Seth Klarman Interview at the TEF Endowment Management Seminar in July 2008
An excerpt that I found very interesting:
…one of the things that’s vastly different from being an analyst to running your own fund — and I can’t emphasize this enough — is that they comprise incredibly different skills. The inability to think about risk the right way may not matter at all for an analyst. We’re not asking for their judgment on risk, we’re asking for analysis and facts, and then secondarily, their opinion. It’s the portfolio manager who eventually needs to be able to identify risk, whether it’s an excessive concentration, a failure to diversify, a failure to hedge, or a failure to understand the risk that is sitting right on your shoulders and you don’t realize it. Failure to recognize those things can kill people. I think we’ve had a few analysts that have disappointed, but no real disasters. But I have observed people that have had shockingly bad judgment in running a portfolio at other firms, and I think those almost could never have been identified a priori. The hard thing to swallow is the realization that your very smart analyst is not able to think well about the bigger task.
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Related post from last week: Seth Klarman Letters: 1995 - mid 2001
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When I was nearing the end of medical school, I decided to go into surgery. I had become enthralled by surgeons, especially by their competence. The source of their success, I believed, was their physical skill—their hand-eye coördination and fine-motor...
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Great find by Dang Le: - Guest Lecturer Seth Klarman - Psychology of Leadership - .................... If you would like to download the video, see this post: RealPlayer - A Useful New Addition .......... Other Seth Klarman posts/links: - Seth Klarman...