📖Seth Klarman
Focus on Absolute Returns
Target absolute returns, not relative performance.
We don't benchmark against indices. Our goal is absolute returns — making money regardless of what the market does.
🏠 Everyday Analogy
📖 Core Interpretation
Seth Klarman advocates a repeatable process: define criteria, execute consistently, and review decisions against evidence. Process quality drives outcome consistency.
💎 Key Insight：Absolute return thinking prevents benchmark-chasing behavior.
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❓ Why It Matters
Without process, there is no reliable feedback loop. Structured execution and review improve decision quality over time.
🎯 How to Practice
Run a decision loop of research, thesis, execution, and post-mortem; document assumptions and update playbooks with evidence, not hindsight bias.
⚠️ Common Pitfalls
Having opinions without execution criteria
Reviewing outcomes but not decisions
Abandoning rules during volatility spikes
📚 Case Studies
1
Eastern European Distressed Debt (1990)
Following the fall of the Iron Curtain, Baupost bought distressed and defaulted sovereign bank debt of Eastern European countries at deep discounts.
✨ Outcome：As countries restructured and normalized relations, debt prices rose substantially, producing attractive, low‑correlated gains over several years.
2
Post-Crash Value Screening (1987)
After the 1987 crash, Klarman’s team performed bottom-up analysis on dozens of bombed-out equities, focusing on balance sheets, asset coverage, and downside protection rather than macro forecasts.
✨ Outcome：Accumulated deeply discounted securities; several doubled or more over the next few years as valuations normalized.
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