Today, I’d like to share Vitaliy N. Katsenelson’s story about his investment decisions from his newsletter. This isn’t merely a boast about success or failure; it’s an opportunity to see how he learned and developed his thinking about investments.
The Most Satisfying Investment Decision
One of Vitaliy Katsenelson’s most satisfying investments was in Uber. He states that while Uber may not have been his most financially successful decision, it gave him immense creative satisfaction. Uber, once a stock that many ignored and struggled to turn a profit until 2023, was a company he opportunistically increased his stake in. He understood Uber’s unique hybrid business model, combining digital and analog components.
His rationale for choosing Uber was as follows:
- Uber is a hybrid company that combines digital and analog components, unlike pure digital companies, which have a different cost structure.
- The ride-sharing market continues to grow, and Uber competes not just with taxis but with various daily transportation needs.
- With global competitiveness and increased R&D resources, long-term growth is expected.
- As revenues increase, margins have the potential to rise dramatically.
This strategy led to a decision that was creatively and emotionally fulfilling.
The Most Regrettable Investment Decision
Vitaliy’s most regrettable investment decision was selling Electronic Arts (EA) too early. At the time of his investment, the gaming industry was rapidly digitalizing, leading to higher margins. However, due to initial difficulties in the first few years, he sold the stock. This decision was not based on his original reasoning but out of frustration with volatility. After he sold, EA’s stock quadrupled in value.
Through this mistake, he learned how crucial it is to maintain a long-term perspective and not become overly fixated on the short-term volatility of individual stocks. This experience underscored the importance of managing emotions in investment.
Conclusion: Learning from Investments
The key lesson from this story is that investing is not just a numbers game—emotions and decision-making play a critical role. Particularly, what he learned from his worst investment decision serves as an important guideline for portfolio management and long-term investment strategies.
From Vitaliy Katsenelson’s experience, we can draw the following lessons:
- Do not let emotions get swayed by short-term volatility; maintain a long-term strategy.
- When investing in growth companies, focus on their future earnings potential.
- The worst investment decision may not be a loss but giving up on potential growth too early.
Source: Vitaliy N. Katsenelson, “The Best and Worst Investment Decisions I’ve Made”