One of the principles of Seth Klarman’s investment strategy is risk aversion. He’s not alone. Buffett uses it, who learned it from Ben Graham, along with several others because they place capital preservation above high returns.
In a paradoxical sort of way, Klarman has achieved higher returns, while focused on preserving capital, as a result of his highly disciplined strategy. That, of course, does not mean high returns are guaranteed. Rather, it only means that there’s a higher chance of avoiding big losses when you manage for risk.
During an MBA lecture, Seth Klarman gave his take on risk aversion: Continue Reading…