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By Investment Master Class

“The market gods rule. We don’t understand what makes all the animal spirits wake up one day and decide to sell all at once” Bernay Box

“The crowd madnesses recur so frequently in human history that they must reflect some deeply rooted trait in human nature. Perhaps it is the same kind of force that motivates the migration of birds or the mass performances of whole species of ocean eels. There seems to be a cyclical rhythm in these movements. A bull market, for example, will be sweeping along and then something will happen – trivial or important – and first one man will sell and then others will sell and the continuity of thought toward higher prices is broken” Bernard Baruch

Seth Klarman’s 2021 Letter: Baupost’s “Never-Ending” Hunt For Information

Baupost's investment process involves "never-ending" gleaning of facts to help support investment ideas Seth Klarman writes in his end-of-year letter to investors. In the letter, a copy of which ValueWalk has been able to review, the value investor describes the Baupost Group's process to identify ideas and answer the most critical questions about its potential Read More

“I can calculate the motions of the heavenly bodies, but not the madness of people.” Isaac Newton

“The psychology that allows bubbles to form always break, sometimes on a dime” Seth Klarman


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“At one moment, the mood in one aspect of the market may be ebullient, while elsewhere it is morose; the entire market gets swept along by a tide of emotion. Intellectual measures often seem not to apply” Leon Levy

"Trends can reverse for no apparent reason with incredible celerity" Barton Biggs

"Ideas, tones, markets can go in one direction for so long supported by one concept - and on a given moments's notice, and unpredictably, it may be over and replaced by a whole other feeling and last another 20 years" Paul Singer

“When a change in trend is recognised, the volume of speculative transactions is likely to undergo a dramatic, not to say catastrophic increase. While a trend persists, speculative flows are incremental; but a reversal involves not only the current flow but also the accumulated stock of speculative capital. The longer the trend has persisted, the larger the accumulation” George Soros

"Market values are fixed only in part by balance sheets and income statements; much more by the hopes and fears of humanity; by greed, ambition, acts of God, invention, financial stress and strain, weather, discovery, fashion and numberless other causes impossible to be listed without omission" Gerald Loeb

Securities prices rise and fall much more than profit, introducing considerable investment risk. Why is that so? Primarily, I think, because of the dramatic ups and downs in investor psychology” Howard Marks

“Booms and busts are not symmetrical because, at the inception of a boom, both the volume of credit and the value of the collateral are at a minimum; at the time of the bust; both are at a maximum” George Soros

“The farther prices rise above or fall below their fundamental value, the greater the store of potential energy to be released in the resulting disequilibrium. Once the reversal process begins, momentum develops and markets generally overact. Does [can?] a swinging pendulum stop on a dime, at its position of balance between the two extremes?” Frank Martin


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