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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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Seth Klarman
Age: 67
Born: 1957
Born: May 21
New York City
New York
Seth Andrew Klarman
Risk
Despite
Science
Mathematics
Predilection
Using
Behavioral
Market
Analysts
Financial
Governed
Models
Markets
Physical
Sophisticated
Trust
Model

More quotes by Seth Klarman

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The single greatest edge an investor can have is a long-term orientation.
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A value strategy is of little use to the impatient investor since it usually takes time to pay off.
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There are only a few things investors can do to counteract risk: diversify adequately, hedge when appropriate, and invest with a margin of safety. It is a precisely because we do not and cannot know all the risks of an investment that we strive to invest at a discount. The bargain element helps to provide a cushion for when things go wrong.
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When people give away stocks based on forced selling or fear that is usually a great opportunity.
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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.
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Typically, we make money when we buy things. We count the profits later, but we know we have captured them when we buy the bargain.
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Because investors are not usually penalized for adhering to conventional practices, doing so is the less professionally risky strategy, even though it virtually guarantees against superior performance.
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Generally, the greater the stigma or revulsion, the better the bargain.
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When all feels calm and prices surge, the markets may feel safe but, in fact, they are dangerous because few investors are focusing on risk.
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We don't deal in absolutes. We deal in probabilities.
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Value investing is predicated on the efficient market hypothesis being wrong.
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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 suffer interim losses, relish and appreciate them
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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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Hold cash when opportunities are not presenting themselves.
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Once you adopt a value-investment strategy, any other investment behavior starts to seem like gambling.
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If another person were to enter the building, it would once again be empty.
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The near absence of bargains works as a reverse indicator for us. When we find there is little worth buying, there is probably much worth selling.
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Investing is the intersection of economics and psychology.
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Having great clients is the key to investment success.
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