Vitaliy Katsenelson

Vitaliy Katsenelson
Born	Vitaliy Naumovich Katsenelson 1973 (age 50–51) Murmansk
🏳️ Nationality	Russian
🏳️ Citizenship	American
💼 Occupation
🌐 Website	contrarianedge.com

Vitaliy Katsenelson (born in 1973) is a Soviet Union-born American economist and investor. He is the author of several books on value investing and a frequent contributor to several financial websites and publications. Katsenelson’s investment philosophy stresses investor psychology, fundamental analysis, concentrated diversification, value investing, and contrarian mindsets. Since 1997, he has worked at Denver-based Investment Management Associates.

Early life and education

Vitaliy Katsenelson was born in 1973 in Murmansk, Soviet Union. He attended the Murmansk Marine College. His father, Naum Katsenelson, taught electrical engineering at the Murmansk Marine Academy. He was also a watercolor painter.

In 1991, when he was 18, the family emigrated to the United States. Katsenelson received both his BS ('97) and MS ('99) from the University of Colorado Denver.

Investment and academic career

In 1997, Katsenelson started working at Investment Management Associates, a Denver money manager. In 2000, he received CFA certification and has registered with SEC as an investment adviser.

From 2001 to 2007, he was teaching practical equity analysis and portfolio management at the University of Colorado’s Graduate School of Business.

In September 2007, Wiley & Sons published his first book Active Value Investing: Making Money in Range-Bound Markets. It gained positive reviews and Rich Karlgaard, writing for Forbes even compared Katsenelson to Benjamin Graham.

In 2009, he launched Contrarian Edge, a website that is recommended as a top source on value investing by The Motley Fool, Kiplinger's Personal Finance and Forbes among others. Later, in 2009 he was accused by the editors of Deepcapture.com of being a member of naked short-selling conspiracy along with Howard Lindzon, Henry Blodget, David Einhorn, Aaron Task and some others.

In 2010, Wiley & Sons published his second book The Little Book of Sideways Markets, where he further developed the concept of sideways markets. Also in 2010, Katsenelson started writing for the Institutional Investor magazine. In 2013 and 2016 the publication included his contributions into the lists of most-read articles of the year. In 2014, he won two awards, Azbee Awards from the ASBPE (American Society of Business Publication Editors) and Best in Business Honorees from the Society for Advancing Business Editing and Writing, for his contributions to the Institutional Investor magazine.

In November 2014, he published a column at Business Insider, where he described his experience of watching and reading Russian-run media for one week following the Annexation of Crimea by the Russian Federation and his reaction towards the government propaganda. His point of view and observations were republished by a number of media in Russia and the world.

In 2020, Katsenelson self-published his third book, Tesla, Elon Musk and the EV Revolution. Also in 2020, ADVFN website recognized Katsenelson as the “Financial Blogger of the Year” in its annual ADVFN International Financial Awards.

Stock market theories

In 2007, Katsenelson introduced the concept of a range-bound, or sideways markets. Katsenelson argues that in addition to traditional bull and bear markets there is another type of market, sideways market.

Unlike bull markets where stocks go up, or bear markets where stocks decline, during sideways markets stocks go up and down but end up going nowhere. One implication of such moves is that investment funds, which put money into indexes, don’t earn more than the dividends during such periods. Another implication is that since the stock prices (P) are basically flat for a long period of time, most of the growth should come from earnings (E) to get P/E multiple to single digits.

According to Kastenelson, Last sideways markets lasted from 1966 to 1982. In his Active Value Investing (2007) and The Little Book of Sideways Markets (2010) Katsenelson argues that the US market entered into another sideways market in 2000. He also notes that the bull market of 1982–2000 was a “super-sized” bull market, explaining that if the Dow Jones Industrial Average index were to repeat it percentage increase of 1982–2000 over the next 18 years, it would have to hit an unbelievable 175,000 points by 2028.

Katsenelson criticizes “Buy and hold” investment strategy, saying that investors should be regularly reviewing their portfolio based on such metrics as P/E ratio. In his Active Value Investing (2007) book, he introduced Absolute PE model, which derives the intrinsic value of the stock based on the following five conditions: earnings growth rate, dividend yield, business risk, financial risk and earnings visibility. Earnings visibility is of particular importance especially when dealing with the companies, which own shares of other companies. Katsenelson once noted that it was almost impossible to value such financial companies like Citigroup, Bank of America or Goldman Sachs because “for the most part, they were leveraged hedge funds." He expressed similar concerns about mortgage real estate investment trusts.

Katsenelson thinks that to achieve a satisfactory rate of return on sideways market, an investor should pick undervalued stocks, stocks with high dividend yield and carefully consider the right time to buy a stock. Moreover, he believes that if there are no undervalued stocks, an investor should prefer staying in cash, over investing.

Using Nassim Taleb’s concept of antifragility he classifies companies into fragile, robust, and antifragile, explaining how cyclical companies with lots of debt that have to issue equity at low prices during the recession, can destroy their own value (fragile companies). He is interested in finding companies that are antifragile. Katsenelvon defines such companies as having strong business, healthy balance sheet and good management, or at least two out of these 3 factors.

He doesn’t invest in gold, mainly because it is hard to calculate the real value of this asset.

Katsenelson lists Warren Buffett among the people who influenced his thinking.

Publications

Books

• Katsenelson, Vitaliy N. (2007). Active Value Investing: Making Money in Range-Bound Markets. Wiley & Sons. p. 304. ISBN 978-1-118-42883-2. Search this book on
• Katsenelson, Vitaliy N. (2010). The Little Book of Sideways Markets: How to Make Money in Markets that Go Nowhere. Wiley & Sons. p. 256. ISBN 978-1-118-01037-2. Search this book on
• Cunningham, Lawrence A.; Cuba, Stephanie, eds. (2018). "Next Year in Omaha". The Warren Buffett Shareholder: Stories from inside the Berkshire Hathaway Annual Meeting. Harriman House Limited. ISBN 978-0-85719-700-9. Search this book on

Articles

• Katsenelson, Vitaliy (2005-05-24). "Beware the boredom of the bear market". Financial Times. Archived from the original on 2020-10-24. Retrieved 2020-10-24.
• Katsenelson, Vitaliy (2008-02-04). "Down to the Last Drop of Profit Growth". Barron’s. Archived from the original on 2020-10-24. Retrieved 2020-10-24.
• Katsenelson, Vitaliy (2009-07-24). "The China Bubble's Coming — But Not the One You Think". Foreign Policy. Archived from the original on 2015-09-09. Retrieved 2020-10-24.
• Katsenelson, Vitaliy (2010-01-06). "Strategizing in a Range-Bound Market". Barron’s. Archived from the original on 2020-10-24. Retrieved 2020-10-24.
• Katsenelson, Vitaliy (2016-01-26). "How to Invest the Dale Carnegie Way". Institutional Investor. Archived from the original on 2020-10-24. Retrieved 2020-10-24.
• Katsenelson, Vitaliy (2016-07-07). "The Values of Value of Investing". Institutional Investor. Archived from the original on 2016-08-15. Retrieved 2020-10-24.
• Katsenelson, Vitaliy (2018-02-08). "What Will the Stock Market Do Next?". Kiplinger's Personal Finance. Archived from the original on 2020-08-13. Retrieved 2020-10-25.
• Katsenelson, Vitaliy (2019-03-04). "Stock Investors: You Have Nothing to Fear but Fear Itself". Fortune. Archived from the original on 2019-03-09. Retrieved 2020-10-27.

Bibliography

• Kaminsky, Gary (2011). "The Lost Generation of Investors". Smarter Than the Street: Invest and Make Money in Any Market. McGraw-Hill Education. ISBN 978-0-07-175358-6. Search this book on
• Max, Otte (2013). Sehr geehrte Privatanleger!: Die besten Anlageweisheiten der letzten 10 Jahre [Dear private investors !: The best investment wisdom of the last 10 years] (in German). FinanzBuch Verlag. ISBN 978-3-89879-816-7 – via Google Books.CS1 maint: Unrecognized language (link) Search this book on
• Shannon, Kim (2013). The Value Proposition: Sionna's Common Sense Path to Investment Success. Sionna Investment Managers Inc. ISBN 978-0-9918-3661-1 – via Google Books. Search this book on
• Calhoun, George (2020). "Applications: P/E As an Independent Variable". Price and Value: A Guide to Equity Market Valuation Metrics. Apress. doi:10.1007/978-1-4842-5552-0. ISBN 978-1-4842-5551-3. Search this book on

External links

• Official website
• author profile at Seeking Alpha
• author profile at Business Insider
• "Investing in range-bound markets:Q&A". Financial Times. 2009-11-23. Archived from the original on 2020-10-24. Retrieved 2020-10-24.

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