While it might seem that anyone can be a value investor, the essential characteristics of this type of investor-patience, discipline, and risk aversion-may well be genetically determined. Seth Klarman More Quotes by Seth Klarman More Quotes From Seth Klarman My view is that an investor is better off knowing a lot about a few investments than knowing a little about each of a great many holdings. One's very best idea's are likely to generate higher returns for a given level of risk than one's hundredth or thousandth best idea. Seth Klarman knowingviewsideas As Buffett has often observed, value investing is not a concept that can be learned and gradually applied over time. It is either absorbed and adopted at once, or it is never truly learned. Seth Klarman buffettadoptedinvesting The trick of successful investors is to sell when they want to, not when they have to. Seth Klarman trickssuccessfulwant Macro worries are like sports talk radio. Everyone has a good opinion which probably means that none of them are good. Seth Klarman worrysportsmean Value investors will not invest in businesses that they cannot readily understand or ones they find excessively risky. Hence few value investors will own the shares of technology companies. Many also shun commercial banks, which they consider to have unanalyzable assets, as well as property and casualty insurance companies, which have both unanalyzable assets and liabilities. Seth Klarman commercial-bankstechnologyshare Frequent comparative ranking can only reinforce a short-term investment perspective. It is understandably difficult to maintain a long-term view when, faced with the penalties for poor short-term performance, the long-term view may well be from the unemployment line ... Relative-performance-oriented investors really act as speculators. Rather than making sensible judgments about the attractiveness of specific stocks and bonds, they try to guess what others are going to do and then do it first. Seth Klarman perspectiveviewslong Investment success cannot be captured in a mathematical equation or a computer program. Seth Klarman investment-successmathematical-equationscomputer 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 risksleepnight 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 blowneedsthinking In a crisis, stocks of financial companies are great investments, because the tide is bound to turn. Massive losses on bad loans and soured investments are irrelevant to value; improving trends and future prospects are what matter, regardless of whether profits will have to be used to cover loan losses and equity shortfalls for years to come. Seth Klarman what-matterslossyears A commodity doesn't have the same characteristics as a security, characteristics that allow for analysis. Other than a recent sale or appreciation due to inflation, analyzing the current or future worth of a commodity is nearly impossible. Seth Klarman analyzinganalysisappreciation Pressure to produce over the short term - a gun to the head of everyone - encourages excessive risk taking which manifests itself in several ways - fully invested posture at all times, the use of leverage, and a market centric orientation that makes it difficult to stand apart from the crowd and take a long term perspective. Seth Klarman perspectivegunlong Value investors should completely exit a security by the time it reaches full value; owning overvalued securities is the realm of speculators. Seth Klarman realmsexitshould Loss avoidance must be the cornerstone of your investment philosophy. Seth Klarman investmentlossphilosophy Be sure that you are well compensated for illiquidity - especially illiquidity without control - because it can create particularly high opportunity costs. Seth Klarman wellscostopportunity Warren Buffett likes to say that the first rule of investing is "Don't lose money," and the second rule is, "Never forget the first rule." I too believe that avoiding loss should be the primary goal of every investor. This does not mean that investors should never incur the risk of any loss at all. Rather "don't lose money" means that over several years an investment portfolio should not be exposed to appreciable loss of principal. Seth Klarman lossmeanbelieve When excesses such as lax lending standards become widespread and persist for some time, people are lulled into a false sense of security, creating an even more dangerous situation. In some cases, excesses migrate beyond regional or national borders, raising the ante for investors and governments. These excesses will eventually end, triggering a crisis at least in proportion to the degree of the excesses. Correlations between asset classes may be surprisingly high when leverage rapidly unwinds. Seth Klarman dangerous-situationscreatinggovernment It is important to remember that value investing is not a perfect science. It is an, with an ongoing need for judgment, refinement, patience, and reflection. It requires endless curiosity, the relentless pursuit of additional information, the raising of questions, and the search for answers. It necessitates dealing with imperfect information - knowing you will never know everything and that that must not prevent you from acting. It requires a precarious balance between conviction, steadfastness in the face of adversity, and doubt - keeping in mind the possibility that you could be wrong. Seth Klarman adversityknowingreflection When people give away stocks based on forced selling or fear that is usually a great opportunity. Seth Klarman opportunitygivingpeople It is crucial to have a strategy in place before problems hit, precisely because no one can accurately predict the future direction of the stock market or economy. Value investing, the strategy of buying stocks at an appreciable discount from the value of the underlying businesses, is one strategy that provides a road map to successfully navigate not only through good times but also through turmoil. Seth Klarman mapsinvestingbuying
