Accepting Quote by Seth Klarman
“Do not accept principal risk while investing short-term cash: the greedy effort to earn a few extra basis points of yield inevitably leads to the incurrence of greater risk, which increases the likelihood of losses and severe illiquidity at precisely the moment when cash is needed to cover expenses, to meet commitments, or to make compelling long-term investments.”
About This Quote
Source Book: Margin of Safety, 1991
Seeking tiny yield gains on cash can expose you to larger, hidden risks that surface when you need the money most.
In simple terms: Chasing small returns on cash can cause big losses later.
Key Takeaway
Prioritize safety over marginal yield.
Themes
risk management
investment
liquidity
Mood
cautious
analytical
Type
financial
advice
When to use this quote
- cash management
- portfolio construction
- short-term investing
- emergency planning
Key Concepts
financial theory
behavioral finance
risk-return tradeoff
Questions to Reflect On
- How much risk can you tolerate?
- What safety nets do you have?
A Different Perspective
Low‑yield assets can be appropriate for certain horizons.
