--- title: "Meaning & Key Takeaway of: Because investors are not usually…" description: "\"Because investors are not usually penalized for adhering to conventional practices, doing so is the less professionally risky strategy, even though it ..." image: "https://sms4smile.com/quotes/i/5b0/seth-klarman-1979_conventional_because-investors-are-not-usually-penali_20945.png" --- # Because investors are not usually penalized for adhering… ![“Because investors are not usually penalized for adhering to conventional practices, doing so is the less professionally risky strategy, even though it virtually guarantees against superior performance.” quote by Seth Klarman](https://sms4smile.com/quotes/i/5b0/seth-klarman-1979_conventional_because-investors-are-not-usually-penali_20945.png) [Download](https://sms4smile.com/quotes/i/5b0/seth-klarman-1979_conventional_because-investors-are-not-usually-penali_20945.png) [Open image](https://sms4smile.com/quotes/i/5b0/seth-klarman-1979_conventional_because-investors-are-not-usually-penali_20945.png) > “Because investors are not usually penalized for adhering to conventional practices, doing so is the less professionally risky strategy, even though it virtually guarantees against superior performance.” [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. Conventional investing is safe because the system rewards conformity, making it hard to achieve outsized returns. **In simple terms:** Conformity limits performance. Key Takeaway Risk-averse behavior curtails alpha. Themes risk aversion conformity performance investment strategy behavioral finance Mood cautious analytical Type advice observation When to use this quote - portfolio construction - fund manager decision-making - investment policy formulation Key Concepts incentive structures market dynamics Practical Applications - risk management - performance evaluation Questions to Reflect On - How does institutional pressure shape investment choices? - What mechanisms could reward contrarian approaches? A Different Perspective Some investors may deliberately deviate from norms to capture unique opportunities despite higher perceived risk. ★ ★ ★ ★ ★ No ratings yet [Conventional](https://sms4smile.com/quotes/about/conventional/) [Conventional Practices](https://sms4smile.com/quotes/about/conventional-practices-396924/) [Customer](https://sms4smile.com/quotes/about/customer/) [Guarantees](https://sms4smile.com/quotes/about/guarantees/) [Investing](https://sms4smile.com/quotes/about/investing/) [Investors](https://sms4smile.com/quotes/about/investors/) [Investors Usually](https://sms4smile.com/quotes/about/investors-usually-396922/) [Performances](https://sms4smile.com/quotes/about/performances/) [Practice](https://sms4smile.com/quotes/about/practice/) [Professionally Risky](https://sms4smile.com/quotes/about/professionally-risky-396923/) [Risky Strategy](https://sms4smile.com/quotes/about/risky-strategy-396921/) [Strategy](https://sms4smile.com/quotes/about/strategy/) [Superior performance](https://sms4smile.com/quotes/about/superior-performance/) [Superiors](https://sms4smile.com/quotes/about/superiors/) ## Related quotes > [When it comes to owning stocks of the best-known businesses in the world, value investors usually feel like children looking through the window of…](https://sms4smile.com/quotes/whitney-tilson/when-it-comes-to-owning-stocks-of-the-best-known-businesses-in-the/) [Whitney Tilson](https://sms4smile.com/quotes/author/whitney-tilson/) > [Practical investors usually learn their problem is finding enough outstanding investments, rather than choosing among too many.](https://sms4smile.com/quotes/philip-arthur-fisher/practical-investors-usually-learn-their-problem-is-finding-enough/) [Philip Arthur Fisher](https://sms4smile.com/quotes/author/philip-arthur-fisher/) > [Operational effectiveness and strategy are both essential to superior performance.](https://sms4smile.com/quotes/michael-porter/operational-effectiveness-and-strategy-are-both-essential-to-superior/) [Michael Porter](https://sms4smile.com/quotes/author/michael-porter/) > [It is impossible to produce superior performance unless you do something very different.](https://sms4smile.com/quotes/john-templeton/it-is-impossible-to-produce-superior-performance-unless-you-do/) [John Templeton](https://sms4smile.com/quotes/author/john-templeton/) > [We assert that integrity (the condition of being whole and complete) is a necessary condition for workability, and that the resultant level of workability…](https://sms4smile.com/quotes/werner-erhard/we-assert-that-integrity-the-condition-of-being-whole-and-complete-is/) [Werner Erhard](https://sms4smile.com/quotes/author/werner-erhard/) > [I have become increasingly convinced that the past records of mutual fund managers are essentially worthless in predicting future success. 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Lewis does, what I feel is…](https://sms4smile.com/quotes/joy-davidman/i-suppose-it-s-unfair-tricks-of-argument-that-leave-wounds-but-with/) [Joy Davidman](https://sms4smile.com/quotes/author/joy-davidman/) > [Over the long run, superior performance depends on superior learning.](https://sms4smile.com/quotes/peter-senge/over-the-long-run-superior-performance-depends-on-superior-learning/) [Peter Senge](https://sms4smile.com/quotes/author/peter-senge/) > [It's simply not enough to just show up and do your work. Superior performance is not, never has been, nor will it ever be,…](https://sms4smile.com/quotes/gary-ryan/it-s-simply-not-enough-to-just-show-up-and-do-your-work-superior/) [Gary Ryan](https://sms4smile.com/quotes/author/gary-ryan/) > [The debate can be put in the form of the question: Resolved, that the best of money managers cannot be demonstrated to be able…](https://sms4smile.com/quotes/paul-samuelson/the-debate-can-be-put-in-the-form-of-the-question-resolved-that-the/) [Paul Samuelson](https://sms4smile.com/quotes/author/paul-samuelson/) > [“If you play to your strengths, you'll turn in a superior performance. Just be yourself.”](https://sms4smile.com/quotes/yuki-kure/if-you-play-to-your-strengths-you-ll-turn-in-a-superior-performance/) [Yuki Kure](https://sms4smile.com/quotes/author/yuki-kure/) > [So the first thing I learned about how to get superior performance is not to buy stocks that are near their lows, but to…](https://sms4smile.com/quotes/william-o-neil/so-the-first-thing-i-learned-about-how-to-get-superior-performance-is/) [William O'Neil](https://sms4smile.com/quotes/author/william-o-neil/) > [A language possesses utility only insofar as it can construct conventional boundaries. A language of no boundaries is no language at all, and thus…](https://sms4smile.com/quotes/ken-wilber/a-language-possesses-utility-only-insofar-as-it-can-construct/) [Ken Wilber](https://sms4smile.com/quotes/author/ken-wilber/) > [Whether you are buying a car or casting a ballot, choosing a job or planning a family, follow your moral compass. Don't let others…](https://sms4smile.com/quotes/denis-hayes/whether-you-are-buying-a-car-or-casting-a-ballot-choosing-a-job-or/) [Denis Hayes](https://sms4smile.com/quotes/author/denis-hayes/) ## More by Seth Klarman > [Unlike return, however, risk is no more quantifiable at the end of an investment that it was at its beginning. Risk simply cannot be…](https://sms4smile.com/quotes/seth-klarman/unlike-return-however-risk-is-no-more-quantifiable-at-the-end-of-an/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) > [Value investing is risk aversion.](https://sms4smile.com/quotes/seth-klarman/value-investing-is-risk-aversion/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) > [Be focused on process and not outcome](https://sms4smile.com/quotes/seth-klarman/be-focused-on-process-and-not-outcome/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) > [There is an old saying, "How did you go bankrupt?" And the answer is, "Gradually, and then suddenly." The impending fiscal crisis in the…](https://sms4smile.com/quotes/seth-klarman/there-is-an-old-saying-how-did-you-go-bankrupt-and-the-answer-is/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) > [In a rising market, everyone makes money and a value philosophy is unnecessary. 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It is an, with an ongoing need for judgment, refinement, patience,…](https://sms4smile.com/quotes/seth-klarman/it-is-important-to-remember-that-value-investing-is-not-a-perfect/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) > [Value investing is at its core the marriage of a contrarian streak and a calculator.](https://sms4smile.com/quotes/seth-klarman/value-investing-is-at-its-core-the-marriage-of-a-contrarian-streak/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) > [The avoidance of loss is the surest way to ensure a profitable outcome.](https://sms4smile.com/quotes/seth-klarman/the-avoidance-of-loss-is-the-surest-way-to-ensure-a-profitable-outcome/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) > [Do not suffer interim losses, relish and appreciate them](https://sms4smile.com/quotes/seth-klarman/do-not-suffer-interim-losses-relish-and-appreciate-them/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) > [Ratings agencies are highly conflicted, unimaginative dupes. They are blissfully unaware of adverse selection and moral hazard. Investors should never trust them.](https://sms4smile.com/quotes/seth-klarman/ratings-agencies-are-highly-conflicted-unimaginative-dupes-they-are/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) > [It is crucial to have a strategy in place before problems hit, precisely because no one can accurately predict the future direction of the…](https://sms4smile.com/quotes/seth-klarman/it-is-crucial-to-have-a-strategy-in-place-before-problems-hit/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) > [Having great clients is the key to investment success.](https://sms4smile.com/quotes/seth-klarman/having-great-clients-is-the-key-to-investment-success/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) [Explore all 193 Seth Klarman quotes ](https://sms4smile.com/quotes/author/seth-klarman/) ## More Conventional quotes > [Whether you are buying a car or casting a ballot, choosing a job or planning a family, follow your moral compass. 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It speaks up when the politically correct answer or the conventional wisdom doesn't…](https://sms4smile.com/quotes/larry-osborne/contrarian-thinking-at-its-best-simply-asks-is-this-really-true-it/) [Larry Osborne](https://sms4smile.com/quotes/author/larry-osborne/) > [My father was in real estate, banking, and land management. As family life, it was very conventional, happy, and comfortable. We weren't wealthy, but…](https://sms4smile.com/quotes/julia-child/my-father-was-in-real-estate-banking-and-land-management-as-family/) [Julia Child](https://sms4smile.com/quotes/author/julia-child/) > [Our Christian faith is actually very subversive of the conventional notion of success - the notion that what invests a person with worth is…](https://sms4smile.com/quotes/desmond-tutu/our-christian-faith-is-actually-very-subversive-of-the-conventional/) [Desmond Tutu](https://sms4smile.com/quotes/author/desmond-tutu/) > [I think you will learn to be natural with me, as I find it impossible to be conventional with you](https://sms4smile.com/quotes/charlotte-bronte/i-think-you-will-learn-to-be-natural-with-me-as-i-find-it-impossible/) [Charlotte Bronte](https://sms4smile.com/quotes/author/charlotte-bronte/) > [What's different now is that while political leaders used to give talking points to talk radio, now talk-radio hosts are giving talking points to…](https://sms4smile.com/quotes/john-avlon/what-s-different-now-is-that-while-political-leaders-used-to-give/) [John Avlon](https://sms4smile.com/quotes/author/john-avlon/) > [Some days, I think maybe we should try and be a little more conventional, but every time I try, I fail, so I'm learning…](https://sms4smile.com/quotes/seinabo-sey/some-days-i-think-maybe-we-should-try-and-be-a-little-more/) [Seinabo Sey](https://sms4smile.com/quotes/author/seinabo-sey/) > [The vision of extraordinary achievement is,by definition, a few steps beyond consensus and conventional logic](https://sms4smile.com/quotes/scott-belsky/the-vision-of-extraordinary-achievement-is-by-definition-a-few-steps/) [Scott Belsky](https://sms4smile.com/quotes/author/scott-belsky/) > [“Can you make me remember the conventional way?”](https://sms4smile.com/quotes/jodi-ellen-malpas/can-you-make-me-remember-the-conventional-way/) [Jodi Ellen Malpas](https://sms4smile.com/quotes/author/jodi-ellen-malpas/) > [Nobody can live in society without conventions. 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But when I campaign on college campuses, they ask me where…](https://sms4smile.com/quotes/aaron-schock/when-i-campaign-with-seniors-it-s-always-are-you-a-democrat-or/) [Aaron Schock](https://sms4smile.com/quotes/author/aaron-schock/) [Browse all 742 Conventional quotes ](https://sms4smile.com/quotes/about/conventional/) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "Quotation", "text": "Because investors are not usually penalized for adhering to conventional practices, doing so is the less professionally risky strategy, even though it virtually guarantees against superior performance.", "creator": { "@type": "Person", "name": "Seth Klarman" }, "isPartOf": { "@id": "https://sms4smile.com/quotes/#website" }, "url": "https://sms4smile.com/quotes/seth-klarman/because-investors-are-not-usually-penalized-for-adhering-to/", "about": { "@type": "Thing", "name": "Conventional" }, "@id": "https://sms4smile.com/quotes/seth-klarman/because-investors-are-not-usually-penalized-for-adhering-to/#quotation", "image": { "@type": "ImageObject", "@id": "https://sms4smile.com/quotes/i/5b0/seth-klarman-1979_conventional_because-investors-are-not-usually-penali_20945.png", "contentUrl": "https://sms4smile.com/quotes/i/5b0/seth-klarman-1979_conventional_because-investors-are-not-usually-penali_20945.png", "url": "https://sms4smile.com/quotes/i/5b0/seth-klarman-1979_conventional_because-investors-are-not-usually-penali_20945.png", "width": 1080, "height": 1080, "caption": "“Because investors are not usually penalized for adhering to conventional practices, doing so is the less…” — Seth Klarman", "creditText": "SMS4Smile Quotes", "creator": { "@id": "https://sms4smile.com/quotes/#organization" } } }, { "@type": "BreadcrumbList", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://sms4smile.com/" }, { "@type": "ListItem", "position": 2, "name": "Quotes", "item": "https://sms4smile.com/quotes/" }, { "@type": "ListItem", "position": 3, "name": "Seth Klarman", "item": "https://sms4smile.com/quotes/author/seth-klarman/" }, { "@type": "ListItem", "position": 4, "name": "Because investors are not usually penalized...", "item": "https://sms4smile.com/quotes/seth-klarman/because-investors-are-not-usually-penalized-for-adhering-to/" } ], "@id": "https://sms4smile.com/quotes/seth-klarman/because-investors-are-not-usually-penalized-for-adhering-to/#breadcrumb" }, { "@type": "WebSite", "@id": "https://sms4smile.com/quotes/#website", "name": "SMS4Smile Quotes", "url": "https://sms4smile.com/quotes/", "publisher": { "@id": "https://sms4smile.com/quotes/#organization" } }, { "@type": "Organization", "@id": "https://sms4smile.com/quotes/#organization", "name": "SMS4Smile Quotes", "url": "https://sms4smile.com/quotes/", "logo": { "@type": "ImageObject", "url": "https://sms4smile.com/quotes/wp-content/themes/sq/assets/icons/icon-512.png", "width": 512, "height": 512 } } ] } ```