Bank of America Sucks by Phil Town
Phil Town said that Melissa has had an account at B of A since early 2002. Melissa deposits a check every month and for every month since she opened the account 8 years ago, she was always able to write checks immediately against the check she deposited and the bank would cash them. However, according to Phil Town, last month the bank told Melissa that they would no longer allow her to get cash right after her deposits. They were going to hold the check for about a week until it was taken off of “hold” status.
What happened to Bank of America? Why did Bank of America demand its branch managers to gather in the ‘float’ at the cost of losing some accounts to more customer friendly banks. (‘Float’ is cash the bank has in its accounts that it doesn’t own. Melissa’s money belongs to her and she should have complete access to her funds. What B of A does is they cash the check immediately and sit on that money for several days during which time it can lend it out short term. Any money, even a very small amount which makes them interest with no cost is pure profit.)
So why would a RULE #1 investor want to own this kind of business? Phil Town say’s you don’t want to own Bank of America because it sucks! He says “No. Hell, no. I don’t want to own businesses that screw the little guy, I don’t care how much money they make. Screw them. We’re moving all our accounts to BB&T. I love their attitude.”
Phil Town
Phil Town is the best selling investing author of RULE #1.
Phil Town Investools
Phil Town is a best selling author and investools speaker. Phil Town has a new book PAYBACK TIME that is due out in Feb. 2010.
Phil Town
Phil Town is the bestselling investing author of RULE #1 and PAYBACK TIME.
Phil Town on MSNBC
Filed under: Phil Town, Phil Town Investing, Phil Town Investor, phil town payback time
Here is Phil Town at CNBC Studios recording for the YOUR Money broadcast for this Sunday October 11th. Phil Town is an investing expert and bestselling author of the NY Times bestselling book RULE #1.
Phil Town PAYBACK TIME book will be in stores on Feb. 2010. In this new book Phil show’s you how to get back in the market and capitalize on buying companies that are on sale for cheap.
Phil Town Payback Time
phil town payback time
In Rule #1 Phil Town wrote about how to know if a business is wonderful and on sale – the two requirements that Phil Town teaches in order to be certain to make money. Most investors buy and hold because that’s all they really have time to do. So Phil Town wrote about how to do it right in his 2nd book Payback Time.
Phil Town Payback Time is about the proper way to buy and hold a stock. The most critical part of buying and holding is making sure you are buying a good business ON SALE. You’ve got to know what the thing is worth and buy it for a lot, lot less if you want your long term investing results to be spectacular – like 25% a year kind of spectacular. To get returns like that, you have to buy right. I call buying right the Payback Time Price. Phil Town’s Payback Time is a concept that he borrowed from doing private equity deals. When we buy a private business, we’re not so certain where we are going to sell it. Maybe no one wants it when we want to sell it. So we wanted to be sure we could get our money out of the deal from earnings in a short time. Like 7 years or so. The time it takes to get your money out of a deal is called Phil Town Payback Time .
Phil Town
Phil Town teaches Stockpiling
Some of you have been doing some thinking and digging around in the new book by Phil Town called PAYBACK TIME. You want to know why you shouldn’t buy and hold a wonderful business we buy on sale instead of trading it. Trading has a transaction cost, can be inaccurate in the short run and will certainly cost you some of your profit. It also has the advantage of getting you out of a stock that is about to take a huge nose-dive. Its not perfect but it is pretty good insurance and it reduces the amount of effort you have to put into determining whether the business is a good one and whether you got the price/value thing right for Rule #1 investing.
Phil Town’s Payback Time presents the buy and hold strategy of Phil Town investing in a whole new light with step by step instructions for implementation. Its the price of the business that will be repaid in a very short number of years out of earnings.
Therefore, in 5 years you have your money back (assuming you don’t need any additional working capital to keep it going).
Of course Mr. Town teaches, that with public companies, we’re not going to be able to buy the whole thing. But if you buy right, if we use Payback Time as a measure of the purchase price, we should properly expect that the market will properly price the business as time goes along and we will see a profit on our investment. In fact, we might even be able to get our money out of the investment in a short time - a year or two - and what we leave in the deal is all house money.
And to jack up our profit, we can add some cool techniques to generate cash flow using Puts and Calls with absolutely zero risk. Phil Town knows that seems crazy but the whole origin of options was to reduce or remove the risk of owning something scary like a wheat crop.
Phil Town on Weak Management
Ayn Rand wrote this back in 1957 when General Motors was a very strong company but starting to be strongly influenced by the AFL-CIO Unions. When employees have a union and put a gun at the head of weak management, and weak management agrees to go along with demands that they reasonably know they shouldn’t be able to afford, you end up producing more and more bad automobiles. That is when you take the gold stamp of General Motors, the great brand and you ruin it. That wonderful American brand is destroyed now because the company is completely gone. But it took 40 years to destroy the best brand automobile in the world and it was basically done by weak managers that didn’t have the guts to stand up for what was right with the unions. The trade unions were not so interested in the survival of a company but just tend keep milking the cow, taking more than they could possibly afford. At that time, when they started this whole downward pressure on GM, there wasn’t any worldwide competition but competition ended up killing them. The capitalistic system cannot be screwed with. You can’t take more than it’s worth because somebody’s going to come along and take your business.
Japan took it this time and if they don’t continue developing better and better automobiles then China will take it away from Japan. So, Atlas Shrugged just got a whole section of the 20th century motor company which went down the tubes because of that sort of a situation, so it’s worth reading man. I like that book a lot. I feel like everything she says but I like — the general principles are very, very good. If you want to be a good investor long term, you should read Atlas Shrugged by Ayn Rand, written in 1957, very good stuff for Phil Town investing.
Phil Town soaring on a private jet
Because I expected the pilot of the aircraft to be competent and it wasn’t a big surprise to me that he did his job without a problem. That’s also what we should expect from the CEO of any company we use for Phil Town investing. Remember, if we buy one share of something, its no different than if we own the whole thing. Therefore, the CEO is our employee and we should expect … no, demand, the CEO be as certain to do the right thing as my pilot. I don’t expect my pilot to wreck the jet. And I don’t expect my CEO to crash my company. Pilots go through a certification process and constant re-certification to make sure they are competent. CEO’s do the same thing even more often than pilots. The exams are called quarterly and annual reports. The pilot has an FAA examiner who grades him. I am my own examiner and I do the grading. If the pilot fails, he doesn’t fly. If the CEO fails, I don’t buy. I sell. There is on old saying in venture capital (to switch metaphors): Bet the jockey, not the horse. Because its all about how they ride the horse, fly the jet, run the business. Its all about competence as a Phil Town Rule 1 follower.