20 Lessons from Seth Klarman's "Margin of Safety" (thread)
1) Get your mindset right before you invest
2) Don’t seek Mr. market’s advice - prices are not always right
3) Stock prices vs business reality — there’s a difference
1) Get your mindset right before you invest
2) Don’t seek Mr. market’s advice - prices are not always right
3) Stock prices vs business reality — there’s a difference
4) Price vs. value - understand the difference
5) Emotions play havoc on investing
6) Play the long game
7) Study market cycles
5) Emotions play havoc on investing
6) Play the long game
7) Study market cycles
8) Understand why big investors underperform — they are not paid for results, but for AUM. A fatter wallet makes investing HARDER. They focus on short-term
9) Avoiding losses is more important than upside
10) Volatility does not equal risk
9) Avoiding losses is more important than upside
10) Volatility does not equal risk
11) Consistent returns are superior to volatile returns
12) Prepare for the worst - hope for the best
13) Focus on the process — NOT the outcome. Systems > goals.
12) Prepare for the worst - hope for the best
13) Focus on the process — NOT the outcome. Systems > goals.
14) Be patient. Wait for the fat pitch.
15) Valuation is hard — insist on a margin of safety
16) Bottoms up — focus on business, not macro
15) Valuation is hard — insist on a margin of safety
16) Bottoms up — focus on business, not macro
17) Focus on absolute returns — not relative returns
18) Don’t overpay for growth
19) Be conservative in your assumptions
20) Follow 80% 20% rule. Don’t over research. You can’t know everything.
18) Don’t overpay for growth
19) Be conservative in your assumptions
20) Follow 80% 20% rule. Don’t over research. You can’t know everything.
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