Great Investors Have Great Instincts
b"With Vitaliy Katsenelson, CEO at Investment Management Associates and author of The Little Book of Sideways Markets, and Active Value Investing
Vitaliy Katsenelson is Chief Investment Officer with Investment Management Associates and a well-known author of two books, The Little Book of Sideways Markets, and Active Value Investing.\\xa0 In addition, his articles have appeared in major financial magazines and journals.
Vitaliy runs a blog called ContrarianEdge.com, which could give you some idea of the kind of investor he is. Conformity is not his style. In fact, he says, his style can best be described as being able to see things that others don\\u2019t; often that means doing the opposite of what the market's doing and being your own person.
It\\u2019s not clairvoyance
Vitaliy says that the vision of great investors has nothing to do with crystal balls but with having the right mental models; it\\u2019s the ability to see value where others don\\u2019t and following a consistent investment process time after time after time.
To further explain his position, when analyzing an investment, Vitaliy asks himself these questions:
Do I want to be in this business?
Do I like the management?
How well do they allocate capital?
Do they have a process I can relate to?
The contrarian way\\xa0
Sticking to your position, not conforming to the accepted view isn\\u2019t easy in any aspect of life. For an investor, especially operating under the pressure and responsibility of handling other people\\u2019s money, it\\u2019s especially difficult. You may know you\\u2019re right, but it takes courage to explain to your clients and get them to accept the contrarian mindset, especially when your decisions may seem wrong for a long period of time.
When you have a situation where the market seems at odds with your instincts, Vitaliy follows a procedure that involves conferring with other respected investors to see all sides of the situation while figuring out what a company is worth. That takes work and a strong belief in your contrarian method.
But sometimes you change direction.
As committed as one may be to a credo, Vitaliy says it\\u2019s important for an investor to be able to change his mind. Using Warren Buffett (whom he greatly admires) as an example, Vitaliy states that even though Buffett has been quoted as saying he would never own an airline or a technology company, he eventually bought IBM and just recently purchased airline stock.
The mark of a great investor is success and along with that is the ability \\u201cto constantly learn and then change your mind when you get an insight.\\u201d Something true of Vitaliy and all great investors."