He also linked this point — which is a fair one — to what "Trump style" means for Mr. Klarman's constituency and others.
"The big picture for investors is this: Trump is high volatility, and investors generally abhor volatility and shun uncertainty," he wrote. "Not only is Trump shockingly unpredictable, he's apparently deliberately so; he says it's part of his plan."
While Mr. Klarman clearly is hoping for the best, he warned, "If things go wrong, we could find ourselves at the beginning of a lengthy decline in dollar hegemony, a rapid rise in interest rates and inflation, and global angst."
Mr. Klarman is a registered independent and has given money to politicians from both parties. He has donated to Jeb Bush, Chris Christie, Marco Rubio, John McCain and Rudolph W. Giuliani as well as Hillary Clinton, Cory Booker and Mark Warner.
While he has remained largely outside the public eye, Mr. Klarman surprised some of his friends and peers over the summer when he issued a statement after Mr. Trump criticized a judge over his Mexican heritage, saying he planned to support Mrs. Clinton: "His words and actions over the last several days are so shockingly unacceptable in our diverse and democratic society that it is simply unthinkable that Donald Trump could become our president."
In his recent letter, he explained for the first time his decision to say something publicly. "Despite my preference to stay out of the media," he wrote, "I've taken the view that each of us can be bystanders, or we can be upstanders. I choose upstander."
From the letter, it is hard to divine exactly how Mr. Klarman is investing his fund's money. His office declined to comment on the letter, which I obtained from a source. His fund currently has more than 30 percent of its funds in cash. He has lost money in only three of the past 34 years.
What investors say publicly and what they do in the markets can be different things. Mr. Buffett campaigned publicly against Mr. Trump, but he has nevertheless invested in the market since his election — about $12 billion, according to a recent disclosure. George Soros, who also actively campaigned against Mr. Trump, bet — wrongly so far — that the stock market would fall; he lost about $1 billion.
Most hedge funds have found themselves on the losing side of trades over the past several years, a point Mr. Klarman addressed in his letter. Noting that hedge fund returns have underperformed the indexes — he mentioned that hedge funds had returned only 23 percent from 2010 to 2015, compared with 108 percent for the Standard & Poor's index — he blamed the influx of money into the industry.
"With any asset class, when substantial new money flows in, the returns go down," Mr. Klarman wrote. "No surprise, then, that as money poured into hedge funds, overall returns have soured."
He continued, "To many, hedge funds have come to seem like a failed product."
The lousy performance among hedge funds and the potential for them to go out of business or consolidate, he suggests, may become an opportunity.
Perhaps the most distinctive point he makes — at least that finance geeks will appreciate — is what he says is the irony that investors now "have gotten excited about market-hugging index funds and exchange traded funds (E.T.F.s) that mimic various market or sector indices."
He says he sees big trouble ahead in this area — or at least the potential for investors in individual stocks to profit.
"One of the perverse effects of increased indexing and E.T.F. activity is that it will tend to 'lock in' today's relative valuations between securities," Mr. Klarman wrote.
"When money flows into an index fund or index-related E.T.F., the manager generally buys into the securities in an index in proportion to their current market capitalization (often to the capitalization of only their public float, which interestingly adds a layer of distortion, disfavoring companies with large insider, strategic, or state ownership)," he wrote. "Thus today's high-multiple companies are likely to also be tomorrow's, regardless of merit, with less capital in the hands of active managers to potentially correct any mispricings."
To Mr. Klarman, "stocks outside the indices may be cast adrift, no longer attached to the valuation grid but increasingly off of it."
"This should give long-term value investors a distinct advantage," he wrote. "The inherent irony of the efficient market theory is that the more people believe in it and correspondingly shun active management, the more inefficient the market is likely to become."
How Mr. Klarman wants investors to behave in the age of Trump remains an open question. But here's a hint: At the top of his letter, he included three quotations. One was attributed to Thomas Jefferson: "In matters of style, swim with the current; in matters of principle, stand like a rock."