It sounds kind of crazy, but in times of turmoil in the market, I've felt a sort of serenity in knowing that I've checked and re-checked my work, one plus one still equals two regardless of where a stock trades right after I buy it.
Interpretation
Amid market chaos, confidence comes from thorough preparation and the consistent principles of logic and mathematics.
Seth Klarman reflects on the comfort that comes from diligent work and the immutable truths in life, such as mathematical accuracy, even when faced with the unpredictability of the stock market. This quote emphasizes the importance of preparation and conviction in one’s own abilities amid external chaos and uncertainty.
In practice
During a financial seminar, sharing this quote can highlight the importance of being thorough in one's financial decisions.
If 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.
Value investing is simple to understand but difficult to implement. Value investors are not supersophisticated analytical wizards who create and apply intricate computer models to find attractive opportunities or assess underlying value. The hard part is discipline, patience, and judgment. Investors need discipline to avoid the many unattractive pitches that are thrown, patience to wait for the right pitch, and judgment to know when it is time to swing.
Investing is the intersection of economics and psychology.
While some might mistakenly consider value investing a mechanical tool for identifying bargains, it is actually a comprehensive investment philosophy that emphasizes the need to perform in-depth fundamental analysis, pursue long-term investment results, limit risk, and resist crowd psychology.
Value investing is risk aversion.
Ultimately, nothing should be more important to investors than the ability to sleep soundly at night.
I never allowed other people's expectations to determine whatever course I took. I had to reach a decision about what I was going to do based on what I felt inside myself.
Pour some water into a tub and stir it up. Now try as hard as you can to calm the water with your hands; you will succeed in agitating it further. Let it stand undisturbed a while, and it will calm down by itself. The human brain works much the same way.
...ambition without pious restraint must end in failure, often involving in its ruin that beautiful reverence which solaces common men for the obscurity and poverty of their lot.
We have to embrace the good over the bad. That has to be one's personal project.
So long as there is any subject which men may not freely discuss, they are timid upon all subjects.
Because, as we all know, it’s easier to do trivial things that are urgent than it is to do important things that are not urgent, like thinking. And it’s also easier to do little things we know we can do than to start on big things that we’re not so sure about.
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