How to Invest the Dale Carnegie Way

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The first time I read Dale Carnegie’s How to Win Friends and Influence People was in 1990. I was living in Russia; the Cold War had just ended. Capitalist American books suddenly became very popular. Carnegie’s was one of the first to be translated into Russian and was “the book to read.” Everyone wanted to be a capitalist, and this book was supposed to make me a better one. I decided, however, that it was stuffed with disingenuous fluff — that it taught the reader how to not be authentic; it turned you into a fake.

Thinking back, at the time I read it, that book had no chance of getting through to me. I was a product of the Soviet system. We were Seinfeld’s Soup Nazi “No soup for you” nation. Teachers who were kind and inspired students were considered weak. I remember two teachers in my school who were considered virtuosos. Neither one smiled. They rarely praised and were never afraid to insult their students for getting an answer wrong. But they were highly regarded because they knew their subjects well and thoroughly subjugated their students.

Here is how Carnegie puts it: “When dealing with people, let us remember we are not dealing with creatures of logic. We are dealing with creatures of emotion, creatures bristling with prejudices and motivated by pride and vanity.”

If we were computers and had no emotions, then my Soviet teachers would have been right that knowledge is the only thing that matters. Then teaching (communicating) would be just data transfer from teacher to student. But if you have something you think is worth uploading to others, they have to be willing to download it. This is where the wisdom of Carnegie comes in. If we were computers, the way data was packaged would be irrelevant — the content would be all that mattered. However, because we are human, the way we package our content is paramount if the other side is to be willing to receive it.

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Vitaliy N. Katsenelson, CFA, is Chief Investment Officer at Investment Management Associates in Denver, Colo. He is the author of Active Value Investing (Wiley) and The Little Book of Sideways Markets (Wiley). His books were translated into eight languages. Forbes Magazine called him "The new Benjamin Graham".