Fully invested at all times theory

When the markets are fairly ebullient, investors tend to hold the least objectionable securities rather than the truly significant bargains. But the inability to hold cash and the pressure to be fully invested at all times meant that when the plug was pulled out of the tub, all boats dropped as the water rushed down the drain.

- Seth Klarman

Public vs Private Investments

At equal returns, public investments are generally superior to private investments not only because they are more liquid but also because amidst distress, public markets are more likely than private ones to offer attractive opportunities to average down.

- Seth Klarman

Buy on the way down

You must buy on the way down. There is far more volume on the way down than on the way back up, and far less competition among buyers. It is almost always better to be too early than too late, but you must be prepared for price markdowns on what you buy.

- Seth Klarman

Never risk short-term cash

Do not accept principal risk while investing short-term cash: the greedy effort to earn a few extra basis points of yields inevitably leads to the incurrence of greater risk, which increases the likelihood of losses and severe illiquidity at precisely the moment when cash is needed to cover expenses, to meet commitments, or to make compelling long-term investments.

- Seth Klarman

Risk: definition

Risk is not inherent in an investment; it is always relative to the price paid. Uncertainty is not the same as risk. Indeed, when great uncertainty - such as the fall of 2008 - drives securities prices to especially low leveles, they often become less risky investments.

- Seth Klarman

Bet on the asset and not on its future price

When you get into buying something where you just betting on whether people will pay a little more for it next year but it doesn’t produce anything, there is nothing illegal about it. It is not illegal, it’s not immoral and probably it isn’t financial fattening either but you are betting on investor attitude or speculator attitude rather than betting on the asset itself.

- Warren Buffett

Tax without legislation

Inflation is taxation without legislation.

- Milton Friedman