How to be a Billionaire: Proven Strategies from the Titans of Wealth

May 30, 2017 By E.J. Smith - Your Survival Guy

Martin Fridson is one of the best high-yield bond analysts, period. I had a chance to meet Mr. Fridson when I started a small stock club at Babson College in Wellesey, Massachusetts in the early 90s.

Two of my favorite professors at Babson are involved in this story. The first is Joel Shulman, who introduced me to Fridson. He suggested my stock group co-sponsor a talk by Fridson. Thanks to Professor Shulman, to this day, I have a signed copy of Fridson’s book Investment Illusions in my office.

In looking up that book for this post, I found Financial Statement Analysis, now in it’s fourth edition and coauthored by my other favorite professor from my time at Babson, Fernando Alvarez. Alvarez is now teaching at Columbia Business School. It’s a small world.

I thought you might like this story from Fridson’s excellent book How to be a Billionaire, in which he talks about Ross Perot and the IPO of EDS:

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Ultimately, EDS came to market at a near-record 118 times earnings, or $16.50 a share. Despite Perot’s resolute drive to get top dollar for the shares he sold in the IPO, the price immediately skyrocketed in frenzied buying of high-tech stocks. Before trading closed on the day of the offering, September 12, 1968, EDS shares had risen to $23. Over the next year, EDS zoomed to $160 a share, representing a mind-boggling price-earnings earnings multiple of 500. At the peak of the go-go market in 1969, Perot’s remaining nine million EDS shares were worth $1.5 billion on paper. He had “pulled off perhaps the most spectacular personal coup in the history of American business,” in Fortune’s estimation. “Probably no other man ever made so much money so fast.”

Perot achieved a remarkable financial feat of quite a different sort when the inevitable bear market arrived in 1970. In a single day, April 22, his net worth plunged by almost half a billion dollars. Perot downplayed the significance of the event, consistent with his claim that making money had never been his goal at EDS. “The day I made Eagle Scout,” he once said, “was more important to me than the day I discovered I was a billionaire.”

Martin Fridson’s 25th Anniversary High Yield Bond Conference

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.

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