Buffett likes companies he can understand, buffettology is more of Buffett’s investing style. Remember the companies Warren Buffett invests in are different than Berkshire.

The real value in Rule 1 is it gives a method for calculating a price for a stock from the stock’s financials. After comparing a few calculations to the stock market’s price, it’s been reasonable close.

If you believe that the stock’s price will eventually catch up with the earnings, it sure helps to put some numbers on it.

The war between mutual funds and stocks will go on and on…..I’m personally going to try to learn Phil’s method, but I’m not ready to give up my mutual funds yet or the advice of my Certified Financial Planner.

Thank goodness for Phil Town and Suze Orman! If it wasn’t for them us regular folk would be totally in the dark.
Knowledge is power!

Town and Orman have books to sell and that’s all that’s going on here. All Town did was read Warren Buffe and Ben Grahm books and repackage the message. Heck I should have done that, except I’m actually a certified professional at this and have the designations. Unlike Town and Orman.

Good luck folks and don’t fall victim to this garbage.

While the diffrence may be fine, it exists.

Thank you for stopping by and commenting on my review. We really appreciate it here. Thank you for clarifying the 15 per week on investing item. I understand that it can take you only 15 minutes a week after your years of experience, but I think it is going to take everyone else a bit more type until they have a few years under their belt.

I appreciate the kind words about my blog and I too look forward to exchanging ideas with you.

Phil V -

It is not necesarily true that focusing your investment on a few stocks is riskier than holding greater numbers of stocks. The quality of the companies that you hold impacts risk. In addition, focusing your attention on few companies can result in analysis and decisions. Many of the most successful investors have concentrated holdings.

I agree with you that I too would like to see Phil’s investment record. However, I don’t understand your reference to Graham ’49. Rule #1 investing is not a mechanical system. It is actually based on a lot of the teachings of Graham.

I think this is the key. So what if I can make 15% in 15 minutes a day? You can make 15% in 15 minutes a year with a diversified portfolio. Town’s method requires that you hold a few stocks, which is really risky regardless of what he says. It’s much riskier than a small cap value index fund, with no more return.

When Town publishes 15 years of detailed, verifiable results, then I’ll think this might work in the future. However, no system like this has ever worked in the past (see Graham 1949), so it’s unlikely this one will either. A lot of people are just going to end up losing a lot of their own money.

In any case, I think you run a good, honest, rational blog that readers can trust and I look forward to exchanging ideas about what to invest in in the future.

Thanks again for taking the time to dig in and give an honest opinion.

Phil

Hey George,

In response to your thoughts on the “three tools”. If you go to [Phil's site] you will see my discussion on the “three tools” that Phil said was a good description on how to use them. Also, his most recent post sorta continued the discussion, see “PROGRAMMING THE TOOLS”

For me, assumining you follow the core principles of Graham et al (as a short hand for what is genrically callewd value investing) . than what Phil is saying fits in a general way.

For example if, collectively mutual funds and insitutions own 30, 40, 60, or even 80 percent of a common stock than they are Mr. Market. And if the gheneral trend is down or up its because they are opening/exiting positions over a multi week period.

So a “pure” graham (value) guy will say , hey if it is selling for 60 cnets on a dollar its a good deal and what do i care if I buy it at 40 cents, a god deal at 60 cents is a good deal.

Where I think the tools and indicators from TA come in is on a macro level in this sense:

if a stocks fair value is 100 and a MOS is adequate at 70 but the stock has gone down from 100 to 70 in 4-6 months, than stay out of the way of the trend. When TA indicates that the trend is moving in a more positive direction is the time to leave.

So many people think that Graham-value etc dont use TA but they do sorta of.

I mean lets say you find a great company, its got a killer moat, the finanmcials all check out and your analysis indicates that a fair value price is 100 per common and you want a 50% MOS like Graham says so you say you will buy at 66 (menaing that the stock price will have to increase buy 50%).

Now when you do your analysis it is selling for 85..not enough of a MOS…but if it gets down ot 66 you will buy it..

Well to me that is TA. You have set a buy signal of 66 using vlaue metrics as opposed to more common TA indicators but it kinda of the same thing…I mean think about a great stock..lets take BRK for example… we all know its a great company…lets assume you have done analysis and FV is 75000 and 2500.

if BRK opens tomorrow at 40,000 or the B opens at 1333 would you buy? of course…why cuz you have set a price target…and thats what TA is all about…

So the difference between TA and Graham for me is actually very small but very important…

under TA it is the indicators that control the decison to buy/sell…

Using Graham the decision to buy or sell is made based on analysis of the company…and confirmed by the TA of price as it relates to FV and MOS

and what I get from Phil is that the indicators just provide some general insight as to roughly what the trend is and how to avoid Mr. Market

Anyway I am intrigued by the indicators and tools myself…how did you get an advance copy..i wish i could have scored one myself

Take care

Steven

I’m this week’s host for the Carnival of the Capitalists, a weekly gathering of business related blog posts that adds up to over 50 briefly noted entries in this week’s edition. Next week’s Carnival of the Capitalists will appear at…

He then said he became a millionaire through an investools TA approach, and tied Buffett’s two rules into it.

This did get me started in investing, but there wasn’t any FA or moat analysis involved…

-Mike