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The 8%

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This letter will not discuss the stock market or the economy; instead I’m going to write about some very random topics that are relevant to me this morning. I promise to switch to regular programming next week.

VALUEx Klosters / Zurich – Milan – Verona – Venice

In late January my brother Alex and I are going to attend the VALUEx conference in Klosters, Switzerland, organized by my friend Guy Spier. I wrote a three-part series about my trip last year – if you missed it, I encourage you to read it. It will take you through our journey from Zurich to Southern France.

The VALUEx conference (be it the one in Klosters organized by Guy or the one in Vail organized by my company) is where likeminded diehard value investors get together to share ideas. I have made a lot of new friends in past years in Klosters, and I’m looking forward to seeing them again.

After the conference, Alex and I will be joined in Zurich by my 18-year-old son Jonah, who is spending his gap year in Israel. The three of us are going on a five-day trip that will take us to Zurich, Milan, Verona, and Venice.

I love touristing through Europe. I love Europe’s age – its architecture dates back not decades but centuries. I love the richness of European culture and the seriousness with which they take their food. I love Europe’s mildly decadent, slow pulse – the resting heart rate of Europe is so much lower than I am accustomed to in the US. You often see people strolling aimlessly through streets with no apparent destination in mind. They take their time, sipping tiny espressos in coffee shops gazing in windows – time seems not to exist for them.

We will visit a few museums, go to a Vivaldi performance in Venice (he was born there). But most importantly, we’ll be Europeans for a few days – only, we’ll sit in coffee shops and drink Americano (which is basically espresso diluted with hot water – you cannot completely take the American out of me). And I’ll get to spend time with my brother and my son.

It’s Jonah’s first time in Europe. I hope he’ll love it as much as I do.

The 8%

In 2018 I hit a midlife crisis. Some people get a red convertible; I started to pay attention to my health. I began exercising and paying attention to what I eat. Now, I keep away from carbs (mainly flour), sugar (mainly deserts), dairy, and red meat – I am at war with cholesterol, and so far I am winning.

In 2019 I started to geofence my diet. Let me explain. I stick with my diet religiously when I am in Denver, but when I travel I have no diet; I can eat anything my stomach (or brain) desires. I instituted this strategy because I found that it was often difficult, inconvenient, and frustrating to stick to my diet when I am not in Denver. Altogether, I travel about a month a year (this includes vacations). If I stick with my diet eleven months a year – that is, 92% of the time – then I’ll achieve my goals of keeping my weight and cholesterol down.

My initial concern about the geofencing strategy was that I wouldn’t be able to switch back to the diet back when I’m in Denver. That has not been an issue – I match the diet to the environment. When I get on a plane or drive for at least four hours, no diet; but when I’m home I make myself be good.

There is another benefit I’ve discovered with the geofenced diet. But first, let me tell you a story.

When I lived in Soviet Russia for the first eighteen years of my life, I only had a soda (a Pepsi) once. I remember how much I loved the tingling sweetness of the magical drink– I was 12. But neither Pepsi nor Coke were to be had in Soviet Russia.

I did not have another Pepsi or Coke until I moved to the US in 1991. Here I discovered that sodas were sold by the gallon, just like water. And I drank them like water. In the first year in the US my consumption of soda pop made up for all my non-consumption of the previous 18 years.

A few years later, when was 21, after asking for a third refill of Coke at a restaurant, I realized that I could no longer actually taste the tingling sweetness of the drink. Not anymore. I had drunk so many sodas that I had stopped enjoying them, and what used to be a special drink had turned into brown, high-calorie water.

At that point I decided that I’d only drink a soda on rare occasions (e.g. when I went to the movies). There was no point of drinking so much of it and not enjoying it. My consumption went from a soda (or two) every day to just a few times a year. And an interesting thing happened. I only had one soda last year, but I tell you, I enjoyed every sip of it. Abundance often devalues things we enjoy. There is a such a thing as too much of a good thing.

I did the same thing with food.

When I am in Denver – 92% of the time – I look at food very functionally: It is just the fuel that powers me, and I want this fuel to be good for the engine. Just to be clear, I don’t eat salad and quinoa and more salad all day, but I do steer clear of food that isn’t good for me, often passing on things I like (red meat, ice cream, pasta); but overall, I eat what I like and like what I eat. When I travel – I eat guilt- and carefree, and enjoy every bite; I don’t care if the dish is loaded with carbs and dripping with fat. I enjoy that 8% of the time so much that it makes the 92% moderation worth it. So, in addition to inhaling Europe’s slow beat and convivial company, I am looking forward to Swiss sausage and Italian pasta.

And one more thing on this subject. When I stopped casually drinking soda a quarter century ago, I did not do it for health reasons – I was 21, and my health was not something I paid any particular attention to then. But in hindsight, just that one decision alone saved me 30 pounds of weight. When I had my soda of the year last year, and I found it to be too sweet. I have not had sugar in a meaningful quantity in over a year, and my taste buds have changed. I don’t enjoy soda as much as I used to, and that’s a good thing.

Vitaliy Katsenelson

I am the CEO at IMA, which is anything but your average investment firm. (Why? Get our company brochure here, or simply visit our website).

In a brief moment of senility, Forbes magazine called me “the new Benjamin Graham.”

I’ve written two books on investing, which were published by John Wiley & Sons and have been translated into eight languages. (I’m working on a third - you can read a chapter from it, titled “The 6 Commandments of Value Investing” here).

And if you prefer listening, audio versions of my articles are published weekly at investor.fm.

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