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Seth Klarman Quotes

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Quote Authors

Benjamin Graham, Bernard Baruch, Charles Ellis, Charlie Munger, Chuck Akre, Daniel Kahneman, David Abrams, David Swensen, Dean Williams, Edward Thorp, Edwin Lefevre, Fred Schwed Jr, Henry Singleton, Hetty Green, Howard Marks, Joel Greenblatt, John Bogle, John Kenneth Galbraith, John Maynard Keynes, John Stuart Mill, John Templeton, Meir Statman, Myron Scholes, Peter Bernstein, Peter Lynch, Philip Carret, Philip Fisher, Richard Thaler, Robert Shiller, Seth Klarman, Stanley Druckenmiller, Walter Schloss, Warren Buffett,

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I think there’s a tendency in the modern world of people wanting their money to be working hard, and I joke that our money is like a couch potato by comparison.
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Seth Klarman
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In my opinion, the market tells you when to buy things. And when things are really cheap, on a Graham and Dodd valuation basis, you should like them more. And when they’re really expensive, you should like them less.
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Seth Klarman
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Investors who find an overly narrow niche to inhabit, prosper for a time but then usually stagnate. Those who move on when the world changes at least have the chance to adapt successfully.
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Seth Klarman
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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.
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Seth Klarman
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If you think of the stock market as a cauldron of minestrone soup that occasionally somebody sticks a ladle in and stirs up, it takes a while before all the vegetables float back to the level that they were at before.
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Seth Klarman
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Avoiding round trips and short-term devastation enables you to be around for the long term.
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Seth Klarman
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The prevailing view has been that the market will earn a high rate of return if the holding period is long enough, but entry point is what really matters.
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Seth Klarman
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I am much more inclined to buy a stock that has been kicked out of an index because then it may have value characteristics -- it has underperformed.
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Seth Klarman
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The line I draw in the sand is that if an asset has cash flow or the likelihood of cash flow in the near term and is not purely dependent on what a future buyer might pay, then it’s an investment. If an asset’s value is totally dependent on the amount a future buyer might pay, then its purchase is speculation.
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Seth Klarman
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We try to protect against tail risk: the risk of unlikely but possible events that could be catastrophic.
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Seth Klarman
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A cheap stock can stay cheap forever, but if you own a bankrupt bond, the process of emerging from bankruptcy and distributing new securities offers a practical catalyst to realize the value.
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Seth Klarman
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All investors need to learn how to be at peace with their decisions.
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Seth Klarman
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When the markets are fairly ebullient, investors tend to hold the least objectionable securities rather than the truly significant bargains.
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Seth Klarman
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Investing is buying a fractional interest in a business and buying debt claims on a business.
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Seth Klarman
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The laws of probabilities tell us that almost anyone can achieve phenomenal success over any given measurement period. It is the task of those evaluating a money manager to ascertain how much of past success is due to luck and how much to skill.
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Seth Klarman
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The question we ask ourselves is, ''What would we be willing to pay to own a security forever?'' Then we determine whether we can buy it at a discount from that figure.
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Seth Klarman
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We try to buy dollars for 50 cents, and to realize the dollar before too much time passes.
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Seth Klarman
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Human nature being what it is, small loopholes are likely to be exploited until they become big ones, and big ones until they turn into financial disasters.
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Seth Klarman
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If the stock market has a period of outperformance of its long-term return, it is inevitably followed by some period of underperformance. But people being optimistic and greedy by nature take the recent short-term outperformance of stocks as a sign of good things to come, rather than a warning of bad things to come.
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Seth Klarman
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In my experience, large increases in assets under management adversely affect returns.
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Seth Klarman
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People always want to believe that this time is different, that there’s something new under the sun, and that through their own ingenuity they can wish away risk.
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Seth Klarman
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The whole reason that our capitalist system works the way it does is because there are cycles, and the cycles self-correct.
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Seth Klarman
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People who chase growth, who chase highfliers, inevitably lose because they paid a premium price. They lose to the people who have more patience and more discipline.
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Seth Klarman
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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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Seth Klarman
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One of the illusions that people on Wall Street have is that they can have perfect information on a stock.
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Seth Klarman
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I think it would be an interesting change for integrity if managers of funds were required to have more of their own money in them.
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Seth Klarman
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One of the nice things about investing is there are many different disciplines that work. You should find one that you’re comfortable with.
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Seth Klarman
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Risk is how much can you lose and what are the chances of losing it.
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Seth Klarman
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Volatility is not risk. And historic volatility does not necessarily project future volatility.
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Seth Klarman
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My experience is that when people want to give something away at a ridiculous price because they have to, not because they want to, that's a good time to buy.
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Seth Klarman
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The way I would think about risk aversion is most people would not want to toss a coin for their entire net worth.
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Seth Klarman
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Your own psychology can be your worst enemy as an investor.
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Seth Klarman
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The way to maximize outcome is to concentrate on process.
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Seth Klarman
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Value investing is, at its core, the marriage of a contrarian streak and a calculator.
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Seth Klarman
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It would be silly to expect every bear market to turn into the Great Depression. It would be equally wrong to expect that a fall from overvalued, to more fairly valued, couldn't badly overshoot on the downside.
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Seth Klarman
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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.
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Seth Klarman
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Market inefficiencies, like tax selling and window dressing, also create mindless selling, as can the deletion of a stock from an index. These causes of mispricing are deep-rooted in human behavior and market structure, unlikely to be extinguished anytime soon.
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Seth Klarman
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It is crucial to have a strategy in place before problems hit, precisely because no one can accurately predict the future direction of the stock market or economy.
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Seth Klarman
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The best investors do not target return; they focus first on risk, and only then decide whether the projected return justifies taking each particular risk.
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Seth Klarman
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The daily blips of the market are, in fact, noise -- noise that is very difficult for most investors to tune out.
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Seth Klarman
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New financial products are typically created for sunny days and are almost never stress-tested for stormy weather.
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Seth Klarman
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Risk is not inherent in an investment; it is always relative to the price paid.
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Seth Klarman
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Nowhere does it say that investors should strive to make every last dollar of potential profit; consideration of risk must never take a backseat to return.
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Seth Klarman
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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.
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Seth Klarman
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Money flows, in effect, can render fundamental analysis futile in the short run, even while creating a compelling longer-term opportunity.
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Seth Klarman
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The point of investing, after all, is not to have a great story to tell; the point of investing is to make money with limited risk.
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Seth Klarman
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The tendency of investors to follow the market's momentum and bet on whatever has worked recently is accompanied by antipathy to whatever hasn't.
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Seth Klarman
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Being extremely early is tantamount to being wrong, so contrarians are well advised to develop an understanding of the psychology of the sellers.
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Seth Klarman
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Investors must never mistake an investment that is down in price for one that is bargain-priced; undervaluation is determined only by a security's price compared to its underlying value.
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Seth Klarman
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We consider for each of our investments not only whether a security is undervalued but why it is undervalued. If the reason is that there are uninformed or emotional sellers, we become more comfortable.
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Seth Klarman
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At the root of all financial bubbles is a good idea carried to excess.
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Seth Klarman
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It is always easiest to run with the herd; at times, it can take a deep reservoir of courage and conviction to stand apart from it. Yet distancing yourself from the crowd is an essential component of long-term investment success.
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Seth Klarman
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As an investor you never have perfect information, and the biggest profits are always available when competition and information are scarce.
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Seth Klarman
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The payoff to fundamental analysis rises proportionately with the difficulty of performing it.
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Seth Klarman
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In investing, nothing is certain. The best investments we have ever made, that in retrospect seem like free money, seemed not at all that way when we made them.
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Seth Klarman
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It is not really within human nature to comprehend that you may not know everything you think you know, and, further, that what you believe in could change on a dime.
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Seth Klarman
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Rather than own a little bit of everything, we have always tended to place our eggs in a few dozen baskets and watch them closely.
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Seth Klarman
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It is only in a bear market that the value investing discipline becomes especially important because value investing, virtually alone among strategies, gives you exposure to the upside with limited downside risk.
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Seth Klarman
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The main underlying principle of value investing is that you should invest in undervalued securities because they alone offer a margin of safety.
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Seth Klarman
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The true investment challenge is to perform well in difficult times.
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Seth Klarman
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Any contrarian knows that just as a grim present is usually precursor to a better future, a rosy present may be precursor to a bleaker tomorrow.
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Seth Klarman
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People do not consciously choose to invest according to their emotions -- they simply cannot help it.
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Seth Klarman
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There is no salve for the hungry investor like the immediate positive reinforcement that comes from making money instantaneously.
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Seth Klarman
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Value investors thrive not by incurring high risk (as financial theory would suggest), but by deliberately avoiding or hedging the risks they identify.
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Seth Klarman
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Stock market efficiency is an elegant hypothesis that bears quite limited resemblance to the real world.
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Seth Klarman
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Higher risk investments often erode one's capital and produce lower returns -- the worst of all investment worlds. Higher-returns-for-higher-risks only applies on average and over time.
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Seth Klarman
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There is always a tension in the financial markets between greed and fear.
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Seth Klarman
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I think investors always learn the lessons of the recent past. And that is the lesson.
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Seth Klarman
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Everybody can talk about the problems, but very few investors act on them.
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Seth Klarman
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In my view, predicting future private market value is like predicting future Dow Jones levels: It doesn't make any sense at all.
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Seth Klarman
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Value to some extent is in the eye of the beholder. It is very hard to pin down what the value of a future set of cash flows from a business, be it cable TV or biotechnology, is going to be.
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Seth Klarman
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When the next fear-inspired panic occurs, investors' finger-pointing will almost certainly be aimed outward, while a good part of the blame should instead be directed inward.
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Seth Klarman
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People seeking answers to why the market plunged usually emphasize the immediate events that precipitated a selling panic, when in fact these events are but minor symptoms of much more severe underlying problems.
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Seth Klarman
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Being very early and being wrong look exactly the same 99% of the time.
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Seth Klarman
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Mutual fund managers, desperate to put cash to work don't buy what is cheap but what is working since what is cheap by definition hasn't been working.
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Seth Klarman
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We would rather underperform in a huge bull market than get clobbered in a really bad bear market.
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Seth Klarman
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Short sellers are the market’s police officers. If short selling were to go away, the market would levitate even more than it currently does.
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Seth Klarman
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Price is the essential determinant in every investment equation. At some price, every company is a buy; at some price, every company is a hold; and at a still higher price, every company is a sell. We do not really recognize the concept of a value company.
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Seth Klarman
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When stocks are rising for no better reason than that they have risen, the greater fool is at work.
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Seth Klarman
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Anybody that says that they see five and ten standard deviation events every couple of years is obviously not thinking correctly about probabilities.
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Seth Klarman
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The first and foremost responsibility of every investor is preservation of capital.
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Seth Klarman
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