Introduction
A couple of months ago, I received an email from the executive assistant of Investment Management Associates' Vitaliy Katsenelson, saying that, on his way back from an investment workshop that takes places every year in Switzerland, he would be visiting Vienna and invited his newsletter readers in the area for a get-together.
For those who don't know him, Katsenelson is a renowned Russian-born value investor who has been living in the U.S. for 30 years and currently operating in Greenwood Village, Colorado.
As I was slightly less than 150 miles away from the city, I decided to join him and also take the opportunity for a nice walk with a dear friend through the streets of the Austrian capital.
Please note that I am publishing this with Katsenelson's permission.
The person
Don't ask me why, but what I first imagined the location of the gathering would be like was a large conference room in a shiny modern hotel with seats and people with laptops waiting to take notes.
I was pleasantly surprised to realize that it was instead taking place in one of the typical historical cafes on the Viennese Ring. Additionally, there was no conference room at all, and I found Katsenelson and his brother sitting at one of the tables, just relaxing and enjoying the place. There ended up being only seven people, so it was quite an intimate conversation.
What I also appreciated is that he was dressed informally: he intended this to be just a talk with friends (even if most of us didn't know each other). He's a very down-to-earth guy and, at least in my view, doesn't consider all his achievements (or, even less, the amount of his assets under management) something that puts him in a higher position compared to other investors or people.
A few lessons I (indirectly) learned
Even if this was supposed to be an investor get-together, we didn't (explicitly) talk a lot about investing. We talked more about life, but, as I later recognized, Katsenelson's investment philosophy is not separated from his approach to life: he's simply applying his vision to everything he does.
I found this very interesting because the greatest investors I know are also great thinkers, and the only way to earn uncommon (read: outstanding) returns is to think better and differently from others.
While sharing our stories and ideas, we also started to talk about our families and specifically what our parents told us that we still value and use today. He told us that when he was a teenager, his father taught him one of the most precious lessons of his life.
While visiting a museum in Vienna, his father noticed that he was very excited and looking forward to visiting as much as possible in one day. Every time he visited a specific place, he was always looking forward to the next place, as if the tour was just made of places to collect, almost completely ignoring the related experiences. His father gently explained him that by behaving that way, he was missing the best of what the city could offer him and suggested to stop, look around and enjoy the paintings, the statues, the architecture, etc. without thinking of what's coming next. He simply told his son to stay in the "here and now" (or, as the Romans used to say, in the "hic et nunc").
To better illustrate the concept, Katsenelson also told us that when his father prepares coffee in the morning, he always stirs clockwise counting to 100 out loud. He always smiles when he does that, but he also greatly admires him for his capacity to live in the moment and to keep his mind calm and focused on what he's doing instead of letting it drift sideways.
This concept is particularly useful in investing as well. We all know that fear and greed are an investor's most dangerous enemies. And what are fear and greed if not the tentative of our minds to escape from the present moment and wander into what happened in the past or what will happen in the future? When we analyze a company, we should ask ourselves how much are we really seeing the reality in which this company operates and its strengths and weaknesses, as opposed to the image we form in our head, which is often full of projections from the past (either positive or negative) and expectations we make on future profits.
Before we start to analyze anything, we should try to begin with a "blank sheet," that is: try to not have prejudices and look at things as they are presently. Historical data is, of course, useful, but it doesn't tell us what will happen next. It's only when we deeply understand the company's business model and the environment in which it operates that we get the "edge" we need to make an informed decision.
Toward the end of our conversation, we started to talk about investing topics, and Katsenelson asked us about our best investment ideas and the related investment thesis. (I didn't dare ask about his personal ideas, as he's getting paid for that so it wouldn't have been fair to his clients).
Again, I was positively impressed by the fact he didn't care at all if we were experienced investors, newbies or investment managers. He only cared about the content of what people said and listened carefully to everyone, pondering different ideas and concepts and answering accordingly. After I explained my ideas and my investment process, he asked me from which sources I was collecting data on my portfolio companies: I told him that I only rely on official data (press releases, 10-Q, 10-K, etc.).
After that we said goodbye to each other and everyone moved in a different direction. When I was back home, I sent I him an email with some info about my favorite holdings and added some links about what we discussed, to which he kindly replied and attached some interviews of customers and ex-employees related to the same companies, which I greatly appreciated. I then realized that he just wanted to suggest me (in a tactful way) to expand and deepen my knowledge and my investing process by taking into account what happens "on the field," which can give a different perspective in addition to what can be understood by simply listening at what the management wants to convey.
Conclusion
Most newbie investors think investing is something you can learn by just reading a few books or crunching some numbers in a spreadsheet.
I am convinced that investing is much more than that, as a big part of being successful comes from the willingness of knowing ourselves and our limitations better, apart from acquiring some technical skills.
The best investors are people like Warren Buffett (Trades, Portfolio), Charlie Munger (Trades, Portfolio), Tom Gayner (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio) and, naturally, Katsenelson, whose investment philosophy is simply an extension of their approach to life. They can count on multiple tools and arrows in their quiver because they know how to transform almost anything they learned in life to investment concepts (and vice-versa).
I will continue to keep them (and their teachings) in high regard, both in investing and life.
