Seth Klarman quotes on macro thinking (1991)

“One thing I want to emphasize is that, like any human being, we can discuss our view of the economy and the market. Fortunately for our clients, we don't tend to operate based on the view. Our investment strategy is to invest bottom up, one stock at a time, based on price compared to value. And while we may have a macro view that things aren't very good right now -- which in fact we feel very strongly -- we will put money to work regardless of that macro view if we find bargains. So tomorrow, if we found half a dozen bargains, we would invest all our cash. 

Our particular view of the economy comes from talking to companies. We don't talk to all the companies that we have an interest in. But we talk to many companies. We also talk to a lot of businesspeople, including our clients. We talk to other investors. And our view is that the economy is awful. We also have a large number of anecdotal observations from being in many areas and talking to people in those areas. The Wall Street consensus right now seems to be, first of all, that the problems are all well-known and therefore need not be worried about. That just because there is a decade of oversupply of real estate, just because most of the banks and insurance companies are broke, we don't need to worry about that because it is already well-known and therefore, since the market is efficient, it must be reflected in securities prices. 

We believe it is well-known. But we don't believe it is reflected in prices at all. Or in people's actions. In effect, we think we have a market of fully invested bears. Everybody can talk about the problems, but very few investors act on them. That has a lot to do with both the trend towards indexing and, more broadly, the tendency of institutional investors to have to more or less mimic each other.”