Phil Town on smart managers

Phil Town suggests that you can tell if an analyst has got their head screwed on straight:
First thing is to check two of the Big 5 that Phil Town teaches in his RULE #1 investing book. ROIC and Equity growth rate - for the recommended business.  Those two numbers will disqualify 99% of all of these recommendations and recommenders. 
Phil Town teaches that If the ROIC and Equity growth rates are high enough, consistent and holding or growing, and if the stock price is less than the MOS price, then you have to be interested enough to dig deeper and start looking at the Moat, the Meaning, the Management, all of which take time that I don't want to spend if these people are recommending either unpredictable or overvalued businesses for me to buy.
This is a very quick way to get a reading on the intelligence of the people who are doing the recommending.  The only problem is that after you do this a few times you'll realize that most of the brokers, TV pundits and junk mail soliciters are totally clueless. 
They have about as much business recommending businesses to buy as you or I would have recommending which lottery number is going to come up this week.  That means that you are on your own.  Scary thought.  But better to know what's really going on than to live in a fiscal fantasy and wake up in a financial nightmare, don't you think?
If, on the other hand, you are getting recommendations that turn out to be wonderful businesses at attractive prices, hey, tell me who these guys are, too!

The New book-Payback Time

Phil Town writes bestselling, unfashionable RULE #1 advice. NY Times and Amazon bestselling - like his first book, Rule #1. Not too-sexy advice because Town focuses on the sorts of things that don't make big instant wealth. Town's first book covered a number of key investment and financial planning concepts like Return on Investment, Capital and Equity, how to read form 10Ks and what to look for in financial disclosure forms. The truth is that investing in companies means spending more time looking for things to queer the deal on potential investments, rather than looking for things that will make you want to put your money into play.

Phil Town's new book, Payback Time, like Rule #1, is geared towards educating the investor - Town understands that investors who have made the transition from mutual funds to self-funded IRA's need a bit of traing for long term investing, and that the current market is a place that's rife with potential bargains to be had...and he gives a pretty stunning indictment of the mutual fund industry, pointing out that only four percent of fund managers have beaten the S&P 500 over the long haul, and that if you're going to do a mutual fund, you might as well invest in an index fund.


Phil Town covers a thing called "stockpiling", and is based off of strategies showing how investors (including Buffett) made large amounts of money by investing in down markets. It's about identifying stocks that are undervalued because of the current credit melt-down, and while it's really basic, Town's easy, non-technical explanations (with the sidebars explaining what the thought and decision process is) makes it accessible.

PAYBACK TIME is available for pre-order now at Amazon, Borders books and Barnes and Noble.