Jonah Katsenelson

Creative Director of IMA

[Vitaliy Katsenelson @vitaliyk]

It's human nature to wake up in the morning and worry a lot more about your kids, your wife, your family than about somebody 10 miles away.

Selfishness is not popular. In the Soviet Union, if you said you were selfish, they would make you feel horrible about it. But that's how we function.

Elon Musk didn't build SpaceX and Tesla to better society. That's the second- or third-order effect. He built them because of his own drive.

Adam Smith said it's not out of benevolence that the baker makes his goods. It's out of self-interest.

The beauty of capitalism is that everybody wakes up in the morning, makes very selfish decisions, and in making those decisions, they benefit the whole.

[Murray Hill Guy @MurrayHillGuy1]

The world we live in is insane.

At my old job, a coworker said after Trump was nearly assassinated, “I wish the shooter didn’t miss.”

I said that was a crazy thing to say, regardless of how much you hate the guy. She reported me to HR and I just got a watch what I say, nothing happened.

Same coworker would constantly say “Free Palestine,” then went way beyond politics, saying Jews were “ruining the world” and shouldn’t be allowed to live freely.

I pushed back on that too as idk how I can keep my mouth shut.

Guess who got written up?

Me.

Eventually I was let go for “performance issues.”

Free speech is funny like that.

[Paul Ollinger @Paul_Ollinger]

No eggs. No chicken. Two pounds of meat a month, per person, that was the Soviet Union he grew up in.

@vitaliyk, CEO of IMA Investments, grew up under a government that owned every business in the country, down to the pizzeria.

"Every single business unit in the country was owned by the government, from pizzeria to barbershop to oil refinery to shipping port, every single one."

"Every family gets two pounds of meat per month per person."

Watch the full podcast - https://t.co/O7tvmHDa2e

[Jonah Katsenelson @KatsenelsonJ]

@NYCMayor Your words inspire attacks like these you vile rodent

[Ronnie Stoeferle @RonStoeferle]

Well done, @vitaliyk! Value investors who genuinely understand gold are a rare breed...

btw, his book "Soul in the Game" is AWESOME!!!

[Vitaliy Katsenelson @vitaliyk]

Reasons why I am bullish on gold

The US dollar is the world's reserve currency. It was a well-deserved place since WWII: largest and most steady, diverse economy; politically stable democracy; the best military.

All three are cracking at once.

ECONOMY:

- The US is running a 6% budget deficit in peacetime. Peacetime is now over.
- Deficits may climb with the $1.5 trillion proposed defense budget, and if, more like when, we go into recession or the stock market declines or both.
- The highest level of debt since WWII.
- Interest on the debt now costs more than defense. It crossed in 2024 and has stayed there. It is the second-largest line in the budget, behind Social Security only.

POLITICAL STABILITY:

- Stronger and more united enemies: China, Iran, Russia. And fewer friends.
- Alliances built over three generations are being destroyed. We are an erratic, unreliable ally and friend.
- Blatant kleptocratic corruption in the White House and self-dealing.
- Politically gridlocked, polarized. Least cohesive society in generations. Ruling party uses government to attack opposition: lawfare.
- Fed independence is in question more than usual. In the past, presidents privately told the Fed what to do. Sometimes it listened, sometimes it did not. This time the Justice Department was used to investigate the Fed chair and a sitting governor. The investigation went away; the precedent did not. Gold and silver jumped the day the probe became public.
- Wealth tax. Governments that run out of income start looking at the balance sheet. Wealth taxes, retroactive levies, exit taxes. California votes on one this November. Capital goes where it is most welcome.
- A tax on what you own rather than what you earn pushes people toward wealth that travels. Gold has no registrar, no jurisdiction, no counterparty.
- The dollar was weaponized after Russia invaded Ukraine. Russian reserves were frozen. Not a safe storage of value if you are an enemy.

POWERFUL MILITARY:

- Perception that the war in Iran was lost. A bigger embarrassment than the exit from Afghanistan, which arguably gave Putin the confidence to invade Ukraine.
- Military built for the Cold War, unable to beat a much weaker country using asymmetric warfare. We spend $4 million on a Patriot interceptor to shoot down a $50,000 drone. Our enemies build drones by the thousands a month. We build interceptors by the hundreds a year.
- Our magazines are near empty, and rebuilding them runs years, not months.
- China has a much stronger manufacturing and energy base. In a war of attrition, the side that can build wins. We also lack the rare earth supply chain a modern military requires.

[Vitaliy Katsenelson @vitaliyk]

Trump Media is reportedly charging trading firms up to $1.2 million a year for early access to Trump's Truth Social posts. His posts move markets. One post about Iran sent oil down 5% in a day.

The product is literally called Truth API. API now stands for Access to President Interface.

Understand what is for sale here. Not information. Time. A few milliseconds between when a hedge fund sees the president's words and when you do. They trade against you in that gap. The product only has value because you are the sucker on the other side.

Trump owns 41% of the company. He writes the post, sells the head start, and pockets the fee.

It did not use to be this way. Jimmy Carter put his peanut farm into a blind trust the day he became president, because even a peanut farm was too much of a conflict of interest for the office. He came home four years later to a business a million dollars in debt, and he accepted that as the price of the presidency. Fifty years later, the president sells early access to his own words and keeps the money.

The US stock market trades at a premium to every other market in the world for one reason: the assumption that it is the most liquid and the fairest, with a rule of law that ensures fairness for every participant. That is the entire point of the SEC, to make the market fair to everybody, so that nobody feels like they're a sucker. Trump is turning his own people into suckers. He is pitting Americans against themselves. If this happened in any other country we would be laughing at them. We are starting to live in a banana republic.

This is a pattern. Trump promised a Bitcoin strategic reserve to win crypto votes, gambling the dollar's reserve status for endorsements. Now he is selling trust in the market for money.

Wall Street calls him TACO because Trump Always Chickens Out. He never chickens out when it comes to his own wallet.

[All Things Markets @AllThingsMkts]

This article by @vitaliyk made us question if today’s market equals 1999 Capex + 2008 Credit. This quote from @DarioAmodei should stopped me dead in my tracks:

"If my revenue is not a trillion dollars — if it's even 800 billion — there's no force on earth, no hedge on earth that could stop me from going bankrupt if I buy that much compute."

Should we be concerned? 👇🏼

[vinay ambekar @vinayambekar]

https://t.co/1EaGWwFLte

History Doesn't Repeat Itself, but It Often Rhymes...

@vitaliyk interesting writeup...

[Vitaliy Katsenelson @vitaliyk]

The 1999 bubble is being supersized into something closer to what led to the 2008 financial crisis.

I wrote in the past that the AI rollout feels a lot like déjà vu of 1999. That comparison is now too small.

Here is the difference between the two. The 1999 bubble had two parallel dynamics: overvaluation of certain segments of the market, and overinvestment by telecom companies in internet infrastructure. When it burst, it deflated overvalued stocks, brought value stocks back from the dead, revealed overcapacity in telecom infrastructure, and brought a mild recession.

The 2008 crisis started with a housing bubble, but housing is not what nearly took down the economy. It was the collapse of housing-linked financial instruments that infected the banking and financial system. That is what went into the history books as the Great Recession.

Today's AI bubble has elements of both. Most people are only watching the first one.

[Vitaliy Katsenelson @vitaliyk]

I find the phrase “Israel has a right to exist” extremely offensive.

No other country in the world is talked about in the same way. The framing itself creates an unfair double standard.

No one says:
“Russia has a right to exist”
“Iran has a right to exist”
“Germany has a right to exist”

Israel exists! As a matter of fact, it’s thriving!

[Jonah Katsenelson @KatsenelsonJ]

@NYCMayor Even his peaceful wishes towards Jews feel antisemitic

[Jonah Katsenelson @KatsenelsonJ]

RT @vitaliyk: I wrote this in November 2023 for @TimesofIsrael, just one month after the October 7th massacre:

"Today Israel is fighting…

[Vitaliy Katsenelson @vitaliyk]

A million people liked @NYCMayor's speech about war criminals. Let me explain what he left out. I'll use small words so that his supporters can follow along.

First, a vocabulary word: Hamas. Hamas is a terrorist organization. What do terrorists do? They murder people. Is murder good? No. Murder is bad. On October 7, Hamas murdered 1,200 people and kidnapped 251 more. Kidnapping is when you take people who don't want to be taken. The last families got their loved ones' bodies back this January. Now here's the tricky part, so read slowly: the mayor gave a two minute speech about war crimes and never mentioned any of this. Forgot the group. Forgot the date. Forgot the dead.

Maybe he's forgetful. Let's check together. In 2017 he recorded a song sending his "love to the Holy Land Five." Who are the Holy Land Five? Good question! Five men convicted of funneling over $12 million to Hamas. Do we remember what Hamas is? Very good. For months he wouldn't denounce "globalize the intifada," a slogan under whose banner Jews have been murdered. Denounce means "say something is bad." He couldn't. Then he compared the slogan to the Warsaw Ghetto Uprising, and the U.S. Holocaust Memorial Museum, the people whose whole job is remembering, had to correct him. Then the polls got tight, and he suddenly "discourages" the phrase. What do we call it when someone's conscience checks the polls first? Sound it out: se-lec-tive.

Now the big word: genocide. That's a hard one, so let's go slow. Israel has one of the strongest air forces on earth. If it wanted Gaza gone, that's one day of work. October 8th, done by dinner. Instead it dropped millions of leaflets, sent texts, made phone calls, and announced its attacks in advance so civilians could leave. Pop quiz: does genocide warn its victims? No. No it does not. Bonus question: where does the mayor's death toll come from? The Hamas-run health ministry. Hamas again! The terrorists are also his statisticians. You're doing great. Almost done.

One more lesson. The country he calls inhumane let 50 to 100 sick people out of Gaza every single day for treatment before the war. Israeli doctors even removed a brain tumor from Yahya Sinwar, the man who planned October 7, while he sat in their prison. They saved his life. Then Israel released him in a hostage exchange. The doctor who saved him watched his own nephew get kidnapped on October 7. Let's review: Israel healed the man who did all of it. Does that sound inhumane, or does that sound like the opposite? Take your time.

Where does a person learn to think like this? At home. Three years after 9/11, his father, a Columbia professor, published a book telling us to see the suicide bomber "first and foremost, as a category of soldier." A suicide bomber is not a soldier. A suicide bomber murders children at pizza shops. Today dad sits on the board of the Gaza Tribunal, a body dedicated to prosecuting Israel. Family business.

Time for our final lesson. A man who sends love to Hamas's financiers is a Hamas sympathizer. A man who can't condemn a call to violence against Jews, in the city with more Jews than anywhere outside Israel, is an antisemite. Two new words for the mayor's vocabulary. He earned both.

No more small words. I am a Jew in the country my family fled to. The mayor ended his speech promising to defend the humanity and dignity of all people. He has spent his whole career showing us which people aren't included. Jews noticed. We always have to. For two thousand years, when it became dangerous to be a Jew somewhere, we fled somewhere else. Expelled from England in 1290. From France in 1394. From Spain in 1492, to the Ottoman Empire. From the German lands to Poland, until Poland became the graveyard. From Russia's pogroms to America. From Baghdad, Cairo, and Tehran, cities where Jews had lived for over two thousand years, until one day they couldn't. My family ran from Soviet antisemitism to the freest country on earth. But when a man can spread this from the mayor's desk of New York City, of all places, and a million people applaud, you start to understand the oldest Jewish fear: one day there is nowhere left to run.

[Vitaliy Katsenelson @vitaliyk]

Warren Buffett described professional obsession perfectly in a story he told about a deeply religious Catholic tailor who saved for years to make a pilgrimage to the Vatican. Upon returning, eager parishioners asked him what the Pope was like. The tailor replied with hyper-specific professional focus: "He's a forty-four, medium."

That's the obsession you want in the people who you employ.

[Vitaliy Katsenelson @vitaliyk]

I spent the last 20 years writing about investing philosophy, life, and music, and my best pieces all live in my newsletter.

A letter to a young investor, the one I wish I had read at 25 ✅
The personal finance advice that actually changed my life ✅
Why a value investor cannot stop writing about classical music ✅

All free, in one place: https://t.co/qrn6wikgk2

[Jonah Katsenelson @KatsenelsonJ]

@vitaliyk @GSpier Best year yet!

[Jonah Katsenelson @KatsenelsonJ]

@Vwy9UHm2PjSchK5 @vitaliyk @GSpier @BeckyQuick This malicious person is clearly impersonating Vitaliy. Please do not click on “next strategy” link

[Vitaliy Katsenelson @vitaliyk]

https://t.co/Zw0FWNvRlo

[Vitaliy Katsenelson @vitaliyk]

My dear friend @GSpier did an almost hour-long interview with CNBC's @BeckyQuick.

It's an interview I wish had never happened, or, if it did, under different circumstances. Guy has been diagnosed with glioblastoma (GBM), one of the most aggressive brain cancers.

Guy singlehandedly changed the trajectory of my life. Seeing Guy interact with the world around him showed me what true generosity looks like and made me want to be more like him.

He is a giver, not a taker.

I kept thinking that he lives on borrowed time, and then it hit me: we all live on borrowed time. We are all living our eventual obituaries.

What makes Guy special is his kindness. His ultimate impact is not the compounding of his clients' assets but the compounding of kindness.

I wrote about Guy below. My essay also contains links to his letter to investors and the interview with Becky.