Chosen by Fortune as one of the

countrys outstanding value investors,

and tagged by Institutional Investor as
one of the Young money managers to
watch in the 1990s, Seth Klarman
shares his value inveting insights.
Investors are 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 succes and invariably run the
risk of considerable economic loss
they resemble speculation or
outrightgambling, not a coherent
investment program. But value
investing ----the strategy of investing in
securities trading at an appreciable
discount from underlying value---has
a long history of delivering excellent
investment results with limited
downside risk. Taking its title from
Benjamin Grahams often repeated
admonition to invest always with a
margin of safety, Karmans Margin of
Safety explains the philosophy of value
investing, and perhaps more
importantly, the logicbehind it,
demonstrating why it succeeds while
other approaches fail. The blueprint
that Klarman offers, if carefully

(continued on back flap)

(continued from front flap)

Followed, offers the investor the strong possibility

of investment succes with limited risk.

Klarman takes the mystery out of value investing,

Showing that theres nothing esoteric about it---

Its simply the process of determining the vaue

Underlying a security and then buying it at a

Considerable discount from that value. The

Greatest challenge for the investor, he believes,

is

To develop the patience and discipline to buy only

When prices are attractive and sell when theyre

Not---avoiding the short-term performance frenzy

That engulfs most players. Klarman argues that

Junk bond mania, for example, was not a once-in-

a-millennium madness, but only a point along the

historical ebb and flow of investor greed and fear.

From this very avoidable debacle, investors can

Learn to escape the next enticing market fad that

s

Sure to come along.

To achieve long-term investment succes through

Bull and bear markets ans changing economic

Cycles, simply observing a few rules isnt

enough.

Nor can investment succes be captured in a

Mathematical equation or computer program;

There is no free lunch or golden road in

Serious investing. Margin if Safety shows you not

Just how to invest but how to think deeply about

Investing---to understand the rationale behind

the

Rules to appreciate why they work when they

Work, and why they dont when they dont.

Seth A. Klarman is president of the Baupost

Group, Inc., a private money management firm

Launched in 1982with $27 million under man-

 Chosen by Fortune as one of the
countrys outstanding value
investors, and tagged by
Institutional
Agement and now managing $400 Investor as one of
million. He
the Young money
managers
Received an M.B.A. from to watch
the Harvard in the 1990s,
Business
Seth Klarman
School and B.A. in economics
shares hisfrom Cornell
value inveting insights.

He lives in Massachusetts withare

Investors histoo
wife andlured
often two by the
daughters. prospect
of instant millions and fall prey to
the many fads
of Wall Street. The myriad
Jacket design by Barry Littmann
approaches they adopt
Photo by Mark Morelli offer Little or no real prospect for
long.term
ISBN 0-88730-510-5 succes and invariably run the risk of
considerable economic loss they
resemble
speculation or outrightgambling, not
PRINTED IN U.S.A. a coherent
investment program. But value
investing ----the
strategy of investing in securities
trading at an
appreciable discount from
underlying value---has
a long history of delivering excellent
investment
results with limited downside risk.
Taking its title
from Benjamin Grahams often
repeated
admonition to invest always with a
margin of
safety, Karmans Margin of Safety
explains the
philosophy of value investing, and
perhaps more
importantly, the logicbehind it,
demonstrating
why it succeeds while other
approaches fail. The
blueprint that Klarman offers, if
carefully

(conti
nued
on
back
flap)