Money and Finance
From Seth Klarman in June 1999:
- Links
Total Addressable Market: Methods to Estimate a Company’s Potential Sales - by Michael J. Mauboussin and Dan Callahan [H/T @trengriffin] (LINK) Is Silicon Valley in Another Bubble . . . and What Could Burst It? (LINK) Bill Gross' September...
- Jeremy Grantham: Learning To Live With A Stock Bubble
Link to: Jeremy Grantham: Learning to Live With a Stock BubbleFor Jeremy Grantham, founder and strategist at GMO, a Boston-based money manager that oversees about $120 billion, it hasn't been easy watching equity markets rack up huge gains. As...
- A Few Seth Klarman Quotes
From Klarman's section in the 6th edition of Security Analysis, which he wrote in May 2008 (they also go well with the 1991 Klarman interview that has been making its rounds, HERE): "In an era of rapid technological change, investors must be ever...
- Excerpt From The Most Important Thing Illuminated - By Howard Marks
Combating Negative Influences By Howard Marks, Author of The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor People who might be perfectly happy with their lot in isolation become miserable when they see others do better....
- Seth Klarman - 2006 Video
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...
Money and Finance
Seth Klarman letter excerpt from 1999
From Seth Klarman in June 1999:
Students of financial history can point to historic levels of valuation to suggest that we are in a bubble. But students of psychology may be needed to complete the picture. For one thing, the financial markets have been so strong for so long that fear of market risk has mostly evaporated. People who used to hold bank certificates of deposit now maintain a portfolio of growth stocks. 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. When your investments are backstopped by reasonably-priced tangible assets, the prospect of a change in sentiment is not very costly. If a building is no longer needed as a furniture retailer, maybe it would make a good warehouse. If you can't make money as a distributor, you can recover most of your capital by reselling your inventory.
Not so for dreams. With more and more of the market value of U.S. equities represented by lofty (in some cases infinite) multiples of current results, a change in sentiment could wipe out a large percentage of investor net worth. Sentiment, existing only in the minds of investors, is subject to change quickly and without notice. Perhaps today's dreams will become realities for some of the current Internet and technology favorites; and perhaps not. For many, the dream will be replaced by a nightmare. Then, the escalating bill for betting on dreams rather than on realities will have to be paid up.
Real value, of bricks and mortar, finished goods inventories, accounts receivable, operating factories and businesses, and even brand names, is hard, although far from impossible, to destroy. If you don't overpay for it, your downside is protected. If you purchase it at a discount, you have a real margin of safety.
- Links
Total Addressable Market: Methods to Estimate a Company’s Potential Sales - by Michael J. Mauboussin and Dan Callahan [H/T @trengriffin] (LINK) Is Silicon Valley in Another Bubble . . . and What Could Burst It? (LINK) Bill Gross' September...
- Jeremy Grantham: Learning To Live With A Stock Bubble
Link to: Jeremy Grantham: Learning to Live With a Stock BubbleFor Jeremy Grantham, founder and strategist at GMO, a Boston-based money manager that oversees about $120 billion, it hasn't been easy watching equity markets rack up huge gains. As...
- A Few Seth Klarman Quotes
From Klarman's section in the 6th edition of Security Analysis, which he wrote in May 2008 (they also go well with the 1991 Klarman interview that has been making its rounds, HERE): "In an era of rapid technological change, investors must be ever...
- Excerpt From The Most Important Thing Illuminated - By Howard Marks
Combating Negative Influences By Howard Marks, Author of The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor People who might be perfectly happy with their lot in isolation become miserable when they see others do better....
- Seth Klarman - 2006 Video
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...