When An Investor Infuses His Soul in The Game

When An Investor Infuses His Soul in The Game

In a world where people are often expected to inhabit polarities – pro-capital or pro-labor, liberal or conservative – Vitaly Katsenelson dwells in a rare liminal or middle space. He is, as he describes himself in his latest book, an investor with a soul.

He is the CEO of IMA, an investment management firm and also the author of wildly popular books on investing including Active Value Investing. With his works translated into many languages – Chinese, Korean, Japanese, German, Polish, Romanian, and Russian – he notes, with wry amusement: “I am not certain, but I may be as popular in South Korea as Psy (of Gangnam Style fame).”

More significantly, his writing has expanded his vistas, prodding his pen into a broad range of topics: classical music, stoic philosophy, creativity or anything else that might spark his fancy. The role that he possibly finds most gratifying is that of being a parent to his three children. It’s a domain that he approaches with curiosity and trepidation, determined to impart the attributes that his Russian Jewish parents transmitted to him. As Vitaly says: “Being a parent is the most transformative experience of all.”

Childhood in Russia

Vitaly grew up in Murmansk, Russia, the home base of “Red October” – the submarine that featured in the movie The Hunt for Red October.

It was a rugged place with few comforts. For six weeks, each winter, the sun vanished, leaving a lightless chill to contend with. His father was a professor but his Mom relinquished a career in physics, to care for the home and kids. When Vitaly was 10 years old, he realized how life could suddenly alter shape.

His Mom, diagnosed with brain cancer, was swallowed into the maws of a hospital while the young Vitaly was dispatched on a long train journey. When he returned, he found the one-time loving homemaker had morphed into a glassy-eyed figure with a “grey buzz cut.” His Mom could no longer recognize her own children, and she called her husband “Papa.” Losing his mother early in life, brought him closer to his father and to the fragility of everything.

He had also sensed anti-Semitic undercurrents through his childhood in Russia. He too thought his Aunt who had emigrated to the US was a “traitor” – he was, after all, brainwashed by the Soviet Government during the Cold War.

A New Life in America

In 1991, his family left Russia and moved to Denver via New York City. “My new American life was exciting – new friends, new country; everything was new.”

Soon after, at college in Denver, he discovered his interest in investing. As a student, he worked at an asset management company – fixing their computer issues. Once, while trying to install a video card in a server, he ended up burning the server and frying all the data. But his employers were forgiving. They did not scold him even. This taught him a valuable lesson as a boss, on how to treat subordinates: “With respect, grace, calmness, and a little bit of humor.”

After college, he faxed his resume to every investment firm in Colorado. Fortunately, he was called into an interview by the founder of IMA – a man named Mike Conn, who was a first-generation college-goer, and who had graduated from Harvard to boot. Mike is still his “mentor, friend and chess sparring partner”. Vitaly, who eventually became the CEO of IMA in 2014, started as an analyst and climbed the ranks.

Exploring the World and Self Through Writing

Along with running an investment firm, Vitaly also discovered a love for writing. At first, he wrote mainly on finance. Soon his articles were published by the Financial Times, and in many other outlets. Later, he launched his first book, Active Value Investing.

He also started emailing articles to friends and relatives. He acknowledges that those emails were unsolicited, but fueled self-expression. “Writing is an externalization of your internal conversation, and even as I type this I can hear myself talk.” Soon his emails started roving into other domains – while attaching his artist father’s paintings and pieces of classical music with his thoughts. In future dispatches, he interrogated his parenting journey.

Investing His Soul in the Game

The documentary, Jiro Dreams of Sushi, features a hole-in-the-wall sushi outlet in Tokyo that can seat only ten people. But this small, unassuming outlet has also hosted Barack Obama and the late Shinzo Abe. Moreover, the place won three Michelin stars. As Vitaly puts it, “Every piece of sushi is crafted with the same care that Rembrandt took as he laid brush strokes on his masterpieces.” Jiro attends to the minutest of details: for instance, if the octopus is massaged for 45 minutes, its flavor changes. When couples visit, women are served smaller pieces, since they usually have smaller mouths.

Extending the concept elucidated by Nassim Nicholas Taleb in Skin in the Game, Vitaly ensures that his business invests its “soul” in the game: “Jiro is an example of total dedication to one’s craft – he undoubtedly has soul in the game.”

At IMA, Vitaly ensures that all his family investments are invested in the same stocks or assets as are his clients. That way, he experiences the emotional upsides and downsides. According to Taleb, soul in the game implies doing work that you absolutely love, so you put in the craft and care of an artisan into everything you do.

In 1892, at 52, Claude Monet studied the Rouen Cathedral intensely. He observed the building in various times of day, in shifting lights. “He was completely obsessed by the cathedral and the light that fell on it.” He painted the cathedral, over and over, finishing 30 paintings of the same building over three years. Vitaly approaches investments with a similar artisan mentality, building his company’s reputation with the client’s long-term interest in mind.

Learning As A Parent

Vitaly realizes when he drives his three kids to school how ephemeral such experiences are. After all, one day, the kids will move out and leave behind memories of family and childhood: “The stock market, economics, politics somehow seem so trivial next to this.”

At his daughter Hannah’s Bat Mitzvah, he tells her to remain a lifelong learner, like her grandparents and great grandparents had always been. Vitaly’s father started studying English at University at the age of 76, though he already held a PhD. His grandfather was translating scientific papers into his 80s.

His parents subjected his older brothers to piano lessons, but they didn’t really take to it. With Vitaly, his father was too fatigued to push him by then – after all, his wife, too had died. But Vitaly’s parents ushered the children to many classical concerts, listened to and discussed pieces. This passion was something that Vitaly rediscovered as an adult: “Classical music, just like any art, has an ability to unearth emotions we did not know we had and that our dictionaries often cannot describe.”

How could he get his own children interested in classical music without a backlash? Thinking back to what drew him during his own childhood, he made sure he treated them to special desserts or yummy foods during every classical music concert. As Vitaly puts it, listening to classical music requires work: “Listening to something you don’t yet appreciate (understand) is not necessarily fun; it may be hard (work).”

He also recounts how children often teach parents lessons in humility. Since his daughter Hannah, at 14, started doing exceptionally well at volleyball, she was moved into a more advanced team. When Vitaly drove her to a tournament, he watched her occupy the sidelines through the entire event – which her team won away. He thought she might be better off on a weaker team, where she would actually get to play. But Hannah would not have it otherwise. She enjoyed cheering the advanced team, and did not mind waiting it out on the sidelines till she imbibed their techniques.

Vitaly had to acknowledge that his own ego had been socked by her inaction, whereas she had the maturity to absorb the big picture. He also no longer looks at driving his daughter to the tournament as a “chore”. After all, kids remain kids only for a finite time, and any moments spent together ought to be cherished.

Shifting his Focus in his 40s

From his 40s, his focus shifted to his physical health and mental wellbeing. He realized that an older body has different needs: “high quality fuel” (healthy foods) and more exercise.

To change your habits, Vitaly suggests you change your environment. After reading The Art of The Good Life by Rolf Dobelli, he gave up on desserts. He felt he had to firmly say “No” to his subconscious, making it easier for the subconscious to comply. For someone who used to be a sugar addict, he says: “I also don’t feel any less happy than I was before.”

For exercise, he hired a personal trainer. He discovered that walking meetings are a lot more stimulating than meetups centered around food: “There is actually a lot of research that shows that walking and talking induces creativity.”

He drops his diet when he travels, according himself phases of indulgence. So he adopts what he calls a “geofenced” diet – severe at home, lax outside. He also enjoys his rarer treats much more as a result. “Abundance always devalues things we enjoy.”

He practices mindfulness meditation to build his own focus. When he first started out, he felt that he had “failed” at Meditation. But he realized that such “failure” was merely part of the journey. Increasingly, he can meditate anywhere and at any time, yanking him back to the here and now. As Master Oogway puts it in Kung Fu Panda: “Yesterday is history, tomorrow is a mystery, and today is a gift…that’s why they call it the present.”

References

Vitaliy Katsenelson, Soul in the Game: The Art of A Meaningful Life, Harriman House, Great Britain, 2022.