Every accommodation to help free up time for me to devote to this project and urged me to press on to completion the many times when progress was slow. I thank her for being a great wife and motherand mybest friend. My father, Herb Klarman, was perhaps the most careful reader of multiple drafts of this manuscript. He is a true crafts.
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Investors are all too often lured by the prospect of instant millions and fall prey to the many fads of Wall Street. The myriad approaches they adopt offer little or no real prospect for long-term success and invariably run the risk of considerable economic loss - they resemble speculation or outright gambling, not a coherent investment program. But value investing - the s...more
Published October 1st 1991 by HarperCollins
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Top 5 Quotes / Thoughts:
1. Page 5: “You don’t understand. these are not eating sardines, they are trading sardines” [Difference between investment (buying stream of cashflows) and speculation (return solely dependent on re-sale).]
2. Page 81: “Buffet’s first and second rules of investing: 1) don’t lose money; and 2) never forget the first rule” [Don’t expose yourself to appreciable loss of principal. Make sure that your downside is bounded (Taleb).]
a. Compound interest is the 8th wonder of the w...more
1. Page 5: “You don’t understand. these are not eating sardines, they are trading sardines” [Difference between investment (buying stream of cashflows) and speculation (return solely dependent on re-sale).]
2. Page 81: “Buffet’s first and second rules of investing: 1) don’t lose money; and 2) never forget the first rule” [Don’t expose yourself to appreciable loss of principal. Make sure that your downside is bounded (Taleb).]
a. Compound interest is the 8th wonder of the w...more
Anyone interested in taking a hands-on approach to their portfolios would benefit from Klarman's guidance in Margin of Safety. The author likens Wall Street to a casino full of speculators with odds stacked in their favor, and against the individual investor that tries to compete on uneven ground. The opening line is a quote by Mark Twain: 'There are two times in a man's life when he should not speculate--when he can't afford to and when he can.' Klarman implores the reader to implement and foll...more
I read this book after reading 'Fooled by Randomness', and that had left me wondering whether trading/investing is really purely random or can there really be method to the madness. Much to my delight, Seth Klarman does provide a sound method to achieve investment success that is based on business fundamentals than pernicious speculation, relying on the 'wisdom' of the market. The book is a fascinating read, especially for someone with a non-finance background but fresh out of a B-School, where...more
Although I wouldn't spend $1000 for this book, he surprised me by summing up in a few simple sentences...
- how the mortgage tranched CDOs are flawed,
- how the rating agencies are claiming it was unforseeable, and
- how it could all blow up by a credit crunch.
But the most amazing part was that he did this in 1991 (when the book was published) and that is way before the mortgage CDOs were in full swing.
I just wish I had read the book earlier.
Brady Bunte
- how the mortgage tranched CDOs are flawed,
- how the rating agencies are claiming it was unforseeable, and
- how it could all blow up by a credit crunch.
But the most amazing part was that he did this in 1991 (when the book was published) and that is way before the mortgage CDOs were in full swing.
I just wish I had read the book earlier.
Brady Bunte
I had high hopes for this book since the ratings were amazing. However, I gave this book 2 stars because many of the ideas and concepts that were mentioned were already known to me. I also found this book more difficult to read than other investment books, perhaps due to the writing style.
Margin of Safety is a famous phrase coined by Ben Graham half a century ago, and taken up by Seth Klarman here as a full volume. Unfortunately, this book is no longer in print, but I managed to score a copy without having to pay the $500 price advertised on amazon.com.
The book is in three parts. First, a strong case for fundamental value investing as the only sound framework for making investment decisions; second is a scathing critique of 'institutional investing,' culminating with Klarman's ri...more
The book is in three parts. First, a strong case for fundamental value investing as the only sound framework for making investment decisions; second is a scathing critique of 'institutional investing,' culminating with Klarman's ri...more
Oct 12, 2010Steve Bradshaw rated it it was amazing
An excellent book written by an highly credible figure in the value investing world. I didn't always agree with the author. For example, I do think a long consistent track record of paying meaningful dividends is worth considering along with more direct value factors like P/E and P/B and I prefer the Graham/Lynch approach of diversifying into 20-30 stocks (versus focusing on 10 mega-picks) which I consider prudent and worth the slight reduction in potential return. However, I was extremely impre...more
Dec 03, 2014Sukhesh Miryala rated it really liked it
Great outline about how to think about investing, and less about specific strategies to invest. Provides great lenses to look at investing followed by illlustrative anecdotes. Some of the actual advice is a bit dated (but to be expected given the age of the book). This book is a must read if you are interested in learning about how value investors (of which Seth Klarman is a legend) think.
The original value investor Benjamin Graham's current equivalent is this guy: Seth Klarman. Some may think that Warren Buffet is applyinh Graham's principles, but more than anyone Klarman really mirrors Graham's thinking.* Like Graham, Klarman grew up Jewish on the East Coast. Both did well in school and had plenty of opportunities in academia but decided to take to money management instead. Like Graham, Klarman's greatest claim to fame was this book he published: Margin of Safety- Risk Averse S...more
Sep 10, 2018Tomas Krakauskas rated it really liked it
A lot of wisdom from personal S.Klarman experience, illustrated with real examples. However I find this book more suitable for novice investors who seek basic knowledge on value investing principles
Geeking it out in the rain. Re-reading a book I bought randomly at The Strand and read in 1996 when I first started in the business. I guess there was only one printing in 1991, and now it's impossible to find and goes for over $1000 for a decent copy on Amazon or Ebay. Hmmm.... Is actually a great primer on how to think like a smart professional investor. Concepts aren't hard, but I don't imagine it would be all that interesting for the individual investor.
Excellent. It was a far superior read the the intelligent investor as it 1) included all of the same ideas + some additional ones 2) wasn't sooo old, so the language was much clearer and easier to follow; 3) wasn't riddled with examples from the 60's(i.e. wasn't written from the perspective of being a 'current' guide to the markets; 4) was significantly shorter/more concise.
Jun 04, 2014Arseny rated it it was amazing
Woke up regarding the meaning of Value. Very impactful book. Most important finding is that the value is outside S&P500, and probably at the top of the bottom-performers of the day, week, month.
Jul 11, 2019JacobBook Margin Of Safety
rated it liked it Shelves: economics, business, ebook, investing, nonfiction
When I saw someone reading this on the train to work one morning, I knew I should read it. It's exactly the kind of thing I'd be interested in. The fact that it turned out to be WAY out of print only fanned my desire to read it. Used copies go for hundreds of dollars! My library system didn't have it. I congratulated myself on using InterLibrary Loan to find some library in the US that did, only to find that it's so valuable no library was letting go of it, if their copy hadn't already been stol...more
Sep 18, 2019Piinhuann Chew rated it really liked it
A detailed footnote of Benjamin Graham's 'The Intelligent Investor'.
It went very detailed into:
- how to value companies broadly that can allow you to make quick decisions (instead of being paralysed by over analysis) at the same time won't be committing too much error in the event that your analyses are wrong
- what kind of undervalued investments should investor buy that might result in stellar returns (in the event that it succeeded) and at the same time won't lose you a lot of money (in the ev...more
It went very detailed into:
- how to value companies broadly that can allow you to make quick decisions (instead of being paralysed by over analysis) at the same time won't be committing too much error in the event that your analyses are wrong
- what kind of undervalued investments should investor buy that might result in stellar returns (in the event that it succeeded) and at the same time won't lose you a lot of money (in the ev...more
If I'd paid the going rate for a used, poor condition copy of over $1000, I would be disappointed. The book has some good information, albeit much of it out of date. I disagreed with a lot of his notions around speculation and think Buffet communicates these sentiments much more reasonably and convincingly.
skip the first 1/3, the rest is good to read
I find the book a little bit disorganized, I have summarized a few points below:
1. There is one crucial difference between investment and speculation:
Investments throw off cash flow for the benefit of the owners; speculations do not. They return to the owners of speculations depends exclusively on the vagaries of the resale market.
and this coincides with Buffett's view as well, as he once said:
So there’s two types of assets to buy. One is where the asset itself delivers a return to you, such as...more
1. There is one crucial difference between investment and speculation:
Investments throw off cash flow for the benefit of the owners; speculations do not. They return to the owners of speculations depends exclusively on the vagaries of the resale market.
and this coincides with Buffett's view as well, as he once said:
So there’s two types of assets to buy. One is where the asset itself delivers a return to you, such as...more
Nov 10, 2015Daniel Olshansky rated it it was amazing
Another great read for any Buffet 'disciples' who are interested in value investing and security analysis.
Other than graham's own books, it's difficult to say that it was a quintessential read, but it packed a lot provided how short it was. Reiterating concepts of fundamental analysis including key ratios and discount cash flow, this book delivered the basics of value investing in a very concise manner. Aside from reviewing basic principles, and hearing the opinion of another experienced investo...more
Other than graham's own books, it's difficult to say that it was a quintessential read, but it packed a lot provided how short it was. Reiterating concepts of fundamental analysis including key ratios and discount cash flow, this book delivered the basics of value investing in a very concise manner. Aside from reviewing basic principles, and hearing the opinion of another experienced investo...more
This book is a comprehensive guide to value investing - an investing approach defined by Ben Graham and followed by most successful investors and hedge fund managers. It covers many topics from the mechanics of financial industry and markets, value investing process and tools, to advice for choosing brokers or money managers. It provides many examples of value opportunities and it covers business valuation too, although very briefly - so don't except much (or any) numbers crunching.
Book covers a...more
Book covers a...more
This book is divided into 3 parts comprising 1. How market works, 2. How to invest and 3. Searching for investments. First part is an eye opener for any wanna be investor to learn how wall street works and why prices deviate from their intrinsic value. Second part focuses on basics of investing, delving into highly important valuation techniques. This is crux of the book and is worth reading many times. Third part focuses on how to search for investments, its good but is less relevant for Indian...more
Apr 04, 2013John rated it really liked it
Priceless book (even if Amazon disagrees). The book is broken up into principles of investing we all know, yet rarely follow when methods are actually put to practice. How is Klarman different from all the other finance writers? Instead of beating the proverbial dead horse of investing dogmas , this book explains how we all come up short because of Wall Street's house edge and our bias towards the latest investing fad. Given this context, the age old investing lessons we all choose to ignore for...more
It's hard to convey how important this book is to someone who is not on the buy-side of the investment management industry. He logically articulates all the structural, behavioral, and logical errors that institutional investors commonly commit. In terms of his value investment philosophy, it is no wonder his returns have been so strong. He is simply willing to go places where other investors do not, which tilts the odds of performance in his favor.
Margin Of Safety Seth Pdf
Jan 10, 2015Dude-von Dudenstein rated it liked it
Good introduction to value investing. The author dwells too much on what's wrong with other valuation methods without talking about how should an investor go about executing value investing. Pros of value investing are too less compared to cons of investing time analysing the underlying businesses. Book is not really targeted towards an audience and seems to wander between individual investor and institutional one. Recommended read but the content delivery is lacking coherence..
You probably won't find a hard copy as it is out of print and selling 2000 USD per copy. Seth Klarman is well known for keeping substantial amount of cash (>50%) in his portfolio when the he cannot find attractive opportunity. Nonetheless, excellent book which discuss the essence of Value investment: Margin of safety.
This book is outdated but the wisdom is timeless. Value investing takes discipline, patience, and a will to go against the grain. But, over time, it is the best investing strategy. You will never look at Wall Street and the 'herd' the same.
** the book is out of print but I highly recommend hunting down a copy from a library.
** the book is out of print but I highly recommend hunting down a copy from a library.
Nov 30, 2011Brentley Campbell rated it it was amazing
I loved Margin of Safety! Seth Klarman does a great job of explaining different ways to be a value investor all the way from how to research to trading. He uses examples that he found through his work at Baupost to illustrate his points and shows many special situations that can be taken advantage of. A must read for any investor.
Margin Of Safety Pdf Free Template
Very good book, totally worth a read if you can grab a copy.
I think S. Klarman writes extremely well and makes you grasp things easily.
Particularly appreciated the discussion of the flaws of EBITDA: Klarman discusses why it leads to 'chronic overvaluation of businesses' (his words) & uses clear exemples.
I think S. Klarman writes extremely well and makes you grasp things easily.
Particularly appreciated the discussion of the flaws of EBITDA: Klarman discusses why it leads to 'chronic overvaluation of businesses' (his words) & uses clear exemples.
Seth Klarman's Margin of Safety is a terrific primer on the difference between investment and speculation. Originally published in 1991 but now long out of print and famously hard to find, Margin of Safety highlights many of the key tenets of value investing, most of which remain completely philosophically relevant even two decades later.
Very comprehensive overview of value-investing from an institutional/professional standpoint which had good, informative case studies of risk-arbitrage deals.
Not from the corner of value investing but it was a very enjoyable read - although slightly underwhelming considering how much this book has been overhyped ;)
Not from the corner of value investing but it was a very enjoyable read - although slightly underwhelming considering how much this book has been overhyped ;)
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Seth Klarman is an American hedge-fund manager and a billionaire who founded the Baupost Group, a Boston-based private investment partnership, and the author of a book on value investing titled Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor. Klarman is a graduate of Cornell University and Harvard Business School where he was a Baker Scholar.
Klarman grew up in...more
Klarman grew up in...more
| Author | Seth Klarman |
|---|---|
| Country | United States |
| Language | English |
| Subject | Securities, Investment |
| Publisher | HarperCollins |
| 1991 | |
| Pages | 249 |
| ISBN | 978-0887305108 |
| OCLC | 2248345232 |
Margin of Safety: Risk-averse Value Investing Strategies for the Thoughtful Investor is a 1991 book written by Baupost Group hedge fund manager and value investor, Seth Klarman, discussing about value investing, temperance, valuation, portfolio management, among other topics. The book draws on from The Intelligent Investor, chapter 20, which is titled 'margin of safety', coined by Benjamin Graham and David Dodd.
History[edit]
In 1991, when Seth Klarman was 34 years old, he published Margin of Safety with publisher, HarperCollins. The book initially sold just 5,000 copies for $25 a piece, and it was considered a 'flop.'[1]
In a Charlie Rose interview, Klarman considered issuing a limited edition copy of Margin of Safety for charity but was otherwise not interested in reviving the book.[1][2]
In July 6, 2018, a Kindle edition of the book was quietly released to the Amazon website. Within a matter of days, the non-authorized kindle edition of the book went to the #16 spot of 'business and investment' section of the online book store.[3] Baupost Group responded to the illegal copy by saying 'The Kindle version of Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor on Amazon is an unauthorized version being sold in violation of its registered copyright, which is owned by Seth Klarman. Mr. Klarman has not authorized republication of Margin of Safety, electronically or in any other format. Our legal department is taking and will continue to take appropriate action with respect to this matter.'[4] The Kindle edition book appeared to have been suggested by Oceanofpdf.com, an organization that offers free downloads of books online and believes 'that knowledge and information should be free and accessible to everyone around the globe.”[4]
Reception and impact[edit]
Despite the initial flop, overtime the book has achieved 'cultlike' status amongst the value investing community and has been revered as a 'bible' of sorts.[1][3] This has caused physical copies of the book to be worth to $500-$2,500 a piece.[1][4] The high price of the book has resulted in piracy of the book.[1]
The book has featured in a number of recommended reading lists in the investment press.[5][6][7]
See also[edit]
References[edit]
- ^ abcdeHa, Thu-Huong; Ha, Thu-Huong. 'Why an out-of-print investment book gets bootlegged and sells for $3,000'. Quartz. Retrieved 2019-02-15.
- ^Jarvis (2017-03-03), Seth Klarman Interview with Charlie Rose - 2017, retrieved 2019-02-15
- ^ abPatterson, Michael (July 10, 2018). 'Seth Klarman Book That Sells for $2,500 Is Now $9.99 on Kindle'. Bloomberg. Retrieved February 14, 2019.
- ^ abcKim, Tae (2018-07-10). 'Seth Klarman's investing classic 'Margin of Safety' gets pirated on Kindle'. CNBC. Retrieved 2019-02-15.
- ^'Fund managers' favourite investment books', Investors Chronicle (13 March 2013).
- ^Patrick Commins, 'Do it by the Book', Financial Review (18 January 2013), Smart Investor supplement p. 24.
- ^Vitaliy Katsenelson, 'My Investor Holiday Reading List, Part 1', Institutional Investor (January 2014).
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