In this episode of Excess Returns, Matt Zeigler and Bogumil Baranowski speak with Vitaliy Katsenelson, CEO of Investment Management Associates and author of Soul in the Game. The conversation explores how value investing is evolving in a world shaped by artificial intelligence, rapidly changing economic dynamics, and historically high market valuations. Vitaliy discusses why humility and diversification are increasingly important for investors today, how to balance quality and valuation when selecting stocks, and what he has learned about selling decisions, portfolio construction, and long-term investing discipline. The discussion also moves beyond markets into deeper ideas about passion, creativity, and why investing, like art, is ultimately a creative pursuit driven by curiosity and lifelong learning.

Topics covered in this episode

Why high stock market valuations may create a headwind for future returns
The math behind long-term stock market returns and the role of earnings growth versus valuation changes
Whether the dominance of mega-cap technology companies represents a structural shift in markets
Why AI investment could lead to both massive innovation and large amounts of wasted capital
The importance of humility in investing during periods of rapid technological and economic change
Why Vitaliy increased the number of stocks in his portfolio due to greater uncertainty
How investors can think about what will not change in a rapidly evolving world
The evolution from statistical value investing to focusing on business quality and management
Why cheap stocks are often expensive and how narrative bias can trap value investors
The importance of evaluating management integrity and avoiding companies with questionable leadership
How Vitaliy thinks about selling decisions and recognizing when an investment thesis is broken
Why many investors make their biggest mistakes by selling winners too early
The concept of being a value buyer but a growth holder when fundamentals improve
Why updating valuation models as businesses improve is critical to capturing long-term upside
Lessons learned from great investors and the importance of surrounding yourself with thoughtful peers
The idea of building a personal operating system for investing and life
Passion, patience, and process as the three pillars of long-term investment success
Why investing is fundamentally a creative pursuit similar to art and music
The deeper motivations behind investing and why for many great investors it is not ultimately about money

Timestamps

0:00 Vitaliy on humility and why the range of outcomes in investing is expanding
2:00 The math behind long-term stock market returns
4:00 Why high valuations can become a headwind for future returns
6:00 Big tech growth and whether large companies now have structural advantages
8:00 AI investment and the risk of massive capital misallocation
10:30 Learning AI and why investors must adapt to rapid technological change
14:00 Why humility leads to diversification and larger portfolios
20:00 The evolution from cheap stocks to quality investing
25:30 Selling discipline and recognizing when a thesis is broken
34:30 Letting winners run and avoiding the mistake of selling too early
42:00 Learning from other great investors and building your own framework
44:30 Passion, patience, and process in investing
52:00 Why great investors are motivated by more than money
1:01:40 The connection between investing, creativity, and classical music

Survival First. Returns Second | Vitaliy Katsenelson on Investing Amid Extreme Uncertainty

Excess Returns