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When a Wall Street analyst or broker expresses optimism, investors must take it with a grain of salt.

Seth Klarman

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Seth Klarman
Age: 67
Born: 1957
Born: May 21
New York City
New York
Seth Andrew Klarman
Street
Analyst
Streets
Brokers
Wall
Analysts
Take
Expresses
Must
Investors
Grain
Salt
Optimism
Broker

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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.
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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.
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If you've just stared into the abyss, quickly forget it: the lessons of history can only hold you back.
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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
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Be indifferent if you lose your short term clients, remember they are your own worst enemy
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The overwhelming majority of people are comfortable with consensus, but successful investors tend to have a contrarian bent.
Seth Klarman
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Ratings agencies are highly conflicted, unimaginative dupes. They are blissfully unaware of adverse selection and moral hazard. Investors should never trust them.
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Interestingly, we have beaten the market quite handsomely over this time frame, although beating the market has never been our objective. Rather, we have consistently tried not to lose money and, in doing so, have not only protected on the downside but also outperformed on the upside.
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Value investing by its very nature is contrarian.
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At equal returns, public investments are generally superior to private investments not only because they are more liquid but also because amidst distress, public markets are more likely than private ones to offer attractive opportunities to average down.
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The government can indefinitely control both short-term and long-term interest rates.
Seth Klarman
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Things that have never happened before are bound to occur with some regularity. You must always be prepared for the unexpected, including sudden, sharp downward swings in markets and the economy. Whatever adverse scenario you can contemplate, reality can be far worse.
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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.
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Analysts recommendations may not produce good results. In part this is due to the pressure placed on these analysts to recommend frequently rather than wisely.
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Hold cash when opportunities are not presenting themselves.
Seth Klarman
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Patience and discipline can make you look foolishly out of touch until they make you look prudent and even prescient
Seth Klarman
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Limit risk with: Deep analysis Bargain purchase Sensitivity analysis.
Seth Klarman
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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
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Never stop reading. History doesn't repeat, but it does rhyme.
Seth Klarman
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At Baupost, we constantly ask: 'What should we work on today?' We keep calling and talking. We keep gathering information. You never have perfect information. So you work, work and work. Sometimes we thumb through ValuLine. How you fill your inbox is very important.
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