To value investors the concept of indexing is at best silly and at worst quite hazardous. Warren Buffett … - Seth Klarman

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I get on base by making good contact with the ball. But whenever I hit a home run, I'm as surprised as everybody else.

Seth Klarman

To value investors the concept of indexing is at best silly and at worst quite hazardous. Warren Buffett has observed that "in any sort of a contest - financial, mental or physical - it's an enormous advantage to have opponents who have been taught that it's useless to even try. " I believe that over time value investors will outperform the market and that choosing to match it is both lazy and shortsighted.

Believe, Lazy, Quite, Silly

Same Author Quotes

Selling, in particular, can be a challenge; many investors are tempted to become more optimistic when a security is performing well. This temptation must be resisted; tax considerations aside, when a security reaches full valuation, there is no longer a reason to own it.

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Value in relation to price, not price alone, must determine your investment decisions. If you look to Mr Market as a creator of investment opportunities (where price departs from underlying value), you have the makings of a value investor. If you insist on looking to Mr Market for investment guidance however, you are probably best advised to hire someone else to manage your money.

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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.

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When excesses such as lax lending standards become widespread and persist for some time, people are lulled into a false sense of security, creating an even more dangerous situation. In some cases, excesses migrate beyond regional or national borders, raising the ante for investors and governments. These excesses will eventually end, triggering a crisis at least in proportion to the degree of the excesses. Correlations between asset classes may be surprisingly high when leverage rapidly unwinds.

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Be sure that you are well compensated for illiquidity - especially illiquidity without control - because it can create particularly high opportunity costs.

Compensated, Cost, Costs, Opportunity, Wells