Ep4: Katsunari Yamaguchi – Government Venture Investing: The Importance of Understanding the Risks
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Guest profile
Katsunari Yamaguchi, Ph.D., CFA, CMA, Chairman, Ibbotson Associates Japan, Inc. He joined The Long-Term Credit Bank of Japan (LTCB) in 1979. He worked as portfolio manager for LTCB’s asset management subsidiaries, LTCB-MAS in U.S. and LTCB Investment Management, from 1986 to 1999. He founded Ibbotson Associates Japan, Inc. in 2000, and served over 15 years as president since then. He has been its chairman since 2016. He also served as visiting professor in finance at Graduate School in Economics of Senshu University from 2003 to 2008, and as visiting lecturer for finance course at Hitotsubashi University Graduate School of International Corporate Strategy.
He is also a visiting lecturer at leading universities in Asset Management Courses co-sponsored by Japan Securities Investment Advisors Association and Investment Trust Association, Japan. Currently, he serves as director for Nippon Finance Association and advisor for Association of Behavioral Economics and Finance. He holds CFA and CMA.
He graduated from Hitotsubashi University in 1979 with BA in social studies and from Yale School of Management in 1986 with MPPM. He earned Ph.D., in Economics at Senshu University in 2008.
He authored a book, Risk Premium on the Japanese Economy (2007), and translated two books, Capital Ideas (2006) and Capital Ideas Evolving (2009), both authored by Peter L. Bernstein). In addition, he published many academic and professional articles, of which he was awarded Security Analysts Journal Prize twice in 1991 and 2005.
In this episode, Katsunari shares his close to painful experience with a government venture project, how he intuitively projected the outcome and realized the risk early on.
“When it comes to the whole picture of any investment, we have to consider not only cost side and tax side. We have to consider the potential risk and return together with the tax reduction benefits.”
Katsunari Yamaguchi
Topics Covered:
01:11 – Katsunari Yamaguchi’s professional and investment background
04:16 – Venturing to government’s Accelerated Depreciation program to reduce his business’ tax
06:10 – European Government venture similar to Japan’s Mega Solar Power Project
06:42 – Katsunari’s intuitive projection: bankruptcy and project did not fully materialize
07:25 – Katsunari’s Key Takeaways from the experience
08:36 – Andrew explains what Accelerated Depreciation model is all about
09:40 – Andrew summarizes the critical learning point from Katsunari’s experience
11:52 – Katsunari’s actionable advice to help listeners protect their investment: Try to be modest about taking the risk and do it gradually not one time beating the market inch by inch and in small winning.
Main Takeaways:
- Lesson 1: It is okay to hear some expert’s advice but when it comes to the whole picture of any investment, we have to consider not only the cost side, tax side. We have to consider the potential risk and return together with the tax reduction benefits.
- Lesson 2: It is only you as an individual can see your own picture of your finance and the whole picture that needs to be taken into consideration.
- Lesson 3: You have to look at every part of an investment. It is not enough to just have one part that is interesting.
- Lesson 4: Do not base your investment decision on the government doing something in your favor. Keep you government-dependent investments pretty low.
Connect with Katsunari Yamaguchi:
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About the show & host, Andrew Stotz
Welcome to My Worst Investment Ever podcast hosted by Your Worst Podcast Host, Andrew Stotz, where you will hear stories of loss to keep you winning. In our community, we know that to win in investing you must take the risk, but to win big, you’ve got to reduce it.
Your Worst Podcast Host, Andrew Stotz, Ph.D., CFA, is also the CEO of A. Stotz Investment Research and A. Stotz Academy, which helps people create, grow, measure, and protect their wealth.