I stumbled across Mr. Vitaliy Katsenelson years ago on Victor Niederehoffers' site, DAILY SPECULATIONS. I own shares of Berkshire Hathaway and thought Vitaliy's writing should be shared. He is a great author and probably a great investment manager.
Q&A Series: Money Habits for Kids and the Power of Writing
I wanted to share with you some edited excerpts from a Q&A session I held with readers in Omaha during Berkshire Hathaway's shareholder meeting weekend. In this email, we'll explore teaching money habits to young people and how writing has improved my investment approach.
How do you teach good money habits to young people?
What skills should kids learn?
I'm a big believer in scarcity and constraints. My kids get limited allowances, always less than they think they need. For instance, my 18-year-old daughter gets $20 a week – just enough to visit Starbucks twice. This scarcity motivated her to get a job at a coffee shop and work at IMA to supplement her allowance.
With Jonah, I used a different approach in high school. I paid him for his grades, but with an interesting system. He got nothing for C's, lost money for D's and F's, and earned money for B's and A's. If he got okay grades, he got nothing. Great grades meant a good payout. He went from a 1.3 GPA in 11th grade to a 3.9 GPA in 12th grade. Money wasn't the only motivator, but it helped.
The point is, no matter how much you make, you can always spend more. You always have trade-offs. Hannah has to choose between going to the movies or eating out an extra time. That's how I deal with teaching money management.
How has writing helped you become a better investor?
I'm so thankful for this question, especially because my kids are here. I want them to hear this answer twice a day. For anyone who wants to be a thoughtful, mindful human being, writing daily is crucial, even if it's just for five or 15 minutes.
Think about it – throughout the day, we're so busy with life, picking up kids from school, scrolling through TikTok; we don't have time to think, right? But when you sit down to write, it's pure focused thinking. That's all it is.
None of you would be here if I didn't write. I'd be a far less interesting person without writing. It gives me time to ponder all these different topics. Without it, I wouldn't have the mental space to even consider how to answer this question.
Take my latest investment, for example. I've spent countless hours in front of my computer, writing about it, thinking it through, finding logical gaps in my reasoning, then going back and rethinking it all. This process is invaluable, and I believe everyone should give writing a shot.
I'm a morning person, so I write early. But Walter Isaacson writes at night. The key is finding a time that works for you, doing it daily or almost daily, and just start journaling. I'm proud that my son is journaling almost every day now.
Writing has transformed me as an investor. It forces me to organize my thoughts, challenge my assumptions, and dive deeper into my analysis. It's not just about putting words on paper; it's about thinking critically and clearly. When you explain something in writing, you often uncover gaps in your understanding or flaws in your logic. This process of self-discovery and refinement is priceless in investing, where clear thinking and thorough analysis make all the difference.
How do working-class people approach bargaining with employers without unions?
That's a great question. About 90% of our economy functions without unions, and we're doing fine. I think the key to bargaining with your employer is to create more value. This is advice I give my kids: Be more valuable than your cost. It's that simple. If you're producing $100,000 of value but want $150,000, you probably don't have much bargaining power.
Let me give you an example using Amazon, which is often criticized. I had dinner with a young woman, a professional musician. She's never taken an economics class and hates Amazon, thinks Jeff Bezos is worse than Putin – I might be exaggerating, but her anger towards Jeff Bezos was intense.
She both criticized Amazon for harsh working conditions in its warehouses and then criticized Amazon for automation. It's a catch-22.
The key is to have skills. In today's world, just having capable hands isn't enough anymore. You need unique skills to be better than others – or robots. That's the reality we're facing. Factories are starting to look like sci-fi movies with all the automation.
This is why I emphasize good education for my kids. I want them to think about how they can create value for their employer. I don't believe anyone owes us anything. There's a sense of entitlement in the younger generation that I disagree with. Maybe it's my immigrant mentality – when I came to this country, I knew nobody owed me anything. I had to achieve everything on my own.
In this new world of automation, it's crucial to have multifaceted skills. Hannah is considering studying psychology and business. There are many who study one or the other, but fewer who combine them. This gives her an edge in the job market.
Interestingly, today you don't necessarily have to go to school in the traditional way. You can take Ivy League classes online for free and build your own curriculum. It's not for everyone – I needed the structure of school – but if you're self-disciplined, it's a viable option.
Imagine two people applying for a job at IMA. One created their own curriculum from various online sources, while the other went to an Ivy League school. I'd probably find the self-taught applicant more interesting. It shows original thinking and value investing principles – they saved $400,000 on tuition!
I have a friend who was rejected by Goldman Sachs. He went home, read 150 books, created outlines of what he learned from each, and reapplied the next year. He got the job. That's the kind of creative thinking I encourage.
Many kids today just click "Apply" on every job on LinkedIn and wonder why they don't get hired. There are 250 other kids doing the same thing. It requires creativity to stand out. That's what I encourage my kids to do.
So, to answer the question: Develop valuable skills, create more value than you cost, and always look for ways to improve. That's your bargaining power in a world without unions. |
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