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The Simple Dollar Morning Roundup: Phil Town Edition 6comments
This week, my morning roundups are going to focus exclusively on specific personal finance writers. I’ve searched around the blogosphere researching these writers and the takes that others have on them and found a number of good ones.
Today’s topic is Phil Town, the individual who has triggered at least fifty emails in my inbox over the last few months. He’s an individual stock investment guru who promotes a simplified version of what’s in Benjamin Graham’s classic investment book The Intelligent Investor. Apparently (though I haven’t seen it), he appears on shows and quite assertively touts the philosophy. He has a blog, too.
An Interview With Phil Town An interesting interview with Phil with a few genuinely interesting questions, like “Why write an investment book if your system works - you should be rich anyway, right?” (@ blueprint for financial prosperity)
Phil Town’s Rule #1 Investing Get Rich Slowly takes a look at Phil’s investment philosophy and seems to generally like it, though Phil’s claims may be a bit inflated. (@ get rich slowly)
Ken Lay Is Dead, But Phil Town Isn’t A good criticism of the biggest flaw in Town’s philosophy. (@ kiplinger)
Phil Town Retro: Calculating Dell’s Sticker Price Phil moves step by step through calculating the “sticker price” of a stock, which is what Phil suggests that the stock should actually be listed at. If you see a stock way below the sticker price, it’s a real bargain. I did this myself, calculating Whirlpool’s sticker price.
The Simple Dollar Retro: Review: Rule #1 Phil’s investment philosophy is collected in this book, which explains a rather straightforward system for teasing out great stocks. It’s a great system that I believe in, but be warned that finding a stock that matches all of the guidelines presented in the book will be tough. If you do find one, though, it’ll be a home run.
Phil is not the person who runs those investor education seminars, though he does present them. The company, Investools, does do some upsell because they have other products/investor education classes and they are kind of “old school” in their sales techniques… but Phil has said on his blog and in emails that you don’t need to take their advanced investor education classes (like options, etc.) in order to practice Rule #1 investing. Basic access to the tool set will get you what you need.
Also his entire book teaches you how to locate and buy stocks at 50% off using free tools like MSN Money, because he says (right in the book and all over his website) that not everyone can afford expensive investing tools, especially when they’re first getting started.
Interesting interview, but I’m not sure about ol’ Phil…
I’ve read Rule #1 and the first half of the book echoes Buffett and Graham (although you are better off reading _The Intelligent Investor_) but when you hit about page 200 and he pulls out Technical Analysis (What I consider the antithesis of Buffett/Graham-style Value Investing) the alarm bells went off. What the heck is Phil thinking?
Basically, the second half of the book discusses timing the markets using Technical Analysis to get in and out of a stock and maximize returns. Pardon my french, but that is just *STUPID*! Every true value investing proponent will tell you not to try and do this. Timing the market is a fool’s errand and you will more-than-likely lose money doing it.
I’ve seen the potential pitfalls with my own value plays. I’ve purchase companies way below intrinsic value and watched the stock price jump (sometime 5%+) with no news or announcements from the company. Mr. Market just changed moods and wanted to pay me more.
My thinking is: I know what the stock is worth, I bought it at a discount, I bought with a MOS, why do I need to fiddle with it, Mr. Town? It seems to me that the constant adjustments would just add a whole lot more risk to the equation.
I am currently reading Rule #1 and find it interesting…
BUT, for as “easy” as the introduction makes it sound, it sure has a lot of technical stuff and it is quite lengthy (how can something so simple be over 300 pages long??).
Admittedly, I’m not finished with the book yet, and it does have me interested in the method, but it seems like Phil’s talking out of both sides of his mouth in some ways (It’s easy, but this part isn’t…).
Toby,
You make a lot of statements in your comment that may be what you believe but are not at all true for everyone. Everyone needs to come up with their own style of investing and if the Rule #1 book helps someone do that, then so be it.
Adam,
Lots of free tools have been created since the release of the book to help with the technical stuff. Google ‘rule 1 spreadsheet’
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So I know this is just my opinion, but I don’t like this guy. My husband had some interaction with him and it reaked of SCAM. He sells tickes to seminars for $2,000 where he tells you you should buy stocks at half price. Now, if you want to find out how to do that, all you have to do is buy tickes to the next seminar for $10,000! No joke. I have no idea how deep the rabbit hole goes, but I just don’t trust Phil. I am sure you can make money this way, but how much is needed up front and is it worth it…
Amanda B. @ 8:43 am August 9th, 2007 (comment #1)