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Monday, November 28, 2011

An Interview With An Investment Guru

Seth Klarman is a legend in a league with Warren Buffett. In this interview with Charlie Rose I found on The Biz of Life site, he first talks about his non-profit organization and then gets into his investment approach.

No matter what style an investor chooses, it is always valuable, I think, to listen to those who have mastered the game. He notes that it takes a certain, rare gene to invest in line with the Benjamin Graham style. He talks about his book Margin of Safety. He lists the 3 stages of investing followed by Buffett. Interestingly, he humbly claims that he is only good at the first: "buying cigar butts at good prices."

You can follow Seth Klarman and his holdings as derived from 13f filings at guru focus.

As shown,CLICK IMAGE TO ENLARGE, he takes some big positions.

As readers of this blog know, I believe investors should index at least 80% of their retirement assets and invest at most 20% in individual stocks. I would also argue that one should be careful following the top hedge fund managers. You may find you don't have that "special gene" at exactly the wrong time ;)

Disclosure: This post is for educational purposes only. Investors should do their own research before investing. I may hold stocks mentioned in this post.


  1. Very interesting, thanks a lot.

    Why there is such precise ratio 80/20?

  2. There's nothing precise about it. It just strikes me as enough to make a meaningful contribution if you make some good picks but hopefully not enough to throw retirement totally off course if you buy an Enron or a Fannie Mae. I wouldn't fight somebody who wants to do 25% say. More than that however and it gets dicey in my view.

  3. I like the solution he offers on how the feds could've handled the bailouts.

    Very informative interview.

  4. That "special gene" hypothesis is the very reason why I'm a fan of indexing. I was unaware of this investor, so thank you for introducing me. He's very insightful.