Seth Klarman On Unsuccessful Investors and Their Costly Emotions

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Seth Klarman On Unsuccessful Investors and Their Costly Emotions

From Seth Klarman’s Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor

Also see – Seth Klarman – How Much Research and Analysis Are Sufficient? 

Seth Klarman On Unsuccessful Investors and Their Costly Emotions

Unsuccessful investors are dominated by emotion. Rather than responding coolly and rationally to market fluctuations, they respond emotionally with greed and fear. We all know people who act responsibly and deliberately most of the time but go berserk when investing money. It may take them many months, even years, of hard work and disciplined saving to accumulate the money but only a few minutes to invest it. The same people would read several consumer publications and visit numerous stores before purchasing a stereo or camera yet spend little or no time investigating the stock they just heard about from a friend. Rationality that is applied to the purchase of electronic or photo-graphic equipment is absent when it comes to investing.

 

RV Capital 1H22 Letter to Co-Investors in Business Owner