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What are the hidden advantages of living away from “noisy” investing centers like New York?
In answering this question, I’ll probably upset nearly all of my NYC readers. But the question gives me a chance to reflect on how our environment shapes our investing mindset, lifestyle choices, and even our values. We’ll dive into the pros and cons of being in a financial hub versus a more laid-back flyover state like Colorado.
I love visiting NYC once or twice a year. The energy of the Big Apple is amazing. Museums, Broadway theatre, opera, restaurants, Central Park; I love walking the streets of Manhattan (especially during Christmas time). I have a tradition: Every time I come to NYC, I go for a long walk in Central Park and then go to the Metropolitan Art Museum, where I visit the exhibits of the Impressionists and Flemish artists. I’ve done this with my family probably a half a dozen times.
However, after spending three days there, the energy of the city is a bit overwhelming, I am completely drained and exhausted. Thus, I enjoy going to NYC but I also enjoy leaving it.
Living there comes with its own set of advantages, especially if you work in the investment industry. There are direct flights to almost any city around the world. It is the world’s financial hub, and thus you have greater access to corporate management, as they come to the city very often. There is a large, vibrant community of investors. I am sure there are many other benefits I’m missing.
To me, all of these advantages come at a cost that I don’t want to bear. The finance industry attracts highly competitive people. If you place them in a highly dense area where the way they choose to spend their money is perceived as a measure of their success, determination, and their standing in society, you are going to create a very interesting environment. That’s NYC.
Often without realizing it, the participants find themselves in a perverse game akin to Super Mario, with many levels of superficial (financial) success. An apartment on the east side of the park – that’s level five. If you move to the west side of the park, you get bonus points, determined by your proximity to the park. If your apartment building has a doorman, that sends you to the next higher level. You get more bonus points if your kids go to the “right” school.
It’s a game with no end, a rat race par excellence. You may think you have reached the highest level, but then your friends have a house in the Hamptons, and now you need to have one, too. This is an environment that constantly makes you feel like you don’t measure up.
Lily Tomlin once said, “The trouble with the rat race is that even if you win, you’re still a rat.” You might not even realize that you are in the rat race. That environment is so powerful, it starts to override your priorities in life.
For me, ending up living in Colorado was not a choice, just luck of the draw. My aunt, who immigrated to the US in 1979, invited my family to immigrate from Russia to Colorado (at the time, she lived in Cheyenne, Wyoming).
In my 30s and 40s I made a deliberate choice to continue to live far away from Super Mario Street. If you hear notes of judgment here of folks who live in NYC, there are none. I’m just not sure I would be strong enough not to succumb to the pressures of the environment. This doesn’t mean you cannot escape the rat race while living in NYC and working in my industry (I have some friends who have). It’s possible, but it’s an uphill battle. Thus, I accept the fact that the environment is stronger than me and choose to live 1627 miles from NYC. I can always visit.
Of course, there are other benefits of living far away from the world’s financial epicenter. You get less groupthink, more clarity, and it is easier to maintain a longer time horizon. It is also easier to think of companies as businesses, not just tickers that you can buy and sell thousands of times a day. I can completely understand Buffett’s living in Omaha, especially in the current technological age where the internet has equalized access to information. If I want to talk to management, I can do so on Zoom, or even better, catch a flight and visit them in their offices.
Maybe what I described above is a bit cartoonish. But the bigger point is that we want to pay close attention to how the external environment impacts our life. How it shapes our values, what we pay attention to. We may or may not be stronger than our environment, but fighting it definitely comes at a cost.
Key takeaways
- Living away from financial hubs offers crucial investing advantages – less groupthink, clearer thinking, and an easier time maintaining a long-term perspective. I’ve found it helps me view companies as actual businesses rather than just tickers to trade.
- The finance industry in NYC creates an endless “Super Mario game” of status-seeking, where success is measured by increasingly expensive lifestyle choices – from doorman buildings to Hamptons houses. I recognize this environment could be too powerful for me to resist.
- While NYC offers undeniable benefits for investment professionals (access to management, investor community, global connections), these advantages come with hidden costs that can unconsciously shape your values and priorities.
- The modern technological age has largely equalized access to information – like Buffett in Omaha, I can effectively manage investments from Colorado through Zoom calls and targeted travel when needed.
- Our external environment powerfully impacts our mindset and values, often without our awareness. In my case, being 1,627 miles from NYC wasn’t initially a choice, but maintaining that distance has become a deliberate strategy to avoid the pressures of the financial epicenter.
Vitaliy Katsenelson is the CEO at IMA, a value investing firm in Denver. He has written two books on investing, which were published by John Wiley & Sons and have been translated into eight languages. Soul in the Game: The Art of a Meaningful Life (Harriman House, 2022) is his first non-investing book. You can get unpublished bonus chapters by forwarding your purchase receipt to [email protected].
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
