Money and Finance
- Target Risk, Not Return
From Seth Klarman, via Margin of Safety:Targeting investment returns leads investors to focus on upside potential rather than on downside risk....Rather than targeting a desired rate of return, even an eminently reasonable one, investors should target...
- Nyt: Taking A Chance On The Larry Portfolio
Found via @tferriss. There are so many competing philosophies in the world of investing that most people learn to tune out any conversations on the topic. This turns out to be a pretty good instinct. After all, people consistently brag about their winning...
- Tariq Ali’s Notes From Li Lu’s 2010 Lecture At Columbia
Thanks to Tariq for putting these notes together. And another thanks to Kjetil for initially passing the video link along. Link to: Li Lu’s 2010 Lecture Notes ……………….. Excerpts from Tariq’s Notes: Columbia is where my whole life in America...
- Seth Klarman Letters: 1995 - Mid 2001
It is hard for me to overstate just how great these letters are. They are probably the best example I have ever seen of someone (and an entire firm) keeping his head cool and staying disciplined while just about everyone else was going crazy. A BIG thanks...
- Recent Transaction
This afternoon I sold a Dec 22 2012 Put option on Archer Daniels Midland Company (ADM) for $0.89. After brokerage costs I netted a total of $81.01. The put option gives me a good return either way that it works out. If ADM is trading above $26 on...
Money and Finance
Harvard Business School Interview with Seth Klarman
When you started with Baupost at age 25, did you already consider yourself a value investor?
Yes. After my junior year in college and right after graduating, I worked for Mutual Shares Corporation, which was run by a wonderful gentleman named Max Heine. I learned a huge amount about value investing. 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.
Yes. After my junior year in college and right after graduating, I worked for Mutual Shares Corporation, which was run by a wonderful gentleman named Max Heine. I learned a huge amount about value investing. 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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Did you ever waver in your investment style?
Never once.
Never once.
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What gave you the resolve to say no to all the other investment approaches?
There are several answers. First, value investing is intellectually elegant. You’re basically buying bargains. It also appeals because all the studies demonstrate that it works. 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. Third, it’s easy to talk in the abstract, but in real life you see situations that are just plain mispriced, where an ignored, neglected, or abhorred company may be just as attractive as others in the same industry. In time, the discount will be corrected, and you will have the wind at your back as a holder of the stock.
What gave you the resolve to say no to all the other investment approaches?
There are several answers. First, value investing is intellectually elegant. You’re basically buying bargains. It also appeals because all the studies demonstrate that it works. 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. Third, it’s easy to talk in the abstract, but in real life you see situations that are just plain mispriced, where an ignored, neglected, or abhorred company may be just as attractive as others in the same industry. In time, the discount will be corrected, and you will have the wind at your back as a holder of the stock.
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Do you set an annual return target?
We think it’s madness to target a return. Return lies in some relationship to risk, albeit there are moments when it’s out of whack, when you can make a high return with very limited risk. My view is that you can target risk versus return. So you can say, I’ll take the very safe 6 percent, I’ll take the somewhat risky 12, or I’ll take the enormously risky 20, knowing that 20 might actually be minus 20 by the time the actual results are known. We just don’t think targeting a return is smart.
We think it’s madness to target a return. Return lies in some relationship to risk, albeit there are moments when it’s out of whack, when you can make a high return with very limited risk. My view is that you can target risk versus return. So you can say, I’ll take the very safe 6 percent, I’ll take the somewhat risky 12, or I’ll take the enormously risky 20, knowing that 20 might actually be minus 20 by the time the actual results are known. We just don’t think targeting a return is smart.
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- Target Risk, Not Return
From Seth Klarman, via Margin of Safety:Targeting investment returns leads investors to focus on upside potential rather than on downside risk....Rather than targeting a desired rate of return, even an eminently reasonable one, investors should target...
- Nyt: Taking A Chance On The Larry Portfolio
Found via @tferriss. There are so many competing philosophies in the world of investing that most people learn to tune out any conversations on the topic. This turns out to be a pretty good instinct. After all, people consistently brag about their winning...
- Tariq Ali’s Notes From Li Lu’s 2010 Lecture At Columbia
Thanks to Tariq for putting these notes together. And another thanks to Kjetil for initially passing the video link along. Link to: Li Lu’s 2010 Lecture Notes ……………….. Excerpts from Tariq’s Notes: Columbia is where my whole life in America...
- Seth Klarman Letters: 1995 - Mid 2001
It is hard for me to overstate just how great these letters are. They are probably the best example I have ever seen of someone (and an entire firm) keeping his head cool and staying disciplined while just about everyone else was going crazy. A BIG thanks...
- Recent Transaction
This afternoon I sold a Dec 22 2012 Put option on Archer Daniels Midland Company (ADM) for $0.89. After brokerage costs I netted a total of $81.01. The put option gives me a good return either way that it works out. If ADM is trading above $26 on...