Editor’s note (from JW): Below is an excerpt from a recent interview I did. Unlike, the recent Equities.com interview which took out most of my tangents, Endlessrise Investor left it in (for better or worse)! Hope readers enjoy a large excerpt froom a recent interview I conducted on ValueWalk (media operations and biz model), value investing, and more.
Interview With Jacob Wolinsky On Broad Theme Value Investing by Lukas Neely, Endlessrise Investor
Jacob Wolinsky On Broad Theme Value Investing via Endlessrise
Jacob Wolinksy’s days as a value investor have taken a backseat to his day-to-day activities at ValueWalk.com. His investing acumen, however, still proves that he has what it takes to pinpoint opportunities.
Ask Jacob Wolinsky how he executes his value investing philosophy during market turmoil and he has a simple, honest answer. “I’m probably getting a little rusty at this point. So I’ve been investing more in beaten down industries or countries through certain ETFs to take advantage of volatility.”
Jacob’s broad approach to value investing was born more so out of happenstance than anything else. However, it doesn’t take away from his value investing philosophy, which has proven invaluable for his business, as well as his investing.
Since using his value investing strategy on ETFs, Jacob has been outperforming the overall markets. However, each person needs to have an understanding of the risk that they incur and how they handle it psychologically.
ValueWalk’s Jacob Wolinsky explains why he focuses on broad value themes right now more than individual companies, how he was influenced by Benjamin Graham, David Dreman and John Neff, why you should never take investment advice, and why he see upside in Greece, Russia and Ireland.
Endlessrise: What is ValueWalk and what do you do?
Jacob Wolinsky: I basically, deal with a lot of things. I deal with content, topics, getting confidential information (for me), helping writers tell stories, dealing with hedge fund compliance (which is not fun sometimes), and the marketing. I wear many hats, but I try as much as possible to outsource some of it. It has certainly evolved a lot from where it started.
We’ve never taken VC funding. I never really wanted it, and we’ve been cash flow positive through the years. I probably missed some opportunities as the markets shifted. However, I took a very value oriented approach to the business. I never took on promises I couldn’t make. So I think it’s been the right move.
Endlessrise: How did you get started with ValueWalk?
Jacob Wolinsky: It’s a funny story. It happened by chance, and now I do it full time. Basically, I saw some pretty bad advice about asset allocation on the internet. And I really thought it was interesting, I made some comments and analysis. And the person that actually contacted me was Alice Schroeder, and said she liked it. At that point I was trying to get a voice for myself. And I was initially doing it as a hobby. I was working at small firms at the time, so it was never a compliance issue because they were really small firms.
I also worked at SumZero for a period of time. However, I ended up leaving because I wasn’t earning enough there to support myself. And that’s when I started doing the site full time around late 2011. I was already making some money and I build things up conservatively. Right now we have a small team, but it has grown a great deal since those early days. So that’s how I got started. It was completely by chance. If you told me five years ago that I would expect to be running a financial website full-time — I would’ve thought you were crazy.
Endlessrise: What does your typical day look like at ValueWalk? (If such a thing exists)
Jacob Wolinsky: Well, my day usually starts early with my two younger daughters waking me up. And I try to do some work while I cook them breakfast. Officially, everything starts at 9:00 am. All of our employees work remotely, I am the only one in New York. There are advantages and disadvantages to this. As far, as the content goes, I start at 9:00am and I see what’s happening in the news. I always try to do a mixture or value bend to particular stories.
For example, Goldman Sachs just said that oil was going to fall to $40. I think the last time they tried to call a momentum or continuation move in oil they were calling for oil to go well north of $150 per barrel. This corresponded almost exactly to the top in oil. So I always want put these types of stories into perspective. And I always try to show the writers the kind of angle we want to use as we approach stories. I have also been trying to do more value investing profiles lately too.
“The balance sheet is really important. It’s your margin of safety. This will be a main factor in purchasing a stock below the asset value of the business.”
It can be hard to just write about value investing all the time, however I always try to have that value investing bend in whatever we do. I always try to stay focused on that.
I also try to see if there are any interesting sell side reports. Even though the forecasts are usually awful, the research itself is usually top notch. Barring the outrageous assumptions, I think they do a great job in the actual analysis. I finish work around 5:30. I have dinner and put my kids to bed. Then I do a little bit more work at night and then relax a little before bed.
Endlessrise: Who Are The people that inspire you the most? And why?
Jacob Wolinsky: First off, my parents gave me some money when I was younger. Thankfully it wasn’t a lot because I thought I was a genius and I made some money in the dot-com bubble. And then even as the market was going up, I started losing some money. Then I remembered seeing an ad from a website and it said, “Warren Buffett says this is the best book ever written.” I was initially skeptical because they wanted me to buy their product, but I took a look and of course it was Benjamin Graham’s, The Intelligent Investor. So I read it — And I said WOW!
I realized I was doing everything he said not to do in this book: don’t chase hot companies, always buy below the intrinsic value of the business, ect.
What he’s saying is literally what I was doing at that very point. All the mistakes I made were articulated perfectly in this book. It just hit me. It’s very difficult to explain, but it’s just a part of who I am now.
Value investing is very difficult to put into practice. So I guess it’s just a part of my DNA. So I would have to credit Ben Graham for pointing me on the path to value investing.
“As a deep value investor, you could really lose a lot of money if your portfolio is overly concentrated…Stay diversified.”
My father was also a major impact on my life and investing. He was extremely bright, and he graduated from a top 50 college as Valedictorian. Although he