#1
Mr. Market Is Bipolar
"The market alternates between greed and fear. Your job is to take advantage of these mood swings, not to be swept up in them."
Exploit Mr. Market's mood swings rather than following them.
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Seth Klarman🛡 Margin of Safety
Seth Klarman's Margin of Safety Rules
Seth Andrew Klarman (born May 21, 1957) is an American billionaire investor and hedge fund manager. He is the chief executive and portfolio manager of the Baupost Group, a Boston-based private investment partnership he founded in 1982, managing over $27 billion in assets. Klarman is known as one of the most successful value investors of his generation, achieving annualized returns...
4 principles·Margin of Safety
4 Key Margin of Safety Principles
#2
Market Mispricing Is Normal
"Markets are not perfectly efficient. They regularly misprice securities, creating opportunities for disciplined, patient value investors."
Market inefficiencies create regular opportunities.
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Ignore Short-Term Market Noise
"Daily market movements are noise. Focus on long-term value, not short-term price fluctuations. The news cycle is designed to distract, not inform."
Daily market moves are distracting noise.
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Margin of Safety
"Value investing is at its core the marriage of a contrarian streak and a calculator. The margin of safety is the discount to intrinsic value at which you buy."
Successful value investing combines contrarian thinking with rigorous financial analysis.
Read Full Analysis →Frequently Asked Questions
What are Seth Klarman's key margin of safety principles?
Seth Klarman has 4 key principles on margin of safety. The most important one is "Mr. Market Is Bipolar" — The market alternates between greed and fear.
How does Seth Klarman apply margin of safety in practice?
Seth Klarman applies margin of safety through several key principles including "Mr. Market Is Bipolar" and "Market Mispricing Is Normal". These principles guide practical investment decisions and have been tested across decades of market cycles.
What makes Seth Klarman's approach to margin of safety unique?
Seth Klarman's approach to margin of safety is distinguished by a focus on long-term thinking and fundamental analysis. With 4 specific principles in this area, Seth Klarman provides a comprehensive framework that investors at any level can study and apply to improve their decision-making.
