventions, especially if the expenses can be conveniently deferred to the future. Some of the price-tag is in the form of back- stops and guarantees, whose cost is almost impossible to determine. Seth Klarman paingovernmentplayer A simple rule applies: if you don't quickly comprehend what a company is doing, then management probably doesn't either. Seth Klarman companymanagementsimple 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 enterprisehavens Be indifferent if you lose your short term clients, remember they are your own worst enemy Seth Klarman worst-enemyclientsremember 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 makeupsavingfall Investing is the intersection of economics and psychology. The analysis is actually the easy part. The economics, the valuation of the business isn't that hard. The psychology - how much do you buy, do you buy it at this price, do you wait for a lower price, what do you do when it looks like the world might end - those things are harder. Knowing whether you stand there, buy more, or whether something has legitimately gone wrong and you need to sell, those are harder things. That you learn with experience, by having the right psychological makeup. Seth Klarman makeupknowingwaiting 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 successfulcollegekids 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 efforthumilitysuccessful Sometimes buying early on the way down looks like being wrong, but it isn't. Seth Klarman investinglooksway
