Vitaliy Katsenelson: Value Investors Will Prosper When The Party Ends

In a recent interview with Jack and Justin on the Excess Returns Podcast, Vitaliy Katsenelson provided some great insights into what it’s like to be a value investor in today’s high growth environment – but he adds – when the party ends, which it will, value investors will be the ones to prosper most. Here’s an excerpt from the interview:

You asked me a question of when and I have no idea. I’m basically investing as if the music will stop at some point – the famous words of Chuck Prince of Citigroup was why was he doing crazy loans in 1978?

He said – “Well we were dancing while the music was playing”. If you are responsible for managing somebody else’s money that’s not the right thing to do even though it’s been, I would argue, it’s been a more successful strategy than just being responsible for the last 10 years.

But I think… people come to me, and i’m sure it’s the same thing with you guys, and say this is my life-savings, don’t screw it up! I can’t be dancing just because the music is playing.

So what i’m trying to do is buy high quality companies. Make sure they’re undervalued and at some point this will produce hopefully superior returns. I should be willing to… So you’re at the prom, at the high school prom and all the kids, all the cool kids, are having fun. They’re getting drunk right, and you’re a geek. you’re basically not drunk and you’re responsible etc.

At some point that party is going to end. So right now you may not feel that smart, just the same way if you were a responsible investor you would not feel smart in 2006 or 1999 but you know historically every single time these parties have ended, you just didn’t know when.

So I’ll be there to drive home responsibly when the party ends.

You can watch the entire interview here: