YouSaid · the spoken record

Paul Johnson

lines on the record: 95
first: 2017-11-27
most recent: 2017-11-27
sittings or episodes: 1
sources: podcast

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“And that's the thing that we didn't make this stuff up like sitting in a room contemplating our navel. We have taught, well, Paul's taught over 2,000 students, I think I've taught about 450 over the 16 years that I taught. And I taught for 16 years and I haven't taught in four years. So I have some students that have been out for 20 years. keep in contact with a lot of amazing differentiated.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“The irony is we meet people all the time. We both have a very large alumni of former students. We talk to the analysts. And it's shocking how often the analysts will say, I did some work three days to three weeks. I went in, the portfolio manager kicked the idea out in 40 seconds. I saw him on the hall. I pitched it objective criteria. They said, I'd love to hear it come to my office within a minute. They're like, no, subjective criteria.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is that in order to get the portfolio manager to actually scale the position, there has to be a transfer of ownership from the analyst to the portfolio manager? And the problem that you have is that there's a lot of subconscious emotions going on in the portfolio manager's head and in the analyst head. So the portfolio manager is like, I can't scale the position up unless I feel as though it's my idea. So I have to do the research. I have to internalize it. But the analyst is holding on for dear life and is very territorial because they're afraid that if they give up ownership of the idea that they won't be adequately compensated. And we feel as though that is a tension within a lot of very well functioning organizations.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you can hit the object of criteria, then you'll get the portfolio manager to listen. If you hit the subject of criteria, then the portfolio manager will, by the idea, get it into the portfolio, take a tracking position. But getting back to your question in terms of this communication with the analyst and the portfolio manager, the third piece which we couldn't get everything into the book, and this is something that didn't make it into the book.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“I hate companies that pay dividends. So if you pitch a company to me and they pay dividends, I'm not going to consider that to be good capital allocation or a strong competitive position. It's very, very subjective.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so those are things that you can reduce to numbers, or it's yes or no. And if the analyst doesn't meet that set of criteria, he should be dragged out in the street and shot like a dog. Now, the subject of criteria, well, in South America, or they drag people out into the street and they shoot them like dogs. Actually, you don't have to actually shoot dogs in order to drag someone out into the street and shoot them like a dog. That's true. But that's neither here nor there. Then you have the subjective criteria, which is like, I want a company with good capital allocation. Sounds great.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I guess what we say is that there are objective criteria and subjective criteria. So the objective criteria, it's pretty easy to nail down. And that stuff like the market cap, domestic, what industry they're in.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“Statement that makes sense. Oh, yeah, of course, governments would be important, particularly in family controlled businesses. Beyond that, he has this incredibly nuanced set of, I want them known enough, but not so much. It's different in Germany than it is in South America, right? These are all of his experiences. And so I go pitch him a stock and I say it's global consumer all this stuff. And within a minute or two, he says, I can never buy it because of the way the family owns that. And I'd be like, what? And it's 30 years of looking at this. He has this incredibly nuanced schema that I don't know. It would be hard for him to articulate all of it because he doesn't necessarily know. He can show examples where it doesn't fit. But like anything in life,”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“So back to the schema. The schema is every portfolio manager has a schema, even if you've been in the business for five minutes, you're starting to develop your schema. Maybe you got it from business school or reading a book or you want to imitate somebody. You get to somebody like Mario or Seth or Buffett. They have these incredibly nuanced schemas that they're looking for. Leon Kuberman recently was quoted in the Grammar Doddsville newsletter a couple of years ago, and then I saw him speak last year. He said the same thing. He uses a beer analogy, uses it in a lot of his presentations. And what he's essentially describing is his schema, what we found out is schemas are multi-layered. And there's what we'll call the stated schema. I only buy domestic, Tom Russo's, right? I want to buy global consumer family-oriented. That's all stated. And then behind that is this list of things that he may state, but I have no idea what they necessarily mean. I want a certain governance structure. Well, I know what governance structures are. I don't know what Tom Russo means by his governance structure. So there's an example of a...”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“You have my son Zev read those words on a piece of paper. Who are you going to believe? And they're saying the exact same thing. And then we started thinking about the differences, which is the delivery of the message.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“What we're finding on this, the way that we thought about it is that the security selection is the first piece of the puzzle. So if I'm a domestic microcap equity manager and you're pitching me Polish sovereign debt, it's not going to fit my schema. So it just kind of stops there. Then the second thing is the content of the message. So now you've selected the security, you've done your research, you've come up with the idea, but then you have to structure that content in order for the portfolio manager to take it in as efficiently as possible. And the example that we talk about in the book is like you have Warren Buffett read the words on that piece of paper.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“You can almost see the edges or weight. You say, oh, I got to present the edges and why the market's wrong. And then the fourth piece was the delivery, which is probably oriented, we originally oriented towards our primary cohort, which is the business school MDA student. But in reality, what we're finding on is...”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, on top of the challenges, which is now more competitive, and at least we've gotten through defining very clearly sort of what it takes to assess a company, assess the competitive environment, what information you have, how that's different from what the market thinks. We now have a communication challenge. Oh, for sure, which is a team of people needs to figure out of the information they have of the edge they have, how does that go from, say, the analyst to the portfolio manager such that it works its way into the portfolio in a size the right way. And so this is where we get into the pitch. So what we did is we said, again, reversed engineered. We talked to every portfolio manager we knew we both were portfolio managers. We kept saying, what makes you buy a stock? What makes you buy a stock? What makes you buy a stock? And we realized there were three components. One is this selection process, which is the schema. Come back to it. The second one is the content of the pitch, which relates to the rest of the book.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then the number of companies, you have the listings gap. So the companies in 1996, there were 8,000 companies on organized U.S. exchanges, which doesn't include the pink sheets and the OTC bulletin board. And that is 4,000 companies now, even though levels of GDP it should be 10,000. So you have more money, more intelligent people using a hell of a lot of technology chasing half the number of stocks.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“Years ago, it was a hell of the The market has gotten a lot more efficient and it's really been driven by the cost of computers and data processing and has gone down enormously. And the fact that hedge funds have gotten a lot bigger and you go to a $20 billion hedge fund that gets 1% management fees, so that's $200 million just for turn them on the lights. So they have a lot of money to spend on resources. So you have natural language processing algorithms going through all sorts of SEC filings. Now, that's not quantitative.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“Question. I'm with Paul 10 years ago, I'd probably even say 15 years ago. It was great because there were a lot of retail, a lot of unsophisticated, and we could come into a good situation and really exploit it. You call the CEO and say, oh, you're the first person I talked to in a year, and it sort of warms your heart. It's probably confirmation bias, but always warmed up. Now the internet and conferences and online and webcasts and all this stuff, the information is so much more available that I certainly think it's harder than internet was.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sort of. Ten years ago, it was a hell of a part, I want to come back to Elizabeth Crowns for a moment. And the one nice part about writing this book, writing the book with Paul was an awesome experience. There's at least a dozen times where I literally wanted to get into an Uber and come up to his house and beat him within one inch of his life, other than those moments, it was really a fantastic experience, the net result of which is that the clarity in my mind, the clarity in his mind, is so much higher and our vocabulary is so much tighter that now when we talk about things, we just get through them very quickly. So go back to your question. I'm going to use the tools. The sad part about Wisdom in Crowds is we figured out, is you don't need as many people as you think to get a wise crowd. You think you'd have to have all these really smart, sophisticated people ends up, you don't. Robust, we call a robust consensus, starts to emerge so quickly that you need a couple of people that are smart and highly motivated. And before you know it, it starts to bubble up. Now back to you.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“Both of you guys participate in smaller cap. All the way down. Do you find the ability to get an edge is, in theory, there are fewer people looking, people don't want to spend the time and resources and names they can't scale. Do you find in practice that it's easier? No.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“For in the book, we talk about Judge Mansfield's decision in the Elkin v. Ligaton-Meyers case. And basically what he says there is that it's totally okay and the job of an analyst is that you're getting non-material non-public information. You're mixing it together with the information that's already there in the public and your own knowledge and experience, which is your analytical process. And then you're arriving at a conclusion which is material nonpublic but legal.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's no four. So your edge is information on analytical or trading. But we really think in the real world what happens is this you either get a piece of information that triggers a schema in your mind, you now start to think differently than the crowd, which then leads to different questions and different research processes. You go get other information. And before you know it, you've combined information which is not really unavailable necessarily, but you've framed it in a way and it's that cycle of a different view, different questions, putting the information into a different puzzle. We use puzzle a lot in the book that you end up with this aha moment of, wait a minute, this is really x versus y.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“Like you see something, there's great examples we talk about, Michael Price, when he reads the paper. He does this great exercise. He has so much experience and so many different schemas, we call them, that they trigger little pieces of information, trigger in his mind a whole thought. He sees stuff that I don't see as an investor. And then the third one is this ability to trade. So the edge at the end of the day is one of those three. Now, we think that...”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“Have an efficient market, then price equals value. And because determining value independently requires time and energy, there's a cost to it. So you sort of go from first principles and you realize that if price equals value, there's no reason to do fundamental research, go by the index fund, I guess is the conclusion. For a stock to be mispriced, price does not equal value. It has to have one of the conditions of the Wisdom crowd, has to be violated. That's simple. Once you invert it. And once we did that, we had our list. So in edge is either I know something the market doesn't know. That's that information. I have figured something out, what we say in the book, I see something the market doesn't see. Or I have a trading advantage, which is either I'm willing to trade or I have access to a trade they can't. And that's it. The good news is we defined it. The bad news is the list is short. And so we really, when we say edge, pure informational edge is really hard to get. Pure analytical edge generally comes with a lot of experience. You've been doing it a long time.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“But that's a perfect example of kind of things that we encountered in the book is just people throw these terms around and they lump it all together and they don't understand what they're actually talking about.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“You added one other question, so that's sort of a quant piece. They have their own models. And if you had a diversity of quants, then they would have some diversity. I think the second piece is this index passive, and they're a price taker. They're not setting price. Quants, there's some new evolution being price setters. But index funds, by definition, are price takers. And what we don't fully know is what happens if we ever have a bear market. Index funds have to sell. They've been collecting assets enormous amount of assets for 20 years. When the Wells Fargo news came out last summer, all the corporate stuff, there were a lot of people that felt that stock didn't go down as much as it would because the index funds were all piling in and waiting and the waiting shift enough. I don't know if that's the case, but it's clearly kind of an overlay. What we've not done is test them where a company, big, high-flying company, misses, it gets repriced. What happens to index funds? We just don't know. We can speculate, but we don't know.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“And they dominated trading. And then when some, you know, you don't really need a lot to set the ball rolling. And then that lack of diversity when it had to be unwound just created incredibly large price moves.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we actually forget where in the book it is, but we talk about the client crisis of August of 2007 as a perfect example when you don't have diversity in the shareholder base. And that was what really caused it, is that you had so many quants that were using the same models so there wasn't a lot of diversity.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“They are in quants to this because almost by definition the way we're talking about Amazon is segmented portfolio managers, some of whom have similar views about pricing over a thousand. Others have different views but don't want to play, almost by definition index funds and quants probably look at things differently.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“More than But there's a whole segment participate, it's not participating. And so you end up with effectively a not very diverse audience. Now, one of the things we talked about, we didn't put as much in the book, one of the many places we're like, oh, we'd have had one more paragraph, is just because you lack diversity or independence doesn't mean they're wrong. And there's a subtlety there that's not insignificant. So we're not saying that Amazon is mispriced. We're just saying the crowd's not very diverse. So if an event happens that challenges the crowd's view, this stock's going to move hard and violently. And we see that in growth stocks all the time. If the growth breaks, there's nobody there on the other side kind of balancing. You don't have a diverse group. All of a sudden, everybody that owns it owns it for the growth. The growth is no longer there. They exit. The next trade has to be somebody who sees value, but at a much lower price.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, one example that we've kind of been toying around with is like, imagine if you asked 1,000 portfolio managers what Amazon was worth. You might get a number of like $600. Now, if you said to them, okay, are you willing to put money on that? Are you willing to either buy the stock or short the stock? There are a lot of people that they aren't willing to short the stock because of the risk. So the only people in the market are the ones that think it's worth north of $1,000. So you really don't have diversity in the shareholder base because half of the people...”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, a good example would be like herbal livestock when Bill Ackman did his presentation. So people had, you might have had diversity in the shareholder base and that people had a lot of different estimates in terms of what it was worth. And then what they did is they set aside their estimate and adopted Ackman's view and sold the stock. Obviously, everybody didn't think that because otherwise the stock would have gone to zero, but it had”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“Now, we have this other side, which we'll call Schiller, Thaler, Kaneman, and Tversky that says, oh, but humans are irrational, they don't do that. So Paul and I said, well, wait a minute, that's got to fit. We can't have a model where that doesn't fit. And it's that middle piece, the processing piece, that really Sawiki and Page and Mobison in his work have always lumped independence and diversity together. And we were just like, they're completely different issues. So diversity is, it's almost easier to talk about lack of diversity. Lack of diversity is when everyone's thinking the same way. Well, that's a bubble or a panic. Everybody's thinking the same way. We've lost diversity. Independence is slightly different where people are diverse. But when they go to express their opinion, then they're collectively influenced by some external.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“Can come in, or they're unable to trade. And what that could be because the stock is a micro cap and it's too liquid. So if you don't have a sufficient number of people that can express their opinions, then you wind up with a missed stock price.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“Then the information has to be processed without any systematic bias. And what that involves is the diversity of the shareholder base. And then the independence of the shareholder base. So if either of those two break down, then you have a systematic bias. And that's two of the three areas where behavioral finance really enters into the equation. Then it has to be expressed in the stock price and things that could prevent it from the information getting to the stock price. It could be that people are unwilling or unable to trade. So in terms of unwilling, when you get a case like 2009, where people like Deer and Headlights and they're afraid to put capital to work so they know it's cheap. But they are afraid of putting capital at risk. So again, the third area where behavioral finance comes in.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“So that became condition one and two of the six. Information has to be available and it has to be observed by a sufficient number of people.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe what we should do is take a step back. Pharma says that an efficient stock is one where the market incorporates all available information. So there were kind of three major parts of that, that the information has to be properly disseminated. And then the second is that it has to be processed without any systematic bias. And then the third is that it has to be incorporated into the stock price.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, absolutely. It ends up that if you're looking at Wizamacrow from Farmer's perspective, it really is about information processing and then trading. If you look at it from the behavioral side, they're trying to see it. What they really do is they want to see where individual behavioral finance errors, biases bubble up to the collective. And we ended up with the six, which essentially are, the first two are information. So one is it has to be disseminated, has to be available, and the second is it has to be observed. And it ends up both are important.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“The first part of the book is about intrinsic value. The first section. The second section is about how price gets set. And we both have been involved in the wisdom of the crowds forever. We thought that this was a great mechanism to really get practitioners and market efficient academics to understand where that collides. And at the limit, the market may be efficient. And at times it has behavioral aspects. And the more we played with Wisdom of the Crowds, the more we realized that it was an incredibly rich metaphor. We leveraged certainly the stuff that's got pages done out of the University of Michigan. I was involved in helping Sawiki kind of get his, which became his book. So we leveraged all of that. And back and forth because of this process, we ended up with six factors. And once we got it, so many things fell into place. And FAM is a market efficiency maps perfectly. And Schiller, Caneman, Tversky, and Thaler's behavioral fits perfectly into this. And the more we play with it, it was like those chapters just snapped.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“When Paul and I started writing this, we've both been teaching forever at Columbia, and we thought literally you could write the book a couple hours a week for a year we'd be done. And at the end of a year, we realized we didn't know what we were talking about. And it wasn't that we didn't know because we haven't knew it. We realized that we were like a lot of people when we threw terms around without necessarily defining them in a way that made sense and was consistent. People throw around risk as if everyone understands competitive advantage as if everybody understands it. We used Michael Steinhardt's variant perception as a very important cornerstone of thinking about how you get an edge in the market. And it was clear that his language is somewhat convoluted. The guy's brilliant, but his language is a little convoluted. And we spent months just trying to tease that out until we did.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“and then the way that we set it up is that you have to come up with an intrinsic value, and then you have to understand price formation and how the market came to the price that it came to, and then adding value through research and understanding risk. And then once you get all that, then you have to pitch it. So what we've always thought is that first you have to convince yourself on an idea, and then you have to convince someone else, and those require two very different skills.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, what happened is that we were originally going to write the book for practitioners, but we felt as though we could make a much bigger impact choosing a different demographic. And most of the schools, they assign the intelligent investor and common stocks and uncommon profits. So we really very deliberately chose that demographic. And then we thought, okay, what do they need to learn? And what our intention was was just kind of to outsource all of the stuff on discounted cash flow. And then when we started looking around, we thought there's nothing that's really, it's too complicated. So we decided to include that basic stuff. And the book, the whole book kind of builds upon itself up to a crescendo. So that was kind of how it evolved.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“At some point. So I'm hoping we get some play on it. But it really, the story at the beginning tells the story of the book because it took me probably a year until I fully appreciated it.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“About the same time, my daughter asked me, she said, What's the name of your book? And I told her, and she said, Wait a minute, there's a movie. I've seen the movie a couple of times. And so that's what really launched it. It was actually better than the first.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“He laughed back and he said, wow, how funny we've known each of this all this time. We have somewhat similar investment strategies. He was a former student. We taught together. Probably not surprising that we came up with similar. So he started emailing each other that day, and we quickly realized we were writing exactly the same book from different sides. And what Paul would say then, and at the time I didn't appreciate it, is that the pitch is the architecture of the recommendation. The investment recommendation is the pitch. If you can't get the pitch across, you can't come in somebody to buy it. You haven't done the requisite work. And when I first heard that, I was like, that makes no sense to me because I thought all you have to do is do the research and the pitch will take care of itself. By the end of the day, really probably into the next week, we had agreed to collaborate despite my sense I didn't want to write a book. And the name of the book became pitch the perfect investment.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“The timing's great, the end of October four years ago. Paul and I were attending the Gramm and Doddsville breakfast the annual event hosted by the Columbia Business School, and afterwards I asked him what's going on, what's new, just catching up. And he said, ah, I finally bit the bullet and I'm going to write a book. Oh, great. I don't have the energy or the time to do it. So I think it's great. I said, what is the name of your book? And he said, the perfect pitch. And I laughed. He said, why are you laughing, thinking I was laughing at the title? And I said, oh, because I've always wanted to write a book. And the book I was going to write is called The Perfect Investment.”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source
“My guests on today's show are Paul Johnson and Paul Sunken, seasoned value investors, longtime professors, both at Columbia Business School and Paul Johnson at Fordham as well, and co-authors of the recently released book Pitch the Perfect Investment. Actually really enjoyed this book and in particular the second half. It's written with a young analyst as the target audience and describes in very clear language what's required to research the perfect investment idea. And then separately how an analyst can understand a portfolio manager's thought process to effectively communicate the idea and then get it adopted in a portfolio. Despite that kind of target audience, I think just about every portfolio manager can benefit from the frameworks in the book and will help them more clearly communicate with their team. And I also suspect allocators will find yet another angle to use in”
2017-11-27 · Capital Allocators · Paul Johnson and Paul Sonkin – The Perfect Investment (Capital Allocators, EP.32) · IDENTIFIED FROM THE TRANSCRIPT · source