Investing is the intersection of economics and psychology.

Klarman’s line underscores that successful investing is not purely an exercise in valuation, accounting, and macroeconomic reasoning; it also depends on understanding how people behave under uncertainty. Prices are set by crowds of investors who are prone to fear, greed, overconfidence, and herding—psychological forces that can push securities away from intrinsic value. The “intersection” suggests that an investor must pair economic analysis (what an asset is worth) with psychological insight (why others may misprice it and when sentiment might shift). In value-investing terms, the edge often comes from staying rational and patient when others are emotionally reactive.