Johnson Paul - Pitch the perfect investment the essential guide to winning on wall street

Cover image: Ticker tape, Anotonio Petruccelli, Reproduced by permission of Mike Petruccelli

Cover design: Jennifer Gallagher

Copyright 2017 by Paul D. Sonkin and Paul Johnson. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Names: Sonkin, Paul D., 1968-author. | Johnson, Paul, 1960-author.

Title: Pitch the perfect investment : the essential guide to winning on wall street/Paul D. Sonkin, Paul Johnson.

Description: Hoboken : Wiley, 2017. | Includes index. |

Identifiers: LCCN 2017013999 (print) | LCCN 2017025132 (ebook) | ISBN
9781119280965 (pdf) | ISBN 9781119280972 (epub) | ISBN 9781119051787 (hardback) | ISBN 9781119280965 (ePDF)

Subjects: LCSH: Investments. | Securities. | BISAC: BUSINESS & ECONOMICS/ Investments & Securities.

Classification: LCC HG4521 (ebook) | LCC HG4521 .S71196 2017 (print) | DDC 332.6dc23

LC record available at https://lccn.loc.gov/2017013999

PS dedicates the book to the next generationZev, Zoe, and Paris.

PJ dedicates the book to his two near-perfect children, Charlotte and Henry.

A picture is not thought out and settled beforehand. While it is being done it changes as ones thoughts change. And when it is finished, it still goes on changing, according to the state of mind of whoever is looking at it. A picture lives a life like a living creature, undergoing the changes imposed on us by our life from day to day. This is natural enough, as the picture lives only through the man who is looking at it.

Pablo Picasso

The quote by Picasso captures how we feel about this book, as our thoughts changed considerably over the three years it took us to write it. In the many conversations we had with our patient acquisition editor, Bill Falloon, once again explaining why the book was going to miss yet another deadline, we reassured him, You are going to get a much different, but better book than you initially signed up for.

Now that the book is finally finished, we are excited to see what happens as our creation is released into the wild. Like Picassos picture, our book will take on a life of its own as the concepts we present are assessed and scrutinized, adopted by some and refuted by others. We know that certain of our ideas will undergo changes as our readers either build upon or discard and replace them through the process of creative destruction. In the words of Paul Samuelson, Inexact sciences... advance funeral by funeral.We welcome both. It is our desire to educate and stretch peoples minds in the fields of security analysis and fundamental investing. We hope that, like Picassos pictures, the book lives a long life through those who are looking at it.

As Paul S. is fond of saying, Being listed as a co-author and writing a book are two completely different things. While we both have been listed as co-authors before, this is the first book that we have actually written. We both had wanted to write a book for years, but life kept intervening and we never found the time to pursue the idea. During the summer of 2013, with significant prodding from his friend Alejandra, Paul S. finally decided to write a book.

Like so many events in life, the spark of this collaboration was random. On Friday, October 4, 2013, just after the conclusion of the 23rd annual Graham & Dodd Breakfast at the Pierre Hotel in New York City, Paul S. and Paul J. were talking when Paul S. mentioned that he was planning to write a book. Paul J. asked, What is the title of your book? Paul S. replied, The Perfect Pitch. Paul J. responded, Funny. I had always planned on writing a book called The Perfect Investment. We began emailing each other after returning to our offices later that morning and quickly discovered that our books were complementary. While Paul S. was fascinated with the role pitching played in getting an investment idea adopted, Paul J. was focused on finding the right idea to pitch. It became increasingly clear that the two books were different sides of the same coin and obvious that we should combine efforts to write a single book together.

In addition to our complementary views, we had known each other for almost 20 years, had similar approaches to investing, and a lot of mutual respect. Besides, we thought it would be fun to work together. The book began to take shape over the next several weeks as we fleshed out the proposal for our publisher and settled on the title Pitch the Perfect Investment.

The gestation of our friendship began in September 1994 when Paul S., then a student at Columbia Business School, took Paul J.s Security Analysis class. Paul S. and about 20 other students loved Paul J.s content and teaching style so much that they persuaded him to teach a second class the following semester. When Paul S. approached Paul J. about teaching this class, Paul J. said, I already taught you all the material I have. Paul S. responded, Thats okay, just teach the same stuff again. Of course, Paul J. created new material and the class was a smashing success.

Over the following summer, Paul S. offered to help Paul J. with his Security Analysis class and became his teaching assistant in the fall of 1995. Then, in the spring of 1996, Paul S. became an adjunct professor and taught at Columbia Business School for the next 16 years, eventually teaching over 450 students. As of the writing of this book, Paul J. has been an adjunct professor for 25 years and has taught over 40 investment courses to more than 2,000 students.