Good stuff, Aaron.

I might expand this definition to include geopolitical risk in particular, especially with regard to China (but also really relevant elsewhere). On the other hand, depending on who you are, this whole category might just go into the "too hard" pile.

Ben Graham was such a great thinker, and Klarman best encapsulates his deep method of thought and a modern interpretation of "Intelligent Investing", as it were. I have read everything he's written, at least insofar as I can find (including Margin of Safety).

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Thank you for the article. Two follow up questions:


There is a point you raised that I wanted to double-click on:

"I simply couldn’t fathom how Facebook could only be worth 24x PE into perpetuity"

Assuming a 10% discount rate, a 24x multiple implies ~6% perpetual growth rate, emphasis on perpetual. How do you get comfortable with such a valuation given that we're talking about perpetual growth rates? At 6%, Meta's earnings will effectively make up the entirety of the nation's GDP.

It's a bit of a silly argument that I'm making primarily because we aren't capitalizing earnings at a mature state, but my sense is that the 24x multiple alone took you by surprise, and I'm curious to know why.


How did you quantify the Apple and Tik Tok risks? I'm always worry of risks that turn out to be insignificant in hindsight due to actions taken to mitigate them (i.e., in an alternative universe, these two risks resulted in principal impairment of capital). Going back to Nov. 2022 when Meta traded for $90, what gave you the confidence to underwrite this risk?

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