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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.

Seth Klarman

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Seth Klarman
Age: 67
Born: 1957
Born: May 21
New York City
New York
Seth Andrew Klarman
Agency
Ratings
Highly
Adverse
Trust
Unaware
Moral
Hazards
Blissfully
Never
Agencies
Unimaginative
Rating
Conflicted
Selection
Dupes
Investors
Hazard

More quotes by 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.
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Macro worries are like sports talk radio. Everyone has a good opinion which probably means that none of them are good.
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Successful investors must temper the arrogance of taking a stand with a large dose of humility, accepting that despite their efforts and care, they may in fact be wrong.
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We don't deal in absolutes. We deal in probabilities.
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Value investing by its very nature is contrarian.
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When people give away stocks based on forced selling or fear that is usually a great opportunity.
Seth Klarman
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Over the long run, the crowd is always wrong.
Seth Klarman
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The government can indefinitely control both short-term and long-term interest rates.
Seth Klarman
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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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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.
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When a government official says a problem has been contained, pay no attention.
Seth Klarman
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While some might mistakenly consider value investing a mechanical tool for identifying bargains, it is actually a comprehensive investment philosophy that emphasizes the need to perform in-depth fundamental analysis, pursue long-term investment results, limit risk, and resist crowd psychology.
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Generally, the greater the stigma or revulsion, the better the bargain.
Seth Klarman
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Excess capacity in people, machines, or property will be quickly absorbed.
Seth Klarman
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Why should the immediate opportunity set be the only one considered, when tomorrow's may well be considerably more fertile than today's?
Seth Klarman
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Risk is not inherent in an investment it is always relative to the price paid. Uncertainty is not the same as risk. Indeed, when great uncertainty - such as in the fall of 2008 - drives securities prices to especially low levels, they often become less risky investments.
Seth Klarman
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The single greatest edge an investor can have is a long-term orientation.
Seth Klarman
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Individual and institutional investors alike frequently demonstrate an inability to make long-term investment decisions based on business fundamentals.
Seth Klarman
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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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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