January 29, 2019

Doug Kass praises Seth Klarman

Doug Kass has professed his admiration for Seth Klarman saying that Mr Klarman may be as great as Warren Buffett in investing.
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Below is a summary of Mr Klarman's January 2019 Letter outlining 2018 in review.

- Value investors should have a game plan that ignores making emotional moves. Value investors should keep a long term view for investments.

- The markets can be volatile and known facts such as upcoming Federal Reserve rate hikes, Trade War move markets downwards when they were once ignored.

- Index investing continued to grow up thru 2018.

- 2018 was much more volatile for US stocks than 2017

- For governments, political reasons favor borrowing money  instead of managing finances responsibly. This could cause Debt to GDP ratios to grow larger and might be a cause for a major financial crisis.

- Algorithm stock trading is growing and questions can be asked as to how the algorithms could respond to higher volatility and difficult market conditions.

- Small cap companies and small cap stocks could suffer more in a bear market.

- The Q4 2018 market sell off could have been a good buying opportunity due to lowered valuations.

- Some ways to maintain a good long term portfolio is to make fact based decisions, diversify, and avoid leverage.

- When their share prices drop, investors should see the price drops as a new opportunity to buy the shares at a lower price instead of a seeing it as a mistake.


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