The Fed is treating investors like little children, Seth Klarman tells investors in his Baupost Group hedge fund.
"Investors are being infantilized by the relentless Federal Reserve activity," Klarman says in an investor letter seen by Bloomberg.
"It’s as if the Fed considers them foolish children, unable to rationally set the prices of securities so it must intervene.
When the market has a tantrum, the benevolent Fed has a soothing yet enabling response."
Klarman adds "psychology is surprisingly ebullient even though business fundamentals are often dreadful".