quote:

Seth Klarman, a hedge fund billionaire some call the next Warren Buffett, wrote a sobering letter warning his investors of the economic impact of global tension, rising debt and the pervasive political divide.

"It can't be business as usual amid constant protests, riots, shutdowns and escalating social tensions," Klarman wrote in the annual letter to investors, according to a New York Times column filed by CNBC "Squawk Box" co-anchor Andrew Ross Sorkin.

The letter caused buzz during the annual World Economic Forum in Davos, Switzerland.

quote:

In 2017, Mr. Klarman returned some of his fund to his investors, saying he didn’t see enough good investment opportunities. Yet he also acknowledged in his letter that even if he expected an eventual crisis, “since the worst does not frequently happen, you cannot let the fear of a monster storm completely paralyze you.” He seems to wrestle in his letter with how to continue investing profitably while protecting himself and his firm against his fatalistic expectations.

Mr. Klarman, a registered independent, was a donor to Republicans for years but has become a critic of Mr. Trump and has sought to elect Democrats to neutralize him. He said in his letter that he was particularly worried about the social and economic implications of Mr. Trump’s efforts to paint accurate information as “fake news.”

“This post-truth moment is quite dangerous,” Mr. Klarman wrote. “Imagine an incident that threatens national security. Will Americans see eye to eye on the seriousness of the threat? If our leaders are truth-challenged, will Americans believe the official explanation of the threat and the wisdom of the proposed response? Should they?”

The many technology companies in Davos — Facebook, Google and Amazon among them — may also want to take note of Mr. Klarman’s anxiety that “more and more people are choosing to only seek out information from those who share their views” and his blame that “technology and social media have made it increasingly easy to do so.”

Whether a crisis is around the corner or still years away, Mr. Klarman seems relatively convinced that it is coming and that it will manifest itself not just in a market downturn but potentially in more violence as well.

“It is not hard to imagine worsening social unrest among a generation,” he wrote, “that is falling behind economically and feels betrayed by a massive national debt that was incurred without any obvious benefit to them.”