Katsunari Yamaguchi – Government Venture Investing: The Importance of Understanding the Risks

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     What do you want to hear from the My Worst Investment Ever Podcast? Tell us here! Resources:  My Worst Investment Ever Book   myworstinvestmentever.com    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...