Assets Quote by Seth Klarman
“When excesses such as lax lending standards become widespread and persist for some time, people are lulled into a false sense of security, creating an even more dangerous situation. In some cases, excesses migrate beyond regional or national borders, raising the ante for investors and governments. These excesses will eventually end, triggering a crisis at least in proportion to the degree of the excesses. Correlations between asset classes may be surprisingly high when leverage rapidly unwinds.”
About This Quote
Source Book: Margin of Safety, Seth Klarman, 1991
Widespread lax lending creates complacency, leading to larger crises when excesses unwind and leverage collapses.
In simple terms: Bad lending breeds false security and bigger crashes.
Key Takeaway
Watch for systemic risk and tighten standards early.
Themes
risk
complacency
crisis
leverage
globalization
Mood
cautious
analytical
Type
financial
warning
When to use this quote
- banking sector
- real estate markets
- government policy
- investment decisions
Key Concepts
financial cycles
systemic risk
contagion
Questions to Reflect On
- How can regulators detect hidden leverage early?
- What safeguards reduce cross‑border contagion?
A Different Perspective
Excesses may persist longer than expected, delaying corrective action.
![“[When I die], I will decidedly not be regretting missed opportunities for a good time. My regrets will be more along the lines of a sad list of people hurt, people let down, assets wasted and advantages squandered.” quote by Anthony Bourdain](https://sms4smile.com/quotes/img-quotes/ba3/anthony-bourdain-649_advantage_when-i-die-i-will-decidedly-not-be-regre_24502.jpg)
