 Good day fellow investor! My favorite investing book is Seth Clarman's Margin of Safety. However, if you want to buy an example, then you have to go on Amazon and pay more than 600 to 2000 dollars. In order to save you the money so that you can invest it in stocks so that you can have double the gain, I decided to do a summary introduction and then chapter by chapter about what's in the book and add contemporary commentary, compare it to current markets in order to give you the most value. I'll probably in the future when I have some time write my own book, Margin of Safety, from a modern perspective. So I'll start today with a little introduction who is Seth Clarman, what's his style and covering the introduction of the book. Later videos will go to chapter one up to chapter 14. So please subscribe in order to be up to date with the videos and the content. Seth Clarman is the founder of the Baupost group founded in 1983 and he's not that famous because he doesn't like too much publicity but his returns since then are around 17-18% per year which led him to manage his fund which is around 30 billion in assets under management. 17% per year over more than three decades is a huge huge return. However, Clarman is a value investor which means he has specific rules that he follows and he doesn't look and care about what the market does. What's very specific about his character can be seen here. From 1993 to 2000 Seth Clarman's Baupost fund underperformed the SAP 500 by more than 50%. Imagine the character and the strength you have to have as a fund manager talking to your clients and underperformed so badly. This is because he sticks to value investing. Over 40 years 17% versus the 9, 8, 9, 10% of the SAP 500. The difference is clear and the benefit of value investing also. So it really takes guts to stick to your own ideas while you underperform the SAP 500 by 50% over six years. However, he knows what he's doing, we are going to learn from him and hopefully also outperform the SAP 500 and all other markets. How does he underperform? Well, he waits to find bargains and there is another characteristic that's very important. He has lots of cash that he uses to buy when a bargain becomes available. If we see here in 2001 when the market was still crashing his cash position was 48.6% of cash. That's huge. On average from 2001 till now Baupost's average cash balances were 33%. So he always has enough cash to take advantage of market opportunities. Of course that cash carries also an opportunity cost. So we have to be really, really smart about how we manage our portfolio, how much cash we have and what we are doing with it. Do we have enough money to take advantage of the opportunities that might present themselves if beer markets comes tomorrow or in the next six months? Very important food for thought. Let's go to the introduction of the book. There are five main psychological characteristics that are explained in the introduction and that are inherent to the value investor. As investing is not really about doing the right thing but having the right blueprint that allows you to cumulate your positive returns over a long period of time. We are now eight years in a bull market, eight years in economic expansion. Of course everybody can be smart about stocks but I want to see five years from now who will still be happy about stocks and discussing stocks and investments. The five points are individual and institutional investors frequently demonstrate inability to make long-term investment decisions. I would add also SAP 500 management with their crazy buybacks. So people don't invest on fundamentals, they invest on hope, greed, euphoria. Second point, investors are sometimes their own worst enemies. When prices go up, they buy and then again in greed buy more, they want to speculate. Instead of looking at fundamentals and risks, investors usually ignore risk, especially those who invest now in the SAP 500. Number three, ultimately investors must choose sides. You can follow the crowd or you can decide to go your own way looking at the fundamentals, looking at low risk for high reward. Number four, there's nothing esoteric about value investing. It is simply the process of determining the value underlying a security and then buying it at a considerable discount from that value. Number five, most investors are oriented towards returns. So they just look how much they can make and they pay very little attention to risk, how much they can lose. This fifth one is a favorite of mine. If I start investing with how much can I lose, everything changes in my investing world because I'm not excited, I'm panicking. Ray Dalio asked the question, where am I wrong? And then when nobody can find the wrong, then they invest. So it's an opposite thinking. However, rich people, successful investors do it. Think about it. Thank you for watching and I see you in the next video. Don't forget to subscribe to get the whole set, Claremont, margin of safety, book explained and summarized in these videos. See you in the next video.