We don't deal in absolutes. We deal in probabilities. Seth Klarman More Quotes by Seth Klarman More Quotes From Seth Klarman To achieve long-term success over many financial market and economic cycles, observing a few rules is not enough. Too many things change too quickly in the investment world for that approach to succeed. It is necessary instead to understand the rationale behind the rules in order to appreciate why they work when they do and don't when they don't. Seth Klarman appreciate order long 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 sophisticated financial risk To a value investor, investments come in three varieties: undervalued at one price, fairly valued at another price, and overvalued at still some higher price. The goal is to buy the first, avoid the second, and sell the third. Seth Klarman three goal firsts 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 cash-flow pay might While some might mistakenly consider value investing a mechanical tool for identifying bargains, it is actually a comprehensive investment philosophy that emphasizes the need to perform in-depth fundamental analysis, pursue long-term investment results, limit risk, and resist crowd psychology. Seth Klarman intelligent philosophy long 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 rising philosophy way Individual and institutional investors alike frequently demonstrate an inability to make long-term investment decisions based on business fundamentals. Seth Klarman decision fundamentals long 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 investment-success knowing opportunity Graham's wonderful sentence as, an investor needs only two things: cash and courage. Having only one of them is not enough. Seth Klarman cash two needs Almost every financial blow up is because of leverage. Seth Klarman financial blow 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 pieces paper remember I know of no long-time practitioner who regrets adhering to a value philosophy; few investors who embrace the fundamental principles ever abandon this investment approach for another Seth Klarman regret philosophy long One must understand the importance of an endless drive to get information and seek value. Seth Klarman endless importance information Gold is unique because it has the age-old aspect of being viewed as a store of value. Nevertheless, it’s still a commodity and has no tangible value, and so I would say that gold is a speculation. But because of my fear about the potential debasing of paper money and about paper money not being a store of value, I want some exposure to gold. Seth Klarman unique gold age As value investors, our business is to buy bargains that financial market theory says do not exist. We've delivered great returns to our clients for a quarter century-a dollar invested at inception in our largest fund is now worth over 94 dollars, a 20% net compound return. We have achieved this not by incurring high risk as financial theory would suggest, but by deliberately avoiding or hedging the risks that we identified. Seth Klarman return risk clients It's awful to have a depression, but it's a great thing to have a depression mentality because it means that we are not speculating, we are not living beyond our means, we don't quit our job to take a big risk because we know we might not get another job. There is something stable about a country, a society built on those values. Seth Klarman jobs mean country When a stock is selling at a discount to liquidation value per share, a near rock-bottom appraisal, it is frequently an attractive investment. Seth Klarman investment selling rocks 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 competition too-late way 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 safety errors luck We worry top-down, but we invest bottom-up Seth Klarman top-down bottom worry
