During his recent interview with Tobias, Vitaliy Katsenelson, author and CEO of Investment Management Associates discusses the new book he’s working on – The Intellectual Investor – The Intelligent Investor, Plus Creativity. Here’s an excerpt from the interview:
Tobias Carlisle: You’re working on a new book, The Intellectual Investor. Do you want to give us a little taste of what that’s going to be about?
Vitaliy Katsenelson: So just realize that when somebody writes a book, they go to promote it. So this is one of those books that may come out five years from now or 10 years from now, but because to me it’s really… The first book I really wrote it like I had a bucket list item. That’s still probably the only item I had in my bucket list to write a book to make my father proud. My second book was really just… John violin sounds came back to me and says, “You have the big book. How about you write a little book? I’m like, “Great.” But this book I’m really writing for me, and this is really a book for me before I can tell. So the name of the book is going to be The Intellectual Investor.
Vitaliy Katsenelson: Basically, it’s a play on The Intelligent Investor. It’s the next iteration of intelligent investing into intellectual investing. Or look at it as basically intelligent investing plus creativity. This book is really for me, trying to become a better investor because good thing about investing, you can always get better, and if you don’t get better, then you actually get worse.
Vitaliy Katsenelson: So, this book is for me to get better. So there’s a cute story that I read it somewhere. I’m stealing it from somebody, but I don’t know from home. So this woman comes to Dalai Lama and she says, “Could you please talk to my son. He eats too much sugar.” Dalai Lama says, “Sure, but can you come back in a month?” The woman says, “Sure.” So she comes back in a month with her son. Dalai Lama looks looks at her son and says, “Stop eating sugar.” The woman’s bewilder. She was like, “I was here a month ago. You could’ve not told me the same thing?” He says, “Yes, but first I had to stop eating sugar myself.” So before I can tell others how to become intellectual investors, I probably should turn myself into one. So this is why this book might take a long time for me to write it.
Tobias Carlisle: I like that answer. I like the idea that it’s the intelligent investor plus creativity. What’s the creativity?
Vitaliy Katsenelson: So Ben Graham, if you look at The Intelligent Investor, it touched on this a little bit, but there’re two things you can get out of it, the recipe, which is buy cheap stocks. And this is what most people get out of The Intelligent Investor because it stares you in your face. You don’t have to be very smart. 10 times your earning is good, 15 times your earning is bad, eight times your earning is phenomenal. That’s the recipe. But then there is a philosophy. A case. My point is this, when Ben Graham was writing his recipe, he was not competing against computers. He lived in a different world.
Vitaliy Katsenelson: And if you look at the Buffett, it’s evolution, he started as a Ben Graham kind of cigar, but investor. And he evolved. And I would argue that you and I are still relatively young and we have a long runway ahead of us and we’ll be competing more and more against smarter investors. But more importantly against computers. If you are only applying quantitative principles, then you are disadvantaged because if you’re only left brain, okay, computers are left brain as well because it’s an algorithm.
Vitaliy Katsenelson: So therefore you’re coming to a fight with a knife and somebody has a gun. What I’m trying to do is figure out how can I compete in the world where I’m competing against computers, how can I outsmart them? And in my mind, creativity is part of that. And this is probably as far as I’m willing to go right now because this is still work in progress for me, but this is the kind of the why I’m doing this book.
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