Seth Klarman Quotes

To get ideas, strategies and critical thoughts when investing in the stock market, Seth Klarman's phrases are the best there is. Is there anyone more appropriate to give advice than a billionaire investor? He began to be active in the world of finance at a very young age. It should be noted that today, in the year 2021, He has a net worth of $ 1,5 billion.

If you want to know more about this investor and know the best phrases of Seth Klarman and his investment strategies, do not miss this article. Because is a faithful follower of value investing, We will also explain what this philosophy of the stock market consists of.

Seth Klarman's best quotes about value investing

Let's start by listing some very specific quotes from Klarman. It is important to know that this American economist is governed above all by value investing, that we will explain later what it is. But now we are going to first see the best phrases of Seth Klarman related to this investment strategy:

1. "We define value investing as buying dollars for 50 cents."
2. “There is nothing esoteric about value investing. It is simply to determine the intrinsic value of a financial asset and buy it at a considerable discount on that value. The biggest challenge is maintaining the required patience and discipline to buy only when prices are attractive and sell when they are not, avoiding the short-term swings that engulf most market participants. ”
3. “Value investing is at the intersection between economics and psychology. The economy is important because you need to understand the value of assets or businesses. Psychology is just as important because price is a critically important component in the investment equation that determines the risk and return of an investment. The price, of course, is determined by the financial markets, varying due to the vicissitudes of supply and demand for each asset. "
4. “I have never met anyone who has been successful in the world of long-term investing without being a value investor. For me, it's like the E = MC² of money and investment. "
5. "Few are willing and able to put in enough time and effort to be value investors, and only a portion of them have the right mindset to succeed."
6. "Unlike speculators, who think of stocks as pieces of paper that are only good for trading, value investors view stocks as fragments of business ownership."
7. "Value investing requires high doses of patience and discipline."
8. "As the father of value investing, Benjamin Graham, said in 1934, smart investors do not look at the market as a guide on what to do, but as a creator of opportunities."
9. "Value investing, in effect, preaches the idea that the efficient market hypothesis is frequently wrong."
10. "Our mission as value investors is to buy bargains that financial theory says don't exist."
11. "Buying these bargains offers the investor a margin of safety, which serves as protection against inaccuracies, mistakes, bad luck or the vicissitudes of economic and business forces."
12. "Every financial asset is an option to buy at a certain price, hold at a higher price and sell at an even higher price."

What is value investing?

Also known as value investing, value investing is an investment philosophy or strategy. Through it, positive returns are generated in a consistent and long-term way. It has its origin in the year 2918, when David Dodd and Benjamin Graham they created it and taught it in their classes at the famous Columbia Business School.

Related article:

What are value values?

Although its creators were the two economists we have mentioned above, it popularized it Warren Buffett. This was a disciple of Benjamin Graham and quite possibly one of the best investors ever. But how does value investing work?

Well, it is based on the acquisition of quality securities but at a price that is below their real or intrinsic value. According to Graham, the difference between intrinsic value and present value is the margin of safety. This concept is fundamental for value investing.

According to this philosophy, whenever the market price is below the real value of the share, the most probable thing is that the price will end up increasing in the future, when a market adjustment occurs. However, it can be somewhat problematic to estimate what the real value of the security or stock will be, and also to predict when a market adjustment will take place, that is, when the price will rise.

Seth Klarman's best quotes about finance and psychology

It is no mystery that the stock market is closely related to psychology, and this is perfectly reflected in the phrases of Seth Klarman. The changes that may occur in the markets have a lot to do with social events that can scare or incentivize people when making investment decisions. Therefore, Seth Klarman's phrases turn out to be very interesting and I highly recommend that you take a look:

1. "Successful investors often remain unmoved, allowing the greed and fear of others to work in their favor."
2. "Investing, when it seems easiest, is when it is most difficult."
3. "The vast majority of people are comfortable with consensus, but successful investors tend to have a contrary bent."
4. "Most investors tend to project short-term trends, both good and bad, indefinitely into the future."
5. "Most people lack the courage and stamina to stand apart from the herd and tolerate lower short-term returns to reap the rewards of great long-term rewards."
6. "Market irregularities are nothing more than noise that many investors find it very difficult to silence."
7. "The pressure to keep up with colleagues makes decision-making even more difficult."
8. "Human nature is so emotional that it frequently clouds reason, causing asset prices to exceed in both directions."
9. “Understanding how our brain works - our limitations, limitless mental shortcuts, and deep-seated cognitive biases) is one of the keys to investing successfully. At Baupost, we believe that it is sometimes easier to predict how investors will act in certain situations than it is to predict the end of a company's downfall. In times of extremes in the markets, by avoiding emotional overreaction by remaining aware of our cognitive biases, it is possible to know market participants better than they know themselves. "
10. "It is psychologically difficult to fight the crowd, take a contrary position and stay in it."
11. "Worrying about what can go wrong can lead to long periods of underperformance."
12. "The stock market is the story of cycles of human behavior responsible for overreactions in both directions."

Who is Seth Klarman?

On May 21, 1957, Seth Andrew Klarman was born in New York, that he would end up being a billionaire investor. Apart from this achievement, he also became a hedge fund manager and the author of the book "Margin of Safety." While his father was an economist at Johns Hopkins University, his mother was a psychiatric social worker. Both influences are very well reflected in the phrases of Seth Klarman, who join the world of finance with psychology.

At just ten years old, little Seth already acquired his first share, which was from Johnson & Johnson. Over the years, he tripled his initial investment. Starting at the age of twelve, he began calling his broker regularly to get more stock quotes.

As can be expected, Seth Klarman graduated magna cum laude in economics. He later decided to work for 18 months before entering Harvard Business School. After graduation, he founded with Harvard professor William J. Poorvu "The Baupost Group", a hedge fund.

For the first few years that Klarman was at the helm of Baupost, he only wanted to invest in companies that were not widely accepted in the Wall Street community. To do this, he placed great emphasis on using the so-called margin of safety and managing risk well. As you can imagine from his strategies, Seth Klarman is a fairly conservative investor. Usually you have a significant amount in your investment portfolios. It should also be noted that, despite having used unconventional strategies on some occasions, it has always managed to obtain very high returns.

I hope that Seth Klarman's quotes have helped motivate you to continue or start investing in the stock market. Value investing is a popular strategy and widely used by the great investors of our time, so it does not hurt to follow their advice.