Seth Klarman Shareholder Letter 2010

I found some great excerpt from Seth Klarman’s 2010 Annual Letter (H/T to for the find) . Whenever, you can find ANYTHING by Seth Klarman it is worth reading. This is not always easy, because despite having one of the largest hedge funds in the country, Klarman is extremely media shy. Below are some notes from the 2010 shareholder letter.


Two problems are upon us at once: short-term stimulus that is unaffordable over the long run and runaway entitlements that must be reined in. But restoring fiscal sanity will be bad for the economy and financial markets. What Treasury official or politician would want the cash spigot turned off before a recovery is certain? Recipients of government handouts – a large percentage of the population – would grumble at the termination of policies that offer them outsized benefits. So prepare for a chorus of “but not yet.” One already sees this in editorials and commentaries, such as the ones saying it’s time to close down bankrupt Fannie Mae and Freddie Mac, but not yet, because doing so would harm the still-weak housing market.

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