Hey everybody this is Phil Town and this is Phil Town and this is Danielle Town

and welcome to the Invested Podcast where we're talking about how to buy individual companies, the way Warren Buffett does,

the way Charlie Munger does, how to go after a very high rate of return with what we would consider very low risk, which is...

Well that sounds great.

It doesn't exist as far as most of the regulators are concerned and most of the and most of the academics and I can almost

say almost all the academics and probably 95% of the people who are managing

money and almost all of the financial advisors.

None of them believe this is this is how the world works and we've discussed why at great length

and I'll summarize it really quickly here. Modern portfolio

theory is the standard theory under which money is managed and which advisors are

taught by the SEC to manage money.

And that theory says that price is equal to value

in the stock market because nobody's stupid enough

to pay too much or to buy it for too much and the or sell it for too little.

And so in this sort of perfect world of rational people in the stock market no one ever makes a mistake on price so this

amazing which of course we all know makes total common sense no one ever makes a mistake on price ever.

No one ever does.

And that all just makes total sense and we should all believe in it and I'll go home.

You know I wrote an article for Value Walk and I just want to mention one thing about it because I thought it brought out one really cool thing about modern portfolio theory

When BPs well blew up in the Gulf of Mexico the stock price went from 60 down to 27.

But it didn't go to zero in spite of people like Jim Kramer saying that the company was going

to go bankrupt.

...