Klarman 2017 letter on
- Bitcoin
- the danger of Chinese leverage
- Discipline while value investing in bubby times
- Value investing is not dead
- Radicalization of politics
- Dangerous FAANG valuations
we’ll start 04:15 with questions soon and again we would 04:18 like for my students to say their name 04:20 here in school as well as their program 04:24 there’s no question sign going on the 04:26 son we you know if the audience what’s a 04:30 second to think we have so you know we 04:37 talked a lot about the school but I 04:38 think it’s a great opportunity to learn 04:39 more insights about your career and your 04:41 approach to business so as business 04:44 students here what are some lessons that 04:46 we need to learn in addition to what you 04:48 just said that are not covered in the 04:49 textbooks there’s a lot of opportunities 04:51 for learning or Negi mellon and access 04:54 to a lot of resources yeah listen I I 04:57 was just I was actually out that was 05:00 what spring Spring Fling Spring Carnival 05:05 know what was outside with the 05:06 hamburgers and hot dogs temper spirit 05:08 pepper spirit yeah I didn’t get a lot 05:10 dogs because I was afraid of slopping 05:12 mustard on myself so but anyways I was 05:16 telling somebody out there that one of 05:18 the things I think you have to do when 05:21 you’re businesses always try to be 05:22 ethical and honest I was telling them a 05:26 story about when I was at Goldman Sachs 05:32 they had this they they set up this fund 05:36 this bankruptcy fund and the person to 05:38 set up the bankruptcy firm was a was a 05:40 head of an M&A; okay and this was back 05:43 after drexel burnham if you know who 05:45 drexel burnham went went under and so 05:50 they were insurance a guy that was a 05:51 head of M&A; was in charge of this fund 05:54 that was buying assets so he wanted to 05:58 buy this one company’s bonds and he gave 06:02 an order for it in and I refused his 06:06 order because the company was on the 06:08 restricted list of strict lists no buy 06:10 lists because they had information 06:11 inside the firm the day before and he 06:14 took it off the next day 06:16 so I told him I’m not buying it not 06:18 thereby so it was a big thing we went 06:21 illegal and then legal said to me you 06:25 know it’s okay you know it’s not a 06:27 problem you can buy things from them and 06:29 I refuse to buy anything else for this 06:31 guy now since he was a head of M&A; it 06:35 really didn’t help me in the next time I 06:36 was up for partner but I don’t know if 06:40 you know this it didn’t really hurt me 06:42 in my career okay so I think that 06:45 there’s kind of a thing to always 06:46 running your life right and always doing 06:48 the right thing and always run it 06:50 ethical and don’t be afraid if somebody 06:52 says to do something that you really 06:55 think is not right don’t do it so I 06:58 don’t think they may teach you that but 07:00 they when you’re on the line I’m just 07:02 gonna say it again don’t do it so at 07:05 some point in your life you’re gonna 07:06 have kids and especially if you have 07:08 kids you look at your kids you say where 07:09 I’d rather see my kids I’d rather not 07:10 see my kids you know if it comes down to 07:13 those sort of things you think things 07:14 aren’t really right don’t do things so 07:15 or not right dude like stay true to 07:17 yourself always so I don’t think you 07:19 shed or not but you know you kind of 07:21 kind of know that already right being a 07:23 good Pittsburgh person yes okay oh 07:28 there’s somebody in the audience hi my 07:33 name is Hannah Jesse Johnny I’m a first 07:34 year MBA thank you so much for coming my 07:36 question is around how the program 07:38 prepared you and made you successful and 07:40 achieve this phase of your career 07:42 is there any advice you can give current 07:44 students about how we can perhaps some 07:47 day be as successful as you are 07:52 [Applause] 07:52 [Laughter] 07:55 you know I have I like to say you know L 07:58 my death there’s three little pigs and I 08:01 tossed the pigs and see how they land 08:03 and then I make decisions on that basis 08:05 I’m going to send you those pigs listen 08:12 I think this place really did I really 08:13 do think that this place at the time 08:15 gave me the tools that I needed to be 08:20 well prepared and in front of other 08:23 people so I really do you know always 08:27 think that I owe this school a debt of 08:29 gratitude I might have paid it back but 08:30 I ordered a granite you know so I I do 08:35 think you get a great education here and 08:36 I think that that that did prepare me 08:40 pretty well what’s your second part of 08:44 your question again any advice you can 08:46 offer current students and how we can be 08:48 as successful as part of the question 08:52 area um listen I I just think like with 08:56 some of the other advice I I just 08:57 offered I just think you know just keep 09:00 your feet moving don’t get stuck try to 09:04 do what you like if you can do it 09:06 possibly I mean I happen to like 09:08 investing I mean if you have if you like 09:11 marketing if you do you know like that 09:13 try to do what you like you can’t always 09:14 start out that way but even if you don’t 09:17 start out that way 09:18 you’re still gonna get experience you’re 09:20 still gonna get things that you can 09:21 learn from it so like I was I’m like I’m 09:25 the type of person if you know somebody 09:27 hit me on the road or like an accident 09:29 they’re still interested in me what the 09:30 process is when the police come in all 09:32 that stupid as hell but it’s still 09:34 interesting to me but I think you always 09:36 have an opportunity to learn from 09:37 different situations even the ones that 09:39 are disappointing so I would say just 09:41 always try to learn and move on and try 09:42 to try to grow from that so do we have 09:50 more audience questions hi my name is 09:51 Ravi I’m a first year MBA student I’m a 09:54 generally very optimistic person however 09:56 we live in a time where it seems that 09:59 there’s pessimism all around us 10:01 especially with tariffs and the politics 10:04 scenario 10:05 like to you I tend to remain optimistic 10:12 enjoy what are your views on this how do 10:16 you see the next five years checking out 10:18 we’re entering the job market again so 10:21 how would you encourage us to think 10:24 about these situations and the scenario 10:25 your first year now I am the economy is 10:28 really good right now okay despite you 10:31 know different things and you know just 10:33 to cuz you kind of alluded to terrorist 10:35 I’ll talk about some of the policies 10:38 that have come down and whether you like 10:40 I’m gonna try the weather I like the 10:43 person or not don’t like the person I’m 10:45 not gonna get into that although I did 10:47 call him a demented narcissistic scumbag 10:52 if you look up connected narcissistic 10:54 scumbag you’ll see my name calling Trump 10:57 that just Google those three words but 11:00 that’s besides the point we’re not going 11:02 to comment on that now but for most from 11:06 a policy standpoint I mean some of the 11:08 deregulation stuff was probably really 11:09 good for the economy we probably have 11:11 gone we probably went too far in the 11:14 Obama years and even Bush put on too 11:17 many regulations now we might have gone 11:19 too far do you regulate any things 11:21 already but I think some of those things 11:22 had to happen I think was holding back 11:24 the economy and the and the tax policies 11:28 that they did although I don’t think 11:30 they again I don’t think they were all 11:32 good but I think there were some things 11:34 that needed to be done I think some of 11:35 the corporate reform was probably good 11:37 because we were becoming a high tax 11:39 country I don’t know if they need to do 11:41 the individual stuff I don’t know if 11:43 they needed to to do you know cut some 11:47 stuff for higher income people one way 11:50 or another so I’m not gonna say that’s 11:51 good or bad or you know but there was 11:53 some those two things I think really 11:54 were helping to move the economy really 11:57 getting the economy going and you really 11:59 have low unemployment 12:00 now obviously the tariffs and attacking 12:03 individual companies like Amazon I mean 12:07 the attacking individual companies like 12:09 Amazon it’s just nuts okay it’s just 12:11 nuts because they own the what because 12:13 Bezos owns the Washington Post I mean no 12:16 but that’s that’s what we got 12:19 and the terrorists look I I think Paris 12:23 in general are just you know not not a 12:26 good thing for the economy I think 12:27 putting tariffs on steel and making that 12:29 a fight in something that’s so old 12:30 economy and something employs so few 12:32 people in the country what’s probably 12:34 not the best place to start on the other 12:37 hand there is a certain amount if you 12:39 talk to tech companies there is they 12:41 believe and there has been proof that 12:44 China has taken in intellectual property 12:46 a bar it is stolen it whatever like you 12:49 like to say so I think something should 12:51 have something needs to be done on that 12:52 front 12:54 putting 52 the first 50 million in 12:56 terrace weather I you know I don’t know 12:59 if I totally agree with it it’s a shot 13:00 across the bow and it was was okay the 13:04 hundred million was crazy because he 13:06 didn’t owe anybody else in his cabinet 13:07 so it’s just nuts 13:08 this is nuts but so I don’t know where 13:12 that goes so I’m not a big fan of it I 13:14 think they could have done other things 13:15 for intellectual properties as far as 13:18 your your your you know but your 13:21 prospects listen the economy seems 13:24 pretty good as long as they don’t take 13:26 these these tariff wars too far and 13:28 there’s so I’d the Pro they probably 13:30 will get a NAFTA agreement you don’t 13:33 want to take things too far with China 13:34 because eventually I can tell you the 13:36 steps that it will go to and China’s 13:38 retaliation we’ve done a lot of time 13:40 trying to figure this out and you get to 13:42 the the fourth step it’s it’s a war it’s 13:45 a real war if you look at the history of 13:48 terrorists they’ve resulted in a lot of 13:52 times real wars so I get a little 13:55 nervous when you start down that path 13:56 and you know but I don’t think well I 14:00 hope you know I worry about the erratic 14:04 radicalness is that a word erratic Ness 14:06 of the president sometimes but you hope 14:10 that that that you don’t go down that it 14:12 to go down that path you’re kind of 14:13 there’s a word it begins with an 14:15 evidence with the K it’s kind of that 14:18 but if there’s none of that I think 14:21 you’ll get a good job I think the 14:22 economy will probably stay okay I’m a 14:24 little worried about higher interest 14:25 rates right now but it you know it’s I 14:29 think that it’ll probably hold up for 14:31 when you get 14:32 so which is kind of important I think it 14:35 is a pretty good economy right now 14:36 around the world especially United 14:38 States so I think that is our great Wow 14:44 you know you ever see this this show 14:46 this joy anybody see the movie joy where 14:49 at first she gets no calls and then she 14:51 gets a lot of calls coming in a lot of 14:53 people lining up – feel like joy from 14:55 that movie I’m Katie glass first year 15:00 MBA one of the benefits we have being 15:03 part of the Tempur network is all of the 15:05 people that we’ve met or will meet along 15:07 our career that serve as mentors and 15:10 advisors can you talk about a mentor 15:13 that you had early in your career and 15:14 the impact that they had on you