The Forgotten Lessons of 2008: Seth Klarman

Seth Klarman outlines the lessons that investors were quick to forget only two years following one of the greatest financial meltdowns in modern history.

Two years after the great financial crisis of 2008, Seth Klarman shared a memo explaining how he felt that investors were quick to forget the lessons learned from one of the greatest financial meltdowns in modern history. He would remark that these lessons “were either never learned or else were immediately forgotten by most market participants”. Not quite a like-for-like comparison, but today we are ~2 years post one of the strangest exogenous shocks to ever hit the market. In this short time, we witnessed excess, despair, and everything in between. Some are now calling for a recession and a prolonged bear market while others suggest we are on the precipice of a young bull market.

I have no idea myself, but I noticed that following one strong month (January) of 2023; the behaviours amongst retail investors that faded during 2021/22 (posting returns, portfolio breakdowns et al) have made a return. I don’t think there is anything inherently wrong with that; transparency is useful as fa…