The Simple Dollar Morning Roundup: Phil Town Edition

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.

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  1. Amanda B. says:

    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…

  2. j.b. says:

    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.

  3. Interesting interview, but I’m not sure about ol’ Phil…

  4. Toby says:

    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.

  5. Adam says:

    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…).

  6. Brian says:

    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.

    Lots of free tools have been created since the release of the book to help with the technical stuff. Google ‘rule 1 spreadsheet’

  7. Actuary says:

    Phil Town is an utter moron who is making ridiculous money off of the same types of people who play the lottery every day or throw a ton of money into casinos.

    I saw this clown on a CNBC presentation about a year ago. He went on some rant about how mutual funds are a “scam” and steal money from you (aside: which in certain cases is somewhat accurate but certainly not in all fund families). The idiot then proceeded to throw out 3 stock picks which he said should be trading at double their value: Walgreens (WAG), UnitedHealthcare (UNH) and Healthway, Inc (HWAY).

    Check those symbols for a 1+ year chart to see the great Phil Town’s work.

  8. Walter says:

    Mr. Town is a technical analyst and anyone who has studied investments knows the concept(s) have been around forever and technical analysis just doesn’t work. Consider this: With all the buying and selling one would have to do, jumping in and out of the market, you’ll spend more on transaction costs than what you’ll make – unless you’re very lucky. ANd some people are very lucky, (maybe they’re the ones he picks for his testimonials?)

  9. Phil Town says:

    Hi all,
    I appreciate the comments about Rule #1. I agree with those who dislike the technical signals – using tech signals does not work if you get in without a big MOS. Regarding my CNBC picks: (WAG, UNH, HWAY) What happened with the market melt-down sort of makes my point regarding tech signals, doesn’t it? I mean, using signals you would have gotten out of all three without any significant loss. However, I get the point so I wrote another book, Payback Time, that’s coming out in Feb, 2010 that takes the reader into REAL value investing strategy. Perfect for THIS market. Regarding Investools, Amanda doesn’t mention that the Investools workshop is two full days of investing info, costs only $99 and includes $149 worth of time (3 months) on their toolset for free. :-) Find a better deal, Amanda, and I’ll sell it for you.

    Now go play, y’all,

    Phil Town

  10. Rikk says:

    Ive read the book and went through the technicals on a few companies. I tried Cramer and am sorry I left the strategies laid out in Rule 1. Finding the companies is or was hard. Its much better now with all the discounts to find companies with a big MOS. Im not sure I trust the future growth rates. Ive been practicing with more companies and its blowing away other strategies. Id wish Id stuck with his philosophy during 2008. I would have been much better off. I never even approached invevstools. I dont think its necessary. Theres plenty of canned help out there.

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