I’ve become very interested recently in fellow investment blogger Phil Town’s site, and so I’ve been reading it from start to finish. After reading much of his site, I’ve come to enjoy his style of writing and investing. Ever the skeptic though, I wanted to make sure he’s not just some shill on the web hawking his wares to an unsuspecting public. Everything I found has been good, and I was even able to find a new resource that he recommends frequently called the INVESTools Investor Toolbox.

About Phil Town

It’s important when investing to pick your advisors carefully. I have kind of a rating system for investment advice.

Poor – Any guy on the web. Pay little attention.
Fair – What he says passes the reason test. I’ll listen skeptically.
Good – Good track record, good advice. I’m listening, but still fact checking.

I don’t think it’s a good idea to ever turn off your brain when listening to others, especially when it comes to matters of money, spirituality, and politics. If you do, you leave yourself open to a world of pain and disappointment. No one person is more qualified to manage your money than you, and as such, the intelligent investor should not become an absent manager. Use your brain; God gave it to you for a reason.

While trying to bring InvestorGeeks into the investment blog mainstream I came upon Phil Town’s blog and discovered that a lot of what he had to say sounded legit. At this point, I’m not educated enough to trust “stock picks” online, as he sometime provides for illustrative purposes, but I do think, from my reading, that his analysis of stock passes the reason test; that is, his writing seems to jive with everything else I’ve been reading, so I upgraded him to a “Fair” rating. Only time will push Phil Town to the coveted “Good” status 😉

Phil Town, former Green Beret and river guide, began investing after a fateful white water trip down the Grand Canyon. One of his clients, an exprienced and successful investor himself, became determined to teach Town the ways of investing. Because of this client’s training, supposedly within 5 years Town turned $1,000 of borrowed money into a million dollars. He now teaches his methods around the country and speaks with the likes of David Bach, and Rudy Giuliani. Phil started the Rule #1 blog in March 2005 and will be publishing his first book, Rule #1, this coming March 2006 through Random House. I checked into all this, and it seems to be legit as well. Here’s some links to a publishing trade journal that mentions his new book, and discussions online.

Article on Publishers Weekly
Discussion Thread on Scam.com

[EDIT]: Phil Town’s publisher sent me an advanced copy of Phil Town’s book and I wrote a review of Rule #1 on InvestorGeeks, which provides more information about it.

Honestly, I couldn’t find a hell of a lot on the guy, except on other investment blogs like this one, but from what I’ve read they think this guy is going to be the Suzie Orman of investment.

Town’s investment philosophy is a combination of value investing while taking advantage of the highs and lows of the stock in the short-run. From what I’ve read he’s no ordinary speculator, but he does like to select high quality companies with bright futures using Graham-style valuation techniques and then take advantage of Mr. Market’s mood swings in the short-term. It sounds very interesting, which is why I’m looking forward to his book next quarter.

About INVESTools

INVESTools is an education company that sells training and web-based tools to bourgeoning investors. Their web portal, “Investor Toolbox,” which Phil Town recommends on his site, is a professional grade analysis portal similar to the free Reuters, Yahoo! Finance or MSN Money sites. Before going more in-depth with Investor Toolbox, let’s just briefly talk about commercial analysis software.

Why pay for access?
These days every variety of technical data is available to you, for free, online. However, companies like INVESTools offer commercial packages, such as Investor Toolbox, at a fairly substantial price. Reasonably, you may ask why such an expense is necessary if everything is available to you for free? While every manner of data about a company is available to you online, this data may be scattered across a handful of web sites, and if you choose not to pay for commercial software, you could waste valuable time searching this information out. Commercial software simply lets you be more productive and provides the kind of reports that afford quick, accurate decision making.

This is in no way an endorsement of Investor Toolbox specifically, just merely a point of fact. Businesses that revolve around advertising are more interested in showing you more ads, which may mean spreading information across more pages than necessary. However, businesses that revolve around subscriptions are more interested in keeping you happy and productive. Makes common sense, right? So if you are looking to invest seriously, seriously consider investing in tools that trims the fat and want to help you do your job well. Think of it this way, would you rather build a house with a $5 screwdriver or a $300 cordless drill? Now let’s talk about Investor Toolbox.

The Real Deal™ with Investor Toolbox
I’ve spent a lot of time over the last week investigating as thoroughly as possible anything I could find online about Investor Toolbox. Honestly, like Phil Town, there wasn’t much out there, but again, from what I could find, it looks pretty great. First I went to the INVESTools web site and ran through all the demos and articles provided for the Investor Toolbox. I have to say, if you can do everything they demonstrated, I’m very impressed. Again, I’ve seen a lot of what they provided on other ad-based sites like Reuters and Yahoo! Finance, however, not nearly as well designed, or in such an informative way.

As far as cost is concerned, there’s no real clear prices on the INVESTools web site, but what I gathered online was that the costs are as follows:

Investor Toolbox Pricing:
1-day Training Course: $1,000 (pay at the end only if you like it)
Subscription: $600/yr

The costs are fairly high, but after looking at two other similar products, it doesn’t seem that these prices are unheard of. As my father says, “You have to spend money to make money.”

Next, INVESTools is a publicly traded company which means that there is much less of a chance that this is a scam. Since financial records are public I decided to review the company’s financials on Reuters. The company doesn’t look to be in terribly good shape based on their financial statements, but they’re viable and their sales are growing rapidly, so that’s positive.

I also looked for third-party product reviews and competing products to Investor Toolbox and although I wasn’t able to find any reviews, per se, I was able to find two similar tools, MetaStock (a Reuters company) and TradeStation. I didn’t spend much time reviewing them, but from what I did see, their prices were in the same ballpark as Investor Toolbox, but neither looked as easy to use.

Finally, I did my best to look for reviews or complaints from users but was only able to turn up a post by TellitStraight on Google Groups which expressed discontentment about the price of the training courses and the fact that appearently much of the time during the training course is spent selling attendees on other training. Phil Town, who I have to give credit for being so proactive among the user community, agreed with the user’s compalint about INVESTools’ hard-sell approach and responded to the pricing issue by pointing out that professional tools, though expensive, make investors much more productive, which is absolutely true. Additionally, while looking for user feedback I found a number of user groups online at sites like MSN Groups for Investor Toolbox, which is always a nice fall back if you run into trouble.

Wrapping it up

When looking for advisors on matters of money, one should choose very carefully who he listens to. Though many think they know what they are talking about, few actually do. Much of choosing advisors involves listening skeptically and checking the facts. After all my research Phil Town seems to pass that test, but while I’m looking forward to finding out more what he has to say I have to remain skeptical. I am my money’s manager, and like a parent I never stop being concerned about it’s well being. I recommend taking a look at Town’s book when it comes out this March. You may just pick up a few practical words of wisdom that you haven’t found somewhere else.

Additionally, after looking at INVESTools Investor Toolbox (I wish it had a shorter name), I’m really impressed, and considering going through their training course. If it’s satisfaction guaranteed and you pay at the end only if you’re happy, then there’s very little downside, right? The tool provides a lot of great information that will be very useful in picking up on buy and sell signals in the market, and may be worth it to have a look yourself.