He closely follows the investment philosophy of Benjamin Graham and is known for buying unpopular assets while they are undervalued, seeking a margin of safety and profiting from any rise in price.

[7] His father, Herbert E. Klarman, was a public health economist at Johns Hopkins University and his mother was a psychiatric social worker [8][9] His parents divorced shortly after their moving to Baltimore.

[7] When he was four years old, he redecorated his room to match a retail store putting price tags on all of his belongings and gave an oral presentation to his fifth-grade class about the logistics of buying a stock.

[7] He went on to attend Harvard Business School where he was a Baker Scholar and was classmates with Jeffrey Immelt, Steve Burke, Stephen Mandel, James Long, and Jamie Dimon.

[12] After graduating from business school in 1982, he founded the Baupost Group with Harvard Professor William J. Poorvu and partners Howard H. Stevenson, Jordan Baruch and Isaac Auerbach.

[7] Poorvu asked Klarman and his associates to manage some money he had raised from the selling of his share in a local television station and the fund was started with US$27 million in startup capital.

[7] His starting salary was $35,000 a year, considered low to alternative job offers,[13] and he later recalled that the other founders "were taking a big risk on a relatively inexperienced person.

"[7] Early on in his investment career, he used to badger Goldman Sachs salesmen with so many questions regarding their options and thoughts on the markets that they were afraid to pick up the phone if they saw that Baupost was calling.

By early 2009, after JPMorgan Chase acquired Washington Mutual as a part of their deal with the United States Department of the Treasury, Sallie Mae bonds were returning double digit figures for Baupost.

He purchased the bonds of CIT Group, a financial holding company based in New York City at 65 cents on the dollar with a yield rate of 15%.

[7] Shortly after the CIT deal was finalized, Klarman amassed a stake in a new bio-tech company called FacetBiotech, at an average cost of $9 a share.

Third, it's easy to talk in the abstract, but in real life you see situations that are just plain mispriced, where an ignored, neglected, or abhorred company may be just as attractive as others in the same industry.

[13]Klarman has been an avid supporter of the teachings of Benjamin Graham, and during the Financial crisis of 2007–2008 criticized the short-term thinking of other fund managers, he believes that the "this-time-is-different" mindset will give a false sense of security to investors, and they ought to look at the bigger picture.

[13] Klarman is known to sit on 30% to 50% of his funds in cash as to avoid unfavorable market conditions and only buys stocks he thinks have a suitable mispricing.

During his first years running Baupost, he made it a point to only invest in companies that were not widely accepted by the Wall Street community; he stressed managing risk and using the margin of safety.

"[7] In a 2011 interview with Charlie Rose, Klarman states he does not use a Bloomberg Terminal (an almost ubiquitous computer system used in major U.S. financial companies to track market data).

[22][23] In 2019, Klarman and Lawrence won the Outstanding Owner category at the Eclipse Awards, mainly due to the incredible season for their horse Bricks and Mortar.

"[34] In the 2016 presidential election, he gave the maximum donation of $5,400 to Hillary Clinton's campaign, stating that "Donald Trump is completely unqualified for the highest office in the land.

"[30] After the inauguration of U.S. President Donald Trump, he released a highly circulated (but internal) letter to members of his fund that denounced the upcoming investing climate.

[35][36][37] The letter states: Exuberant investors have focused on the potential benefits of stimulative tax cuts, while mostly ignoring the risks from America-first protectionism and the erection of new trade barriers.

[38]Although Klarman gave $2.9 million to Republican candidates in 2016, he told The New York Times in September 2018, "One of the reasons I’m willing to come out of my shell and talk to you is because I think democracy is at stake, and maybe I’ll be able to convince some other people of that, and get them to support Democrats in 2018."

Klarman is a registered Independent who reasoned, "We need to turn the House and Senate as a check on Donald Trump and his runaway presidency."

Klarman along with investor and Hyatt heir John Pritzker and LinkedIn cofounder Reid Hoffman were among the donors to the anti-Trump Republican Accountability Project.

[10] In 2008, he was inducted into Institutional Investors Alpha's Hedge Fund Manager Hall of Fame along with Alfred Jones, Bruce Kovner, David Swensen, George Soros, Jack Nash, James Simons, Julian Roberston, Kenneth Griffin, Leon Levy, Louis Bacon, Michael Steinhardt, Paul Tudor Jones and Steven A.

In the book, he outlines the various issues with retail investing, and critiques small time investors getting into the market purely using metrics such as share price momentum and losing money in the long run.