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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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Seth Klarman
Age: 67
Born: 1957
Born: May 21
New York City
New York
Seth Andrew Klarman
Never
Prepared
Markets
Regularity
Economy
Sharp
Scenario
Happened
Sudden
Adverse
Whatever
Bound
Contemplate
Reality
Unexpected
Scenarios
Must
Bounds
Swings
Always
Worse
Contemplating
Things
Including
Occur
Downward

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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.
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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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We are big fans of fear, and in investing it is clearly better to be scared than sorry.
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Avoiding where others go wrong is an important step in achieving investment success. In fact, it almost assures it.
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Having great clients is the key to investment success.
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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.
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I think Buffett is a better investor than me because he has a better eye toward what makes a great business. And when I find a great business I'm happy to buy it and hold it. Most businesses don't look so great to me.
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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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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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Depressions aren't good but the depression mentality is good.
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We don't deal in absolutes. We deal in probabilities.
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The single greatest edge an investor can have is a long-term orientation.
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Excess capacity in people, machines, or property will be quickly absorbed.
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Be focused on process and not outcome
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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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One of the biggest challenges in investing is that the opportunity set available today is not the complete opportunity set that should be considered. Limiting your opportunity set to the one immediately at hand would be like limiting your spouse to the students you met in high school
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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.
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Individual and institutional investors alike frequently demonstrate an inability to make long-term investment decisions based on business fundamentals.
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Be indifferent if you lose your short term clients, remember they are your own worst enemy
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We continue to adhere to a common-sense view of risk - how much we can lose and the probability of losing it. While this perspective may seem over simplisticor even hopelessly outdated, we believe it provides a vital clarity about the true risks in investing.
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