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Pitch the Perfect Investment: The Essential Guide to Winning on Wall Street
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Pitch the Perfect Investment: The Essential Guide to Winning on Wall Street
by Paul Johnson, Paul D. Sonkin
Pitch the Perfect Investment
Cover
Preface
Notes
Introduction
Notes
PART I THE PERFECT INVESTMENT
Chapter 1 How to Value an Asset
Three Primary Components of Value
Gems
Notes
Chapter 2 How to Value a Business
Defining Cash Flow
How to Calculate Present Value Using a Discounted Cash Flow Model
Predicting the Future Is Not Easy
How to Calculate the Present Value of a Bond
How to Calculate the Present Value of a Perpetuity
How to Calculate the Present Value of a Business
How to Calculate the Present Value of a Growing Cash Flow Stream Using a Two-Stage DCF Model
How to Think About the Discount Rate
Gems
Notes
Chapter 3 How to Evaluate Competitive Advantage and Value Growth
Cash Flow Generated by Selling Assets
Cash Flow Generated by Operating the Assets: Return on Invested Capital, Cost of Capital, and Excess Returns
Gems
Notes
Chapter 4 How to Think About a Security’s Intrinsic Value
What is “Intrinsic Value”?
Thinking of Intrinsic Value as a Range of Values
Gems
Notes
Chapter 5 How to Think About Market Efficiency
Market Efficiency Is More of a Concept Than a Law
The Holy Grail of Money Management: Generating Alpha
Generating Alpha Is a Zero-sum Game
Defining Market Efficiency
The Rules of Market Efficiency
When the Rules of Market Efficiency Operate Flawlessly
The Mechanism That Implements the Rules of Market Efficiency
Gems
Notes
Chapter 6 How to Think About the Wisdom of Crowds
“And the Oscar Goes to …”
The Wisdom of Crowds Is Critical to Market Efficiency
How the Wisdom of Crowds Implements the Rules of Market Efficiency
Tenet 1—The Dissemination of Information
Tenet 2—The Processing of Information
Tenet 3—The Incorporation of Information
Examples Illustrating How the Wisdom of Crowds Implements the Rules of the Efficient Market Hypothesis
The Wisdom of Crowds Applied to the Stock Market
The Crowd Is Smarter Than the Experts Most of the Time
How the Crowd Can be Fooled
Gems
Notes
Chapter 7 How to Think About Behavioral Finance
The Moody Mr. Market
When the Wisdom of Crowds Becomes the Madness of Crowds
Is the Crowd’s Apparent Madness Irrational?
How Can Fama and Shiller Both Be Right?
The Magnetism of the Efficient Market Hypothesis
Limits to Incorporation: When the Crowd Cannot Act
The Efficient Market Hypothesis Remains “King of the Hill”
Why Do We Care About Market Efficiency?
Gems
Notes
Chapter 8 How to Add Value Through Research
Informational Advantage
Analytical Advantage
Informational + Analytical Advantage
Trading Advantage
Catalysts
Gems
Notes
Chapter 9 How to Assess Risk
The Difference Between Risk and Uncertainty
Confusing Uncertainty and Risk Causes Mispricings
How Confusion of Risk and Uncertainty Manifests in the Wisdom of Crowds Framework
When Uncertainty Becomes Risk
Margin of Safety Is Really All about Risk
A More Certain Business Can Actually Be Riskier
Time Matters . . . and Matters a Lot . . .
How Increased Accuracy and Precision in Estimating Intrinsic Value Affects Risk
How Increased Accuracy and Precision in Estimating Time Horizon Affects Risk
Risk and Variant Perception—Skewing the Distribution in the Investor’s Favor
The Risk of Underperforming
Gems
Notes
PART II THE PERFECT PITCH
Chapter 10 How to Select a Security
The Importance of Matching a Portfolio Manager’s Schema
Identifying a Manager’s Fundamental Criteria
What Went Wrong?
Identifying a Manager’s Valuation Criteria
Other Barriers to Adoption
Overcome Barriers by Learning How to Read a Portfolio Manager’s Mind
Other Communication Pitfalls
Gems
Notes
Chapter 11 How to Organize the Content of the Message
How to Capture and Keep a Portfolio Manager’s Attention
Constructing a Formidable Argument Using the Toulmin Model
The Stress-Tested Argument
Gems
Notes
Chapter 12 How to Deliver the Message
The 30-Second Hook
The Two-Minute Drill
Make It Easy for Them
Topography of a Simple Slide Deck
How to Handle Q&A?
Stock Pitching Contests
Delivering the Message—You Are the Envelope
Anatomy of a Meeting
Other Not So Obvious Barriers to Communication
How Do You Get to Carnegie Hall?
Gems
Notes
Acknowledgments
Notes
Art Acknowledgments
About the Authors
Index
EULA
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Pitch the Perfect Investment: The Essential Guide to Winning on Wall Street
Next
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Preface
Contents
Cover
Preface
Notes
Introduction
Notes
PART I THE PERFECT INVESTMENT
Chapter 1 How to Value an Asset
Three Primary Components of Value
Gems
Notes
Chapter 2 How to Value a Business
Defining Cash Flow
How to Calculate Present Value Using a Discounted Cash Flow Model
Predicting the Future Is Not Easy
How to Calculate the Present Value of a Bond
How to Calculate the Present Value of a Perpetuity
How to Calculate the Present Value of a Business
How to Calculate the Present Value of a Growing Cash Flow Stream Using a Two-Stage DCF Model
How to Think About the Discount Rate
Gems
Notes
Chapter 3 How to Evaluate Competitive Advantage and Value Growth
Cash Flow Generated by Selling Assets
Cash Flow Generated by Operating the Assets: Return on Invested Capital, Cost of Capital, and Excess Returns
Gems
Notes
Chapter 4 How to Think About a Security’s Intrinsic Value
What is “Intrinsic Value”?
Thinking of Intrinsic Value as a Range of Values
Gems
Notes
Chapter 5 How to Think About Market Efficiency
Market Efficiency Is More of a Concept Than a Law
The Holy Grail of Money Management:
Generating Alpha
Generating Alpha Is a Zero-sum Game
Defining Market Efficiency
The Rules of Market Efficiency
When the Rules of Market Efficiency Operate Flawlessly
The Mechanism That Implements the Rules of Market Efficiency
Gems
Notes
Chapter 6 How to Think About the Wisdom of Crowds
“And the Oscar Goes to …”
The Wisdom of Crowds Is Critical to Market Efficiency
How the Wisdom of Crowds Implements the Rules of Market Efficiency
Tenet 1—The Dissemination of Information
Tenet 2—The Processing of Information
Tenet 3—The Incorporation of Information
Examples Illustrating How the Wisdom of Crowds Implements the Rules of the Efficient Market Hypothesis
The Wisdom of Crowds Applied to the Stock Market
The Crowd Is Smarter Than the Experts Most of the Time
How the Crowd Can be Fooled
Gems
Notes
Chapter 7 How to Think About Behavioral Finance
The Moody Mr. Market
When the Wisdom of Crowds Becomes the Madness of Crowds
Is the Crowd’s Apparent Madness Irrational?
How Can Fama and Shiller Both Be Right?
The Magnetism of the Efficient Market Hypothesis
Limits to Incorporation: When the Crowd Cannot Act
The Efficient Market Hypothesis Remains “King of the Hill”
Why Do We Care About Market Efficiency?
Gems
Notes
Chapter 8 How to Add Value Through Research
Informational Advantage
Analytical Advantage
Informational + Analytical Advantage
Trading Advantage
Catalysts
Gems
Notes
Chapter 9 How to Assess Risk
The Difference Between Risk and Uncertainty
Confusing Uncertainty and Risk Causes Mispricings
How Confusion of Risk and Uncertainty Manifests in the Wisdom of Crowds Framework
When Uncertainty
Becomes
Risk
Margin of Safety Is Really All about Risk
A More Certain Business Can Actually Be Riskier
Time Matters . . . and Matters a Lot . . .
How Increased Accuracy and Precision in Estimating Intrinsic Value Affects Risk
How Increased Accuracy and Precision in Estimating Time Horizon Affects Risk
Risk and Variant Perception—Skewing the Distribution in the Investor’s Favor
The Risk of Underperforming
Gems
Notes
PART II THE PERFECT PITCH
Chapter 10 How to Select a Security
The Importance of Matching a Portfolio Manager’s Schema
Identifying a Manager’s Fundamental Criteria
What Went Wrong?
Identifying a Manager’s Valuation Criteria
Other Barriers to Adoption
Overcome Barriers by Learning How to Read a Portfolio Manager’s Mind
Other Communication Pitfalls
Gems
Notes
Chapter 11 How to Organize the Content of the Message
How to Capture and Keep a Portfolio Manager’s Attention
Constructing a Formidable Argument Using the Toulmin Model
The Stress-Tested Argument
Gems
Notes
Chapter 12 How to Deliver the Message
The 30-Second Hook
The Two-Minute Drill
Make It Easy for Them
Topography of a Simple Slide Deck
How to Handle Q&A?
Stock Pitching Contests
Delivering the Message—You Are the Envelope
Anatomy of a Meeting
Other Not So Obvious Barriers to Communication
How Do You Get to Carnegie Hall?
Gems
Notes
Acknowledgments
Notes
Art Acknowledgments
About the Authors
Index
EULA
List of Tables
Chapter 2
Table 2.1
Table 2.2
Table 2.3
Table 2.4
Table 2.5
Table 2.6
Chapter 3
Table 3.1
Table 3.2
Table 3.3
Table 3.4
Table 3.5
Table 3.6
Table 3.7
Table 3.8
Table 3.9
Table 3.10
Table 3.11
Table 3.12
Table 3.13
Table 3.14
Table 3.15
Table 3.16
Table 3.17
Table 3.18
Table 3.19
Table 3.20
Table 3.21
Table 3.22
Table 3.23
Table 3.24
Table 3.25
Table 3.26
Chapter 4
Table 4.1
Table 4.2
Table 4.3
Chapter 6
Table 6.1
Table 6.2
Table 6.3
Chapter 7
Table 7.1
List of Illustrations
Introduction
Figure I.1 Factors Influencing the Value of an Asset
Figure I.2 Present Value of $100 Two Years in the Future
Figure I.3 Present Value of a Plain-Vanilla Bond
Figure I.4 Competitive Pressure Drives Excess Returns to Zero
Figure I.5 The Three Rules of Market Efficiency
Figure I.6 Market Efficiency and Behavioral Finance Coexist
Figure I.7 Two Potential Errors to the Consensus Expectations
Figure I.8 Accuracy and Precision Matter
Figure I.9 Precision and Accuracy Substantially Reduce Potential Risk
Figure I.10 Questions to Achieve the Perfect Pitch
Figure I.11 Schema Used to Evaluate Bacon Sundae
Figure I.12 Portfolio Manager’s Stated Criteria
Figure I.13 Subjective Criteria Not Satisfied and Unstated Criteria Unknown
Figure I.14 Less is More
Preface
Figure P.1 Pitch the Perfect Investment Roadmap
Chapter 1
Figure 1.1 Primary Components to the Value of an Asset
Figure 1.2 Four Cash Flow Subcomponents
Figure 1.3 Getting Cash Sooner Is Preferable
Figure 1.4 A Longer Duration of Cash Flows Is Preferable
Figure 1.5 A Greater Magnitude in Cash Flows Is Preferable
Figure 1.6 Growing Cash Flows Are Preferable
Figure 1.7 Faster Growing Cash Flows Are Preferable
Figure 1.8 Stable Cash Flows Are Preferable to Negative or Declining Cash Flows
Figure 1.9 Uncertainty in the Four Cash Flow Subcomponents Affects the Value of an Asset
Figure 1.10 Single-Point Cash Flow Estimate
Figure 1.11 Range of Cash Flow Estimates
Figure 1.12 Distribution of Cash Flow Estimates
Figure 1.13 Cash Flow Estimates Become Less Certain in the Future
Figure 1.14 The Range of Cash Flows Estimates Widens in the Future
Figure 1.15 Future Value of $100
Figure 1.16 Present Value of $100 One Year in the Future
Figure 1.17 Present Value of $100 Two Years in the Future
Figure 1.18 Present Value of a Stream of $100s
Chapter 2
Figure 2.1 Present Value of Four Years of Cash Flows from Zoe’s Lemonade Stand
Figure 2.2 Present Value of Six Years of Cash Flows from Zoe’s Lemonade Stand
Figure 2.3 External Factors Affecting Cash Flows from Zoe’s Lemonade Stand
Figure 2.4 Present Value of a “Plain Vanilla” Bond
Figure 2.5 Present Value Formula Used to Value a Bond
Figure 2.6 Present Value Formula Used to Value a Business
Figure 2.7 Present Value of Zoe’s Lemonade Stand with No Growth
Figure 2.8 Present Value of Zoe’s Lemonade Stand with 10% Annual Growth
Figure 2.9 Present Value of Zoe’s Lemonade Stand with 15% Annual Growth
Figure 2.10 Main Factors of the Discount Rate Stack
Chapter 3
Figure 3.1 Cash Flow is Generated by Operating an Asset or Selling an Asset
Figure 3.2 Value from Selling an Asset: Liquidation Value and Private Market Value
Figure 3.3 Operating or Selling an Asset to Generate Cash Flow
Figure 3.4 Sevcon’s Liquidation Value
Figure 3.6 Sources of Competitive Advantage
Figure 3.7 Potential Sources of Cash Flow
Figure 3.8 Present Value of Zoe’s Lemonade Stand with No Growth
Figure 3.9 Owner Earnings Equals Excess Return Plus Capital Charge
Figure 3.10 Present Value of Excess Return
Figure 3.11 Present Value of Capital Charge
Figure 3.12 Owner Earnings Equals Capital Charge with No Competitive Advantage
Figure 3.13 Owner Earnings Less than Capital Charge
Figure 3.14 Negative Excess Returns Destroys Value
Figure 3.15 Competitive Pressures Drive Excess Returns to Zero
Figure 3.16A Nominal Incremental Owner Earnings Equals Incremental Capital Charge
Figure 3.16B No Excess Returns from Growth Creates No Value
Figure 3.17A Nominal Incremental Owner Earnings Less Than Incremental Capital Charges
Figure 3.17B Negative Excess Returns from Growth Destroy Value
Figure 3.18A Nominal Incremental Owner Earnings Greater than Incremental Capital Charge
Figure 3.18B Positive Excess Returns from Growth Create Value
Figure 3.19 McCormick: Ranges for Sources of Value
Chapter 4
Figure 4.1A Narrower Distribution of Cash Flows Is More Predictable
Figure 4.1B Wider Distribution of Cash Flows Is Less Predictable
Figure 4.2 Single-Point Estimate for Intrinsic Value of Zoe’s Lemonade Stand
Figure 4.3 Single-Point Estimates for Intrinsic Value of Zoe’s Lemonade Stand Under Different Scenarios
Figure 4.4 Distribution of Intrinsic Value Estimates for Zoe’s Lemonade Stand Assuming Different Annual Growth Rates
Figure 4.5 Distribution of Estimated Intrinsic Value for Company with Treasury Note as its Single Asset
Figure 4.6 Tesla: Individual Analyst Estimated One-Year Price Targets and Average Estimate
Figure 4.7 McCormick: Individual Analyst Estimated One-Year Price Targets
Figure 4.8 Comparing Distributions of Estimated One-Year Price Targets for U.S. Treasury Bill, McCormick, and Tesla
Figure 4.9 Sources of McCormick’s Value Presented Graphically
Chapter 5
Figure 5.1 Significant Decline in Retail Stock Ownership over the Past 70 Years
Figure 5.2 Different Types of Information
Figure 5.3 Information Dissemination into the Market
Figure 5.4 Available for a Price: Quasi-Public Information
Figure 5.5 Non-Material, Nonpublic Information Also Has a Cost
Figure 5.6 Not Available: Material, Nonpublic Information
Figure 5.7 Fama’s Available Information
Figure 5.8 Three Rules of Market Efficiency
Figure 5.9 Newport Corporation’s Stock Reprices Immediately After Takeover Announcement
Figure 5.10 An Individual’s Process for Estimating Intrinsic Value
Figure 5.11 Aggregated Individual Process = Collective Process
Chapter 6
Figure 6.1 Proper Functioning of the Collective Process Produces an Efficient Price
Figure 6.2 Insufficient Dissemination Results in a Mispriced Stock
Figure 6.3 First Rule of Market Efficiency Satisfied
Figure 6.4 Lack of Domain-Specific Knowledge Within the Collective Results in a Mispriced Stock
Figure 6.5 Domain-Specific Knowledge Is Comprised of Facts and Expertise That Form an Individual’s Processing Model
Figure 6.6 Individuals’ Private Information
Figure 6.7 Diversity of Models Produces an Efficient Price
Figure 6.8 Lack of Diversity Results in a Mispriced Stock
Figure 6.9 Mayhem Causes a Breakdown of Independence Resulting in a Mispriced Stock
Figure 6.10 Doctors’ Diagnostic Process
Figure 6.11 Second Rule of Market Efficiency Satisfied
Figure 6.12 Factors Preventing Information from Being Incorporated Results in a Mispriced Stock
Figure 6.13 Third Rule of Market Efficiency Satisfied
Figure 6.14 Individual Pen Knowledge
Figure 6.15 The Collective Is More Knowledgeable Than an Individual
Figure 6.16 Individual Decision Process Applied to the Ox-Weighing Contest
Figure 6.17 Scott Page’s Diversity Prediction Theorem
Figure 6.18 Ox-Weighing Contest: Diversity Reduces Error
Figure 6.19 Ox-Weighing Contest: Smaller Benefit of Diversity When Estimating is Easy
Figure 6.20 Ox-Weighing Contest: Steer Seer Introduces Bias and Misleads the Crowd
Figure 6.21 Beatles: Tally for First Group
Figure 6.22 Beatles: Random Guesses in the Wild
Figure 6.23 Beatles: Random and Wrong
Figure 6.24 Beatles: Random and Right
Figure 6.25 Beatles: Tally for First Two Groups
Figure 6.26 Beatles: Random and Wrong
Figure 6.27 Beatles: Random and Wrong
Figure 6.28 Beatles: Tally for First Three Groups
Figure 6.29 Beatles: Random and Wrong
Figure 6.30 Beatles: Random and Right
Figure 6.31 Beatles: Tally for First Four Groups
Figure 6.32 Beatles: Tally for All Five Groups
Figure 6.33 Beatles: Correct Answer
Emerges
from the Crowd
Figure 6.34 Beatles: Biased and Wrong
Figure 6.35 Beatles: Biased and Wrong
Figure 6.36 Beatles: Biased Answer Produces Wrong Crowd Guess
Figure 6.37 Apple: Range of Q4 Earnings Predictions
Figure 6.38 Apple: Diversity Reduces Crowd Error
Figure 6.39 Apple: Biased Estimates Affect Diversity
Chapter 7
Figure 7.1 Mr. Market’s Various Moods
Figure 7.2 Value of an Asset—Primary Components
Figure 7.3 Lack of Diversity and Breakdown of Independence Caused by Mayhem Produces a Mispriced Stock
Figure 7.4 Approaches to Determine Intrinsic Value
Figure 7.5 Distributions of Intrinsic Value Estimates Based on Different Investor Valuation Models
Figure 7.6 Sevcon: Range of Estimated Liquidation Values
Figure 7.7 Intrinsic Value Estimate Before and After Customer Loss
Figure 7.8 Mr. Market Overreacts
Figure 7.9 Domain-Specific Knowledge Is Comprised of Facts and Expertise That Form an Individual’s Processing Model
Figure 7.10 Homemade Electromagnet
Figure 7.11 The Electromagnetic Pull of Market Efficiency
Figure 7.12 Mayhem’s Bias Pulls Stock Price Away from Intrinsic Value
Figure 7.13 Non-Biased Electromagnets Overpower While Bias Weakens and Stock Returns to Its Efficient Price
Figure 7.14 Biased Behavioral Magnet Overpowers Unbiased Electromagnet of Market Efficiency
Figure 7.15 Underpowered Unbiased Electromagnet Cannot Correct Extreme Behavior Pull
Figure 7.16 Unbiased Electromagnet Ultimately Overpowers the Biased Behavioral Magnets and Stock Returns to an Efficient Price
Figure 7.17 Market Efficiency and Behavioral Finance Coexist
Figure 7.18 Apple, Inc.: Price Quote
Figure 7.19 Associated Capital Group: Price Quote
Figure 7.20 Client Invests in Funds
Figure 7.21 Client Sees Fund and Stock Down 22.7%
Figure 7.22 Client Redeems Investment
Figure 7.23 Fama and Shiller Are Both Right!
Chapter 8
Figure 8.1 Dollar General One-Year Price Targets Without Mispricing
Figure 8.2 Dollar General: Variant Perspective Versus Consensus Expectations
Figure 8.3 Variant Perspective Translates to Divergent Estimate for Cash Flows
Figure 8.4 Divergent View of Future Cash Flows Produces Variant Perspective
Figure 8.5 Consensus Expectations and Your Variant Perspective For Future Cash Flows
Figure 8.6 Stock Mispriced Due to Information Not Being Fully Disseminated
Figure 8.7 Absence of Errors Leads to Efficiently Priced Stock
Figure 8.8 Research Process
Figure 8.9 Twitter’s Stock Performance in Reaction to Its Inadvertent First Quarter Earnings Release
Figure 8.10 Stock Mispriced Due to Information Not Being Fully Disseminated
Figure 8.11 Error in Processing Results in Mispriced Stock
Figure 8.12A Dan’s Expected Return from Herbalife Bond Position
Figure 8.12B Dan’s Actual Return from Herbalife Bond Position
Figure 8.13 Investment Time Horizon and Breakeven Point
Figure 8.14 Investment Time Horizon with Extended Breakeven Point
Figure 8.15 John’s Perception of Error by the Consensus
Figure 8.16 Stock Mispricing Caused by Error in Incorporation
Figure 8.17 Requirements for an Efficient Stock Price
Figure 8.18 Stock Performance Heat Map
Chapter 9
Figure 9.1 Consensus Decision Model Distorted by Error in Processing
Figure 9.2 Tesla: Analysts’ One-Year Price Targets
Figure 9.3 Tesla: Consensus Estimate
Figure 9.4 Tesla: Expected Return Implied by Consensus Price Target
Figure 9.5 Tesla: Market Implied Risk of Investing in Stock at $245 per Share
Figure 9.6 Tesla: Outcomes Above Market Price are Uncertain But Not Risky
Figure 9.7 Tesla: Initial Expected Return versus Market Implied Risk
Figure 9.8 Tesla: Stock Price Increase from $245 to $278
Figure 9.9 Tesla: Increase in Price Results in Lower Expected Return and Additional Risk
Figure 9.10 Tesla: Market Implied Risk with Stock Price of $278
Figure 9.11 Tesla: Stock Price Declines from $278 to $245
Figure 9.12 Tesla: Lower Price Produces Higher Expected Return and Lower Market Implied Risk
Figure 9.13 Margin of Safety Equals Expected Return
Figure 9.14 McCormick and Tesla Consensus Estimates of One-Year Price Targets
Figure 9.15 Comparing the Risk of McCormick and Tesla
Figure 9.16 Three Components of Investment Return
Figure 9.17 Expected Rate of Return
Figure 9.18 Error in Estimating Time Horizon
Figure 9.19 Error in Estimating Intrinsic Value
Figure 9.20 The Difference Between Accuracy and Precision
Figure 9.21 Initial Assumptions
Figure 9.22 Research Results in Greater Accuracy
Figure 9.23 Increased Accuracy Reduces Risk
Figure 9.24 Initial Assumptions
Figure 9.25 Your Estimate of Risk
Figure 9.26 Greater Precision Reduces Risk
Figure 9.27 Initial Assumptions
Figure 9.28 Increased Accuracy and Precision Reduce Risk Significantly
Figure 9.29 Risk Reduction from Initial Condition
Figure 9.30 Range of Estimated Time Horizon
Figure 9.31 Implied Risk in Estimated Time Horizon
Figure 9.32 Figure 9.18: replicated
Figure 9.33 Market-implied Risk
Figure 9.34 Normal Versus Skewed Distribution
Figure 9.35 Risk Reduction Due to Skewed Distribution
Figure 9.36 Consensus Implied Risk For Cloverland
Figure 9.37 Helve’s Variant Perspective Results in Lower Risk
Figure 9.38 Heat Map: Risk of Capital Loss
Figure 9.39 Helve’s Variant Perspective Regarding Time Horizon
Figure 9.40 Cloverland: Break-even Investment Time Horizon
Figure 9.41 Heat Map: Risk of Underperformance
Chapter 10
Figure 10.1 An Individual’s Process for Estimating Intrinsic Value
Figure 10.2 Reverse Engineering the Decision-Making Process
Figure 10.3 Schema for a Sundae
Figure 10.4 Bacon Sundae Is Rejected
Figure 10.5 Matrix of Fundamental and Valuation Criteria
Figure 10.6 Dreaming of the Perfect House and the Perfect Investment
Figure 10.7 Schema for Summer House
Figure 10.8 Stated Criteria for Summer House
Figure 10.9 Criteria Parsed into Quantitative and Qualitative
Figure 10.10 Objective Quantitative Criteria Satisfied
Figure 10.11 Objective Versus Subjective Criteria
Figure 10.12 Subjective Criteria Not Satisfied
Figure 10.13 Unstated Criteria Revealed and Included
Figure 10.14 Unstated Criteria Were Not Satisfied
Figure 10.15 Portfolio Manager’s Stated Investment Criteria
Figure 10.16 Parsed Quantitative and Qualitative Criteria
Figure 10.17 Objective Quantitative Criteria Satisfied
Figure 10.18 Objective versus Subjective Criteria
Figure 10.19 Subjective Criteria Were Not Satisfied
Figure 10.20 Unstated Criteria Revealed and Included
Figure 10.21 Unstated Criteria Were Not Satisfied
Figure 10.22 Fundamental and Valuation Investment Criteria
Figure 10.23 Idea Adoption Requires Overcoming Objective and Subjective Obstacles
Figure 10.24 Negative Space and Rubin’s Vase
Chapter 11
Figure 11.1 Lack of Dissemination Results in Mispriced Stock
Figure 11.2 Questions to Achieve the Perfect Pitch
Figure 11.3 The Perfect Pitch for Cloverland
Figure 11.4 The Dimensions of Evidence Quality
Chapter 12
Figure 12.1 Obstacles to Getting the Idea Adopted
Figure 12.2 Typical Overcrowded Slides
Figure 12.3 IEH Corporation’s Hyperboloid Connector
Figure 12.4 Typical Summary Data Slide
Figure 12.5 Variant Perspective for Cloverland
Figure 12.6 Portfolio Manager: “Do I Believe Him?”
Figure 12.7 Portfolio Manager’s “New Analyst” Schema
Figure 12.8 Six Stages of an Initial In-Person Meeting
Guide
Cover
Table of Contents
Preface
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