RARE BOOK GUIDE - THE RUNNERS, THE RIDERS & THE ODDS

22 December 2006

Margin of Safety. Risk Averse Value Investing...


A much wanted book, there are many people looking for the book but they don't want to pay the slightly silly list prices; after all the book advises great caution in buying...

Seth Klarman. MARGIN OF SAFETY: RISK-AVERSE VALUE INVESTING STRATEGIES FOR THE THOUGHTFUL INVESTOR. Harper Collins, N.Y. 1991. ISBN 0887305105

Current Prices $750-$1250 / £400-£650 Want level 50 - 75 High

ECONOMICS / INVESTING
Value investing. A much wanted book that always seems to be v expensive, some people get it from the library and copy it. Not esp scarce and not nice to look at. Slightly dated in some aspects now but from the horse's mouth, Librarians even in late 2006 report that it is the most requested of all books. Klarman is said to trouser $60,000,000 a year from a multibillion (Baupost) dollar fund operating out of Cambridge, Mass. He wrote this when he was 33 and doesn't (according to a librarian on bookfinder) want to see it reprinted.
Basically, and this is also true of books, the investor has to develop the discipline only to buy when prices are attractive and sell when they are not, developing a longer term strategy- -Klarman hated Junk Bonds. His advice is to avoid fads and he teaches how to think long and deep about the market and the rationales behind it. A UK edition, with the title 'At the Margin of Safety, Going beyond Finacial Mythmaking to Find Real Investment Value' is worth even more than the US ed.

VALUE? For a while there were copies at circa $700 but they actually sell, and $1500 is what you have to put on it to stop it selling. Needless to say there are quite a few chaps doing that, some vainly holding out for $3000. At one point a wily entrepreneur was renting out his copy on ebay at $75 per week. Several have made over $1000 on ebay. With this book one might follow Seth's own principles and not buy it, prices being currently unattractive. Meanwhile -- more according to Seth (and it's free) "How can investors be certain of achieving a margin of safety?" he writes "...by always buying at a significant discount to underlying business value, and giving preference to tangible assets over intangibles....By replacing current holdings as better bargains come along. By selling when the market price of an investment comes to reflect its underlying value and by holding cash, if necessary, until other attractive investments become available...Since investors cannot predict when values will rise or fall, valuation should always be performed conservatively, giving considerable weight to worst-case liquidation value as well as to other methods." That's like $5 worth of info! STOP PRESS 14 March 2006. No copies anywhere for less than $1000 and that one is an 'acceptable' only ex library copy at Amazon USA. Because it is never going to be reprinted (according to Seth) it looks like it's always going to be painfully expensive. Librarians can help if you want to merely read and inwardly digest it.
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