Legendary value investor Seth Klarman, the founder of Boston-based hedge fund Baupost Group, created a bunch of buzz amongst floor traders at the NYSE with a quote from his Q4 letter.
"Investing today may well be harder than it has been at any time in our three decades of existence," writes Seth Klarman in his year-end letter. The Fed's "relentless interventions and manipulations" have left few purchase targets for Baupost, he laments. "(The) underpinnings of our economy and financial system are so precarious that the un-abating risks of collapse dwarf all other factors.
Cashin noted that Klarman has achieved "near legendary" status on the Street.
Klarman, who has a reputation for being media shy, rarely speaks to the press. He did, however, sit down with interviewer Charlie Rose to discuss history, his book, Ben Graham, Warren Buffett and his investment philosophy back in 2011.
The interview is fascinating and we recommend you watch the full thing.
We've pulled out 12 brilliant insights for value investing from Klarman.
There's a "gene" for value investing.
Klarman said being a value investor is completely natural for him.
"There's a gene for this stuff," he said.
When the market starts to go down, he explained, a lot of people overreact and start to panic.
"For me it's natural. For a lot of people it's fighting human nature."
Value investors have to "slow the game down."
"If you can remember that stocks aren't pieces of paper that gyrate all the time --they are fractional interests in businesses -- it all makes sense."
He said you have to "slow the game down."
"I can buy this thing for a huge fraction of what it's worth. What am I worried about if it goes down a little bit more?"
However, the analysis is the easy part, he said.
They realize investing is the intersection of economics in psychology.
"Investing is the intersection of economics and psychology."
That's what Klarman likes to tell business school students.
"The economics, the valuation of the business, is not hard. The psychology -- How much do you buy? Do you buy it at this price? Do you wait for a lower price? What do you do when it looks like the world might end? Those are the harder things."
He said with time and experiences those things can be learned, but you also have to have the right psychological make up in the first place, he added.
See the rest of the story at Business Insider
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