In his recent interview with the This Week In Intelligent Investing Podcast, Vitaliy Katsenelson discusses how every great investor goes through periods of pain and self doubt. Here’s an excerpt from the interview:
Katsenelson: Every great investor went through a period of pain. There was this great Canadian investor Peter Cundill and he had… he wrote a book and I think, There’s Always Something To Do, and the beat of the book is that originally it was written like a journal, like a personal journal.
So the beauty of that is that the thoughts in the book are not… like there is no revisionist history there. And he writes about the pain… and this is the… by the way Peter Cundill this is the person Warren Buffett called when he was looking for Todd and Ted.
Before he found Todd and Ted, this is one of the greatest investors of our generation, of lost generations, so he was a phenomenal investor and in the early 90s he had the most miserable two or three years. There’s a lot of self-doubt so that happens to every investor.
Benjamin Graham, the father of value investing, he got blown up in the 1929 depression, a great, he got blown up in great depression and The Intelligent Investor, the book probably would not have happened if he did not go through the great depression. So I guess Ben Graham learned that valuation matters in 1949.
So a couple things, so I learned that for me to avoid the mistakes that I made in 2015. I cannot compromise on quality. That was, the company that basically went 80% overnight and just never came back, that company had a over-leveraged balance sheet, but what appeared to be looking high earning, kind of looked very cheap on earnings. And when it stumbled just a little bit the balance sheet would not afford the company to survive.
You can listen to the entire discussion here:
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One Comment on “Vitaliy Katsenelson: Every Great Investor Has Gone Through Periods Of Pain & Self Doubt”
When I was an analyst with a small investment firm in the early eighties, Peter Cundhill was a major client of our Vancouver office. Like Buffett, his entire focus was intrinsic value. Things like book value were totally irrelevant. The broker who handled his account was also a chartered accountant as was Cundhill. This broker would look for companies trading at major discounts to intrinsic value, write up a report and walk it to Cundhill. I don’t recollect any self doubt, pain or underperformance during that period. Our firm was purchased by the Royal Bank in 1986. When the banks were buying up firms in Canada around then, they generally did not permit a retail broker to deal with a major client like Peter. The accounts were moved to the institutional desk. That does coincide with when the pain started.