PHIL TOWN

Phil Town on Bank of America

Bank of America sucks

Melissa has had an account at Bank of America since 2002.  She deposits a check every month and for every month since she opened the account 8 years ago, she could write checks immediately against the check she deposited and the bank would cash them.  For 8 years.  Then last month the bank told her they would no longer do that.  They were going to hold the check for about a  week until it ‘cleared’. 

What happened?  Bank of America has ordered 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, Bank of America cashes the check immediately and then sits 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 do Rule #1 investors want to own this business?

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. They walk their talk. And they like Ayn Rand.

Now go play.

Phil Town

Phil Town Gives MSNBC Studio Tour

Where is This Market Going?

WHERE IS THIS MARKET GOING?

When Phil Town was on The Millionaire Inside show with Erin Burnette, he was totally impressed with her.  Obviously, so was CNBC.  They have her fast-tracked and doing the cool stuff.  She’s been traveling lately – Dubai, London.  Checking out where its all going. Are we in a recession headed for a depression or did the stimulus package work magic without ever getting any money into the economy?  She interviewed a money manager who thinks we’re off to the races.  There is an old saying in India – “Your world is as you are.”

And isn’t that just the way stock markets work?  The price of an investment is all about the buyer and seller’s joint agreement on the near term future.  If it looks rosy to both, the price will be high.  If not, not so much.  

Apparently, the mere fact that governments world wide have shown an unlimited willingness to write checks to keep things going has done wonders for buyer-seller perception of the future.  Like – there’s going to be one.  And since there’s going to be one, businesses are going to be able to sell stuff, have revenues and pay employees who will, in turn, go buy stuff from other businesses who will have revenues and pay employees who will….  Well, you get the idea.  

However, value, as I’ve said ad nauseum, is not the same as price.  Coke has a long term value.  It also has a short term price.  They are not the same.  Its price is dependent quite a lot on perception, right now, of what’s going to happen in the near term.  If the sky is not going to fall, well then, price is likely to go up from where it was when the sky seemed likely to land on us.  

So where is this market going?  On March 10^th at 6600 I said its about value.  The market was going to go up because price is not value and the value was quite a lot higher than the price.  At 9800, the price is up so now its about price and price is about ‘as you are’.  The fearful are starting to turn greedy and that means they are becoming buyers.  So where’s it going?  Up.  For a while.  This is now a trader’s market.  Be nimble, kids.  We want to be selling to greed and buying from fear.  Fear is going away.  For a while.  Don’t be caught getting greedy.  If you followed me in March, you’re investments are up 50% in six months.  That is considered good.  

Remember:  Pigs get fat.  Hogs get butchered.  This market is now about price, not value.  Be nimble.  And be ready.

Now go play.

Phil Town