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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.

Seth Klarman

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Seth Klarman
Age: 67
Born: 1957
Born: May 21
New York City
New York
Seth Andrew Klarman
Difficult
Risk
Apart
Excessive
Makes
Stand
Fully
Posture
Take
Ways
Market
Invested
Long
Head
Pressure
Orientation
Way
Term
Perspective
Crowd
Centric
Times
Short
Crowds
Manifests
Everyone
Produce
Several
Leverage
Use
Taking
Gun
Encourages

More quotes by Seth Klarman

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When a government official says a problem has been contained, pay no attention.
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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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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.
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Almost no one will accept responsibility for his or her role in precipitating a crisis: not leveraged speculators, not willfully blind leaders of financial institutions, and certainly not regulators, government officials, ratings agencies or politicians.
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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.
Seth Klarman
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Almost every financial blow up is because of leverage.
Seth Klarman
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When you buy bargains and they become better bargains, it is easy to start to question yourself, which can impair your judgement. Real or imagined concerns about client redemptions, employee defections can greatly influence behavior away from rational.
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Be indifferent if you lose your short term clients, remember they are your own worst enemy
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It turns out that value investing is something that is in your blood. There are people who just don't have the patience and discipline to do it, and there are people who do. So it leads me to think it's genetic.
Seth Klarman
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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.
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Investors need to pick their poison: Either make more money when times are good and have a really ugly year every so often, or protect on the downside and don't be at the party so long when things are good.
Seth Klarman
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When managers are afraid of redemptions, they get liquid. We all saw how many managers went from leveraged long in 2007 to huge net cash in 2008, when the right thing to do in terms of value would have been to do the opposite.
Seth Klarman
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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
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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
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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.
Seth Klarman
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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
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The inability to hold cash and the pressure to be fully invested at all times meant that when the plug was pulled out of the tub, all boats dropped as the water rushed down the drain.
Seth Klarman
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It sounds kind of crazy, but in times of turmoil in the market, I've felt a sort of serenity in knowing that I've checked and re-checked my work, one plus one still equals two regardless of where a stock trades right after I buy it.
Seth Klarman
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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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Having great clients is the key to investment success.
Seth Klarman