A picture is not thought out and settled beforehand. While it is being done it changes as one’s 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 Picasso¹

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 Picasso’s 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.”² We welcome both. It is our desire to educate and stretch people’s minds in the fields of security analysis and fundamental investing. We hope that, like Picasso’s 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, “That’s 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.

For Paul S., the journey to writing this book began when he started working as a research analyst for legendary microcap value investor Chuck Royce after graduating in May 1995. On his first day at work, he found out abruptly that he was not adequately prepared for the job. While he felt that he had a pretty good handle on the mechanics of the research process, he was unequipped to present the information in a way that would persuade a portfolio manager to follow his recommendation. He quickly discovered that many of his classmates were in a similar position. Paul S. remembers a call from one of his former classmates, who told him, “It’s my first day on the job and my boss came over to say hello, and see how I was settling in, then threw an annual report on my desk, said ‘tell me what you think,’ leaving before I had a chance to ask him anything. What do I do now?”

To address that deficiency, when Paul S. taught his first class, Advanced Seminar in Fundamental Research Techniques, in the spring of 1996, his goal was to teach students the essential skills they would need to do their job as a securities analyst. He told his students on the first day of class, “You go to Apex Technical School to learn how to weld. This class will teach you how to be a research analyst. It’s a vocational class that will teach you how to do the job.” Paul structured his lectures originally to teach fundamental research techniques, with the course culminating in a final project where each student gave a 20-minute presentation on a stock they had worked on during the term. The presentations were painfully boring, and to Paul, who was diagnosed with attention deficit disorder at the age of five, the experience of sitting through them was simply unbearable. Because of his impatience, he interrupted students after a minute or two into their presentation and started peppering them with questions.

As a result of this experience, Paul completely inverted the structure of the course. The final project remained a presentation, but research was now performed to support the pitch, not the other way around. Paul figured that if the students could support and defend their pitch, then it indicated that they had done an appropriate amount of research. This exercise cemented Paul’s belief that the pitch is the backbone of any good investment recommendation.

There was a parallel influence for Paul structuring his class this way. In the fall of 1995, Paul audited Pat Duff’s Advanced Security Analysis course,³ in which students were assigned an industry and required to pitch stocks from that industry to guest portfolio managers Duff invited to class. These portfolio managers, like legendary investor Dick Gilder, would mercilessly punch holes in the students’ presentations. Paul adopted this structure in his Security Analysis class the next time he taught the course. Then, in the spring of 1999, Paul conceived the idea of melding Duff’s class with Bruce Greenwald’s Value Investing class⁴ to create a new course, which he titled Advanced Seminar in Applied Value Investing and then taught for the next 13 years. The new course focused on having the students pitch investment ideas with a value discipline. Applied Value Investing is one of the most popular courses at Columbia Business School, with multiple sections taught each semester.

Paul J.’s journey was different. Paul became an adjunct professor at Columbia Business School in the fall of 1992 on the recommendation of Charlie Wolf, with whom Paul worked at Credit Suisse First Boston. Charlie had been a tenured professor at Columbia since 1966, teaching courses on debt markets and credit instruments. Roger Murray, who began teaching Security Analysis at Columbia when Benjamin Graham retired in 1956, had himself retired in 1978. After several years without offering a course in security analysis, the Business School asked Charlie to take over teaching the class. At the age of 51, to learn more about how an equity analyst did his job, Charlie took a sabbatical year off from teaching to work as a rookie analyst at First Boston Corp. (which was eventually acquired by Credit Suisse). Charlie began his Wall Street career writing research reports on a small technology company called Apple Computer. He was so enthralled with being a Wall Street analyst that he gave up his tenure and never returned to academia. Charlie agreed with the school to teach security analysis as an adjunct professor, usually in the fall term, and to recruit other Wall Street analysts to teach the same course in the spring. Charlie was unable to teach the course in the fall of 1992 and walked across the hall to Paul’s office to see if he had any interest in teaching the course for him. The conversation took place in early August and the fall term was scheduled to start only four weeks later. Although Paul was amenable to the idea of teaching someday, he was concerned that he would not have enough time to prep for the term or enough material to fill a semester-long course. Further to the point, Paul had received his MBA only the spring before and was a little concerned that he was too inexperienced to teach an investment course to MBA students at a top-ranked business school. But Charlie was persuasive and Paul agreed to teach the class. Paul loved the experience so much that he continued to teach (off and on) for the next 25 years.

Paul J.’s interest in writing a book stemmed from his hope of one day publishing his classroom material, although he recognized that there was a big difference between creating lecture notes and writing a thoughtful investment book. Paul knew that the main challenge would be finding the time to convert his notes into a book while he pursued his career and raised his family. It took the nudge from Paul S. in late 2013 to get the ball rolling.

This book ultimately is the product of our frustration. We have had no book to assign for our courses that covered all of the main topics that we teach and wanted to rectify the situation. There is The Intelligent Investor by Ben Graham, The Most Important Thing, Illuminated by Howard Marks, You Can Be a Stock Market Genius by Joel Greenblatt, pirated copies of Margin of Safety by Seth Klarman, and photocopies of the Buffett Partnerships letters, but there is no single source of material to augment classroom lectures and homework assignments. In fact, Paul J. distributes to his students a “bulk pack” of readings that is more than 400 pages long and contains copies of book chapters, journal articles, research reports, newspaper clippings, and other interesting published items he has collected during his career.

Over the years, we have each read thousands of books, journal articles, and other publications. Paul S. has taught more than 450 students and Paul J. more than 2,000. We have each listened to literally thousands of stock pitches not only from students but from corporate executives, investor relations personnel, institutional salesmen, sell side analysts, and other professional investors. We have learned what elements are required to pitch the perfect investment and have tried to distill this knowledge and experience into a single, easy-to-understand volume.

Originally, and without much thought, we planned to write this book for Wall Street practitioners. However, the more we wrote, the more we realized that the true audience was our students. Most seasoned practitioners had already learned the lessons we wanted to present and we knew that they would not find the book as valuable as would a younger, less experienced newcomer to the industry.⁵ We began to focus our writing exclusively on this demographic and that focus allowed us to emphasize the issues we thought most essential for a young analyst to learn.

Since training for new research analysts is basically nonexistent on Wall Street,⁶ our goal was to write a “survival” guide for someone embarking on a career as an investment professional. We thought of John “Lofty” Wiseman’s SAS Survival Handbook: The Ultimate Guide to Surviving Anywhere, which has sold over a million copies, as a model. Wiseman’s book is comprehensive and addresses many different disaster scenarios in varying climates, in wild or urban settings, on land or at sea. The author states in the introduction that “Survival depends on applying basic principles and adopting them to the circumstances” and discusses the three elements that are necessary to survival: the will to live, knowledge, and a “kit.”

If you are embarking on a Wall Street career, you must have a will to live, as you are throwing yourself into an incredibly challenging career and one that will test your will to survive on a regular basis. In terms of the kit, Wiseman says, “We keep this to a minimum and have a thorough knowledge of its uses and capabilities.” On Wall Street, the kit includes your computer, phone, and access to data sources such as CapitalIQ, Factset, and Bloomberg, as well as sell-side research and other similar resources.

The critical element in survival is having knowledge. As Wiseman’s guide states, “The more we know the easier it is to survive. Knowledge dispels fear. Look at the locals and see how they survive. Talk to people who have endured and learn from their experiences.” Wiseman further states that “by sharing the survival knowledge that I and my colleagues have gained through experience, I aim to help you make those decisions correctly. These methods and skills have helped save our lives and they will help you to be a survivor too.”

In this spirit, Pitch the Perfect Investment provides you with the knowledge you need to survive (and thrive) as a Wall Street analyst.

Whereas the SAS Survival Handbook has 672 pages, our publisher informed us that the ideal size for a book of this type is approximately 320 pages. Obviously, we missed that mark with our book weighing in at 496 pages, but we could have easily written a book many times that length. The page constraint forced us to distill our content to what we felt were the most critical elements in our “survival guide.” Through this culling process, we sought to keep the resolution of concepts consistent throughout the book. For example, in an early draft we wrote five pages on the limitations of EBITDA. While the material was excellent, it was overkill for what we were trying to communicate in the chapter and we truncated the discussion accordingly. Please keep in mind that many (actually all) of the topics we discuss can be expanded upon significantly.

Accordingly, unlike the SAS Survival Handbook, which attempts to address every conceivable scenario, we seek to explain most situations rather than trying to explain every exception, nuance, and possible outcome. One frustration with teaching is that in every class there seems to be “that guy.” He (it is usually a he) seems to challenge just about every statement we make, possibly only to hear his own voice as he attempts to look smart in front of the professor and his fellow classmates. Paul S. remembers an incident when he was Paul J.’s teaching assistant involving a particularly persistent student. Paul J. asked the class, “Why does anyone buy a stock?” The answer was, “Because they expect it to go up.” Clearly no one buys a stock with the expectation of losing money. However, there was one student, who, for some unknown reason, insisted on searching for a “corner case”⁷ to prove Paul J. wrong.⁸ The student challenged Paul J. for 10 minutes, offering scenario after scenario under which one might purchase a stock for a reason other than to make money, each of which Paul J. gracefully parried and proved to be flawed, until the student finally found a case involving an elaborate options hedge that seemed to be an exception. While the student appeared to be technically correct, the discussion seemed to be an incredible waste of time, as, in the vast majority of situations, an investor buys a stock because he expects it to go up.

This example is like the standard approach in physics stating that mass is constant. While this convention holds in most cases, it is not a true law as mass actually increases with velocity, although the change is imperceptible until the velocity exceeds 360,000 miles per hour. To put this extreme speed in perspective, a 250-grain bullet shot from a Sako TRG-42 .338 Lapua rifle travels at 2,045 miles per hour, whereas the escape velocity from earth is 25,000 miles per hour and the space shuttle flies at 17,500 miles per hour once out of Earth’s gravitational pull. Therefore, one can state that mass is constant without the need to qualify the statement to account for extreme velocities. Similarly, we discuss concepts that hold most of the time, although not in every single corner case.

Another motivating factor in our writing the book is that there is a wealth of information, mainly contained in academic journals, that is too complicated for most investors to access easily. For example, we attempt to translate concepts like market efficiency, behavioral finance, and risk into language that is understandable while retaining the critical subtleties underlying these ideas. Unfortunately, we have found that many of the concepts that have made it into the mainstream investment community suffer from the “telephone game” when they are “communicated” to a broader audience. Unfortunately, the message has become a distorted version of the author’s original meaning. Also, many concepts lose much of their significance when truncated to appeal to the masses. A prime example occurred on CNBC when Eugene Fama was asked to encapsulate the efficient market hypothesis in a 30-second soundbite. Clearly, the body of work that won Fama a Nobel Prize in Economics⁹ cannot be fully articulated in a brief sound bite.

In addition to being complicated, the sheer volume of material is absolutely staggering, which made the culling process that much more challenging. We have read innumerable books and journal articles in which we found a few sentences, paragraphs, or pages that we felt were relevant, offered an important insight, made a critical point, or were just plain interesting. While oftentimes it felt like herding cats, we have sought to collect these insights and present them in a straightforward way in a single volume. However, in some cases our effort to accomplish this goal has come at the expense of nuance. Although we tried as best we could to achieve the delicate balance of accuracy versus clarity (and brevity), we expect some readers will find fault with our choices. We only ask that they accept that precision is often the enemy of clarity and understanding.

Given that we have different backgrounds, experiences, and styles of thinking, over the three years of writing the book together, we have had countless spirited discussions regarding concepts in the book.¹⁰ Coupled with the fact that many of the topics are challenging to conceptualize and often difficult to explain, while at times controversial, several chapters went through 40-plus drafts and were completely rewritten multiple times. There was also a lot of material that wound up on the cutting-room floor. We believe that the final product benefited greatly from these efforts.

Like many people with the “gift” of ADD, Paul S. uses a lot of metaphors and is a creative, visual thinker. For Paul J., this creativity made the process sometimes frustrating,¹¹ often challenging, but always instructive and, in the end, a highly rewarding experience. Paul S. would come up with “crazy ideas” and Paul J. would work to bring them down to earth.

As part of this process and because he is extremely metaphorical in his thinking, Paul S. used diagrams and charts (which you will see throughout the book) to sort through various issues in his mind that he was trying to explain before attempting to write the accompanying text. He would often send these images to Paul J. as an email attachment, saying, “I think I might be going down a rabbit hole. I want to bounce this idea off you to make sure I’m going in the right direction before I spend too much time running down this thread.” The diagrams proved to be an effective way for us to discuss, debate, argue, and, ultimately, reach clarity on numerous particularly slippery concepts and important insights.

The interesting part of the exercise was that the visual representation often explained the concepts better than either of us could articulate in writing. We soon realized that we should include these visual aids in the book as part of our presentation because we thought they might also be useful to the reader. Paul S. had been reading about the concept of cognitive load and the fact that pictures and diagrams not only explain concepts better than words (the proverbial picture is worth a thousand words), but graphic images also give the reader’s brain a break, which reduces the buildup of cognitive load.

While we created the diagrams ourselves, since neither of us is an artist, our use of illustrations raised a critical issue as we felt the look and feel of the images needed to be consistent throughout the book. We determined that the only way to achieve that goal would be to find an illustrator who could create consistent images. In March 2016, Paul S. stumbled upon an illustrator, Charlie Pendergraft, on Instagram (@drawmecharlie), who was very creative and reasonably priced. Over the course of a year, Charlie produced more than 300 images that we have used in the book.

We feel that the diagrams and charts make our book unique in terms of presenting complicated financial concepts in an easy-to-read, understandable form. We appreciate that there is a fine line between corny and clever, and are unsure as to where some of the images in the book fall—we figure some will be the former, while others will be the latter, although the ultimate balance will reside in the mind of each reader.

Derek Thompson, in his book Hit Makers, discusses how new products, songs, and concepts become popular. For example, in industrial design, hits are partly the result of a concept developed by Raymond Loewy called “most advanced, yet acceptable.” This insight can be thought of as a “familiar surprise,” in which there is a certain amount of “new” coupled with an underlying familiarity. While the presentation format in the book is new, the content is familiar because all the concepts have their roots in hard science or rigorous finance theory.

If I have seen further, it is by standing on the shoulders of giants.

—Isaac Newton

We should stress that most of the ideas in the book are not our own. In many cases, we have simply repackaged well-vetted concepts into what we believe is a much more user-friendly format. As Paul S. has said, think of the book’s building blocks as Legos. We did not invent the Legos in our book, although we feel we have built something unique with them.

This book is divided into two primary sections. We selected this structure because an analyst has two distinctively different responsibilities. The analyst’s first assignment is to find a good investment, one where there is a large spread between the market price and intrinsic value. This part of the process requires the analyst to calculate the stock’s intrinsic value, determine whether a genuine mispricing exists, and identify a catalyst that will close the gap between the stock’s price and its intrinsic value, thus correcting the stock’s mispricing.

The second part of the process is communicating (pitching) the idea to the portfolio manager. This step requires a completely different set of skills. We have structured the book accordingly, as shown in Figure P.1. (Note: the numbers in the circles correspond with chapter numbers in the book.)

The first four chapters of the book layout the process of determining a company’s intrinsic value. This explanation begins with valuing an asset using a discounted cash flow model in Chapter 1, then uses this approach to value a business in Chapter 2. Because assessing competitive advantage is critical to determining the value of growth, we discuss these topics in depth in Chapter 3. Chapter 4 uses those tools to value a security.

The primary building blocks for these four chapters are based on the work of Warren Buffett, Aswath Damodaran, David Dodd, Mario Gabelli, Benjamin Graham, Bruce Greenwald, Seth Klarman, Michael Mauboussin, Roger Murray, and John Burr Williams.

We then explain how investors set stock prices, which entails a detailed discussion of market efficiency. We begin in Chapter 5 with an examination of Eugene Fama’s efficient market hypothesis, where we establish the rules the market follows to set prices. We discuss the wisdom of crowds in Chapter 6 and show how these rules are implemented in the market. We then discuss behavioral finance in Chapter 7 to show how these rules can become strained or broken.

The primary building blocks for these three chapters are based on the work of John Bogel, Nolan Dalla, Eugene Fama, Sir Francis Galton, Benjamin Graham, Daniel Kahneman, Andrew Lo, Michael Mauboussin, Roger Murray, Scott Page, William Sharpe, Robert Shiller, Andrei Shleifer, Ned Smith, James Surowiecki, Amos Tversky, and Robert Vishny.

In Chapter 8 we discuss how to add value through the research process. We show that the investor must develop an informational advantage, an analytical advantage, or a trading advantage to be able to claim that a stock is genuinely mispriced. If the investor cannot identify why other investors are wrong, show why he is right, and articulate what advantage he has, then it is unlikely that he has identified a true mispricing. We end the chapter by defining a catalyst as any event that begins to close the gap between the stock price and your estimate of intrinsic value. The primary building blocks for this chapter come from Eugene Fama and Michael Steinhardt.

In Chapter 9 we demonstrate that risk and uncertainty are not synonymous and show that their difference is misunderstood by most investors. We then highlight the components of an investment’s return and emphasize that while most investors focus on their estimate of intrinsic value, time is a critical, although often overlooked, factor. We demonstrate how an investor can significantly reduce risk by increasing the accuracy and precision of both their estimate of intrinsic value and the investment’s time horizon. The primary building blocks for this chapter are based on the work of Howard Marks and Nassim Nicholas Taleb.

At this point in the book we will have shown how to vet the perfect investment. The next part discusses the key elements of pitching that investment to a portfolio manager.

We explain in Chapter 10 that for the analyst to select the proper security to pitch, he must know the portfolio manager’s selection criteria. We demonstrate that the manager will not even listen, much less adopt, an investment idea unless it matches his investment criteria. We show in Chapter 11 how to organize the content of the pitch to maximize its impact. Finally, we discuss in Chapter 12 the different elements necessary to ensure the effectiveness of the delivery, while minimizing extraneous factors.

The primary building blocks for these three chapters are based on the work of Milo Frank, Marianne LaFrance, John T. Malloy, Alfred Mehrabian, and Stephen Toulmin.

There are other people whose work and ideas were less identifiable as discrete building blocks, but were critical in the development of certain concepts, helped shape our thought process, or simply stretched our thinking. This list includes Per Bak, Sornette Didier, David Dreman, Nancy Duarte, Paul Ekman, David Epstein, D. Craig Fecel, Philip A. Fisher, Richard Gabriel, Malcom Gladwell, Steve Johnson, Gary Klein, Cole Nussbaumer Knaflic, Maria Konnikova, Pierre-Simon Laplace, Daniel J. Levitin, Tim Loughran, Douglas S. Lavine, David Matsumoto, Alfred Rappaport, Antonin Scalia, Nate Silver, Keith E. Stanovitch, Philip E. Tetlock, Richard Thaler, Chris Voss, Duncan Watts, Holly White, and Timothy D. Wilson.

It is not our intention to take credit for anyone else’s work. The people mentioned here are individuals whose work contributed to our understanding of the concepts we present in the book. In addition to all the individuals we have previously mentioned, there are numerous other people who have provided an insight or relevant subtlety that we included in the book. In some cases, we make reference to them in the text or in a footnote, but in other cases we may have inadvertently left them out. Any oversight is unintentional and we apologize in advance for not being more diligent with our notes. We will seek to correct this deficiency over time as we assemble a reading list of books and journal papers that we feel were relevant and important in our writing the book, which we will make available on our website, www.pitchtheperfectinvestment.com.

In the words of Judd Kahn, paraphrasing Samuel Johnson, “You never finish a book, you just stop writing.” There is a lot more we could have written, but we had to stop somewhere. Please keep in mind that we do not view this book as a definitive treatise. Rather, we have tried to advance the discussion and add to the overall mosaic of available investment literature. For us, writing the book has generated more questions in our minds than it has answered, which we found both exhilarating and terrifying. One can imagine the world as an infinitely long hallway with doors on either side. To us it felt that we were exposed to other worlds we never knew existed every time we opened one of the doors to look inside, which we found exhilarating. The terrifying part is our recognition that there are many more doors in the hallway that we did not have the time to even open.

There are numerous topics that we have not done justice to in this book, some of which will be subjects for us to write about in the future, including: signal detection theory, cognitive psychology, situational awareness, information foraging, and trial advocacy, as well as many areas of decision making, information theory, and storytelling. Stay tuned.

The authors take the position that everyone bleeds the same color blood and are therefore equal. However, for environmental reasons (which we discuss in the next paragraph), economy in writing, and consistency, we wrote primarily in the masculine gender.¹² While our preference would be to use a single pronoun throughout the book, unfortunately, this option does not exist in the English language.

We ask readers to weigh the benefits to the environment when evaluating this decision. By our calculation¹³, if we use “he or she” and “him or her” instead of “he” and “him,” the book will be longer by approximately four pages. If the book sells 100,000 physical copies over its life (perhaps optimistic), this choice would result in 200,000 extra pages printed (front and back). Since each page weighs roughly 1.8 grams, the extra pages would total almost 800 pounds of paper. Following math from the Sierra Club, these extra pages would equal approximately four trees. A typical tree absorbs 48 pounds of carbon dioxide (imagine a 48-pound block of dry ice which is solid CO₂) and produces 260 pounds of oxygen per year. If a tree lives for an average of 75 years, and we save four trees, then our choice equals 14,400 pounds of carbon dioxide and 78,000 pounds of oxygen. Although we sometimes struggled with our choice, we justified it for environmental reasons. We could think of no better cognitive dissonance!

A few “housekeeping” items: For economy of writing we primarily use the term “stock” in reference to whatever financial asset we are discussing. However, any security (or any asset, for that matter) can be substituted, including but not limited to a bond, an option, a building, raw land, gold, stamps, and rare snow globes. For the same reason, we usually refer to “purchasing” or “buying” a stock although “selling” or “shorting” can easily be substituted. In some footnotes, rather than providing a link like: https://www.youtube .com/watch?v=pz6ZwIlGfw4 we put “You can google ‘Clarence fifth Beatle’ to see the full interview” in the footnote. We felt that these types of references will make it easier for the reader by eliminating the possibility of dead links and transcription errors. Throughout the book, we denote key words in bold. In certain chapters, we use colors for text that corresponds to colors in diagrams. There will be notes in the relevant chapters conveying this information. In some instances, numbers in tables or figures might not add up. Rest assured that these “errors” are not careless mistakes, but the result of rounding. We could have avoided this issue by using numbers with cents throughout the book, but we thought that the extra “precision” would only add unnecessary clutter to an already complicated set of calculations.

Because of the litigious nature of our society we are compelled to include the following disclaimer: The views, opinions, and interpretations expressed are those of the authors and do not necessarily represent the views of their respective firms, the individuals who have been referenced, nor any firms with whom they may be affiliated.

Finally, as is convention, we take full responsibility for the many errors, omissions, and compromises that remain.

If you are new to the investment business, we hope this book prepares you for what you will encounter. You are at the beginning of a journey that will never end. Buckle up and enjoy the ride.