Seth Klarman On Cash Return: Time To Sell?

Betting that the markets never revert to historical norms, that we are in a new era of higher securities prices and lower returns, involves the risk of significant capital impairment. Betting that prices will fall at some point involves opportunity cost of uncertain amount. By holding expensive securities with low prospective returns, people choose to risk actual loss. We prefer the risk of lost opportunity to that of lost capital, and agree wholeheartedly with the sentiment espoused by respected value investor Jean-Marie Eveillard, when he said, “I would rather lose half our shareholders. . . than lose half of our shareholders’ money….” Seth Klarman, 2004 letter to Baupost Limited Partners

Seth Klarman, one of the world's most respected value investors,...