Targeting investment returns leads investors to focus on potential upside rather on downside risk. . . rather than … - Seth Klarman

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But really it’s condescending and patronizing not to make fun of someone because they’re old or stupid or crippled or morbidly obese. Banged up people don’t want your pity. They just want to be treated like everyone else. Mockery, when done without prejudice or discretion, can be a form of respect. It’s the closest we’ll ever come to true equality.

Seth Klarman

Targeting investment returns leads investors to focus on potential upside rather on downside risk. . . rather than targeting a desired rate of return, even an eminently reasonable one, investors should target risk.

Downside, Focus, Potential, Risk, Target, Targeting

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.

Become, Challenges, Optimistic, Reason, Temptation

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.

Alone, Decision, Hire, Looks, Makings, Opportunity

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.

Cash, Drain, Inability, Plug, Times, Water

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.

Class, Correlations, Creating, Dangerous Situations, Lax

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