Successful investors like stocks better when theyโre going down. When you go to a department store or a supermarket, you like to buy merchandise on sale, but it doesnโt work that way in the stock market. In the stock market, people panic when stocks are going down, so they like them less when they should like them more. When prices go down, you shouldnโt panic, but itโs hard to control your emotions when youโre overextended, when you see your net worth drop in half and you worry that you wonโt have enough money to pay for your kidsโ college.
Seth KlarmanIf you are predisposed to be patient, disciplined and psychologically appreciate the idea of buying bargains, then you're likely to be good at it. If you have a need for action, if you want to be involved in the new and exciting technological breakthroughs of our time, that's great, but you're not a value investor, and you shouldn't be one.
Seth KlarmanOne thing I want to emphasize is that, like any human being, we can discuss our view of the economy and the market. Fortunately for our clients, we don't tend to operate based on the view. Our investment strategy is to invest bottom up, one stock at a time, based on price compared to value. And while we may have a macro view that things aren't very good right now - which in fact we feel very strongly we will put money to work regardless of that macro view if we find bargains. So tomorrow, if we found half a dozen bargains, we would invest all our cash.
Seth Klarman