The Financial Reader

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Never in my life have I been around someone as controversial as my next interviewee. I met William (Billy) at an old site we both used to be active in. His investment style is similar to Warren Buffett’s in that they both make huge bets when the odds are in their favor. Although controversial, his advice is simple, straightforward and intelligent. It is that straightforwardness that gets him in trouble, but underneath the controversy lies a man who knows what he is doing. His book Consume Consume and Consume More: Spend More Work Less has received high accolades from both experienced and novice investors.

Billy you have a book that has had great reviews from fellow Value Investors and everyday people, why do you think the book has been a great success?

The book has been a success because 1) It is Short 2) Its specific with formulas and filters 3) Duplicable, Everything in the book can be duplicated if the reader has the self discipline and desire to do it. After chapter 3,the book more than pays for itself in true value investor form.

Many people do not know you did not go the typical route to become financially independent,by that I mean you did not go to a university, get a corporate job,etc.. Yet, you are able to garnish outstanding returns on your investments in the stock market, what separates you from someone who goes the “usual” route?

I was an accounting major but we learned EMT (Efficient Market Theory) in school. It was very simple .Since 1993 I made 100% of my income from allocating capital in sports memorabilia ,tickets and stocks. When your wrong ,your family does not eat, you are not as quick to lose your capital. If you are not good at it, then you go broke and need to get a job. I was not great when I started but each year got better.

At what point in time in your investing career did value investing hit you?
I always believed in value investing , When you are using “eating money” or “scared money” you will not be reckless .If you are too reckless you need to get a job. 3 other guys I know started with me. All are now working for someone else except me.

Best piece advise you can give to someone starting out in the stock market?

Best advice for someone starting out is to read my book and follow it step by step. I parlayed $9,000 into a heck of a lot more and it was “virtually risk free” ironically.

What is the best book on investing you have read?
Warren Buffett will be angry but I loved Buffettology. Decide which stocks you want to own and decide which price to own it. The actual formula in Buffetology is flawed. My books formula is much better but the concept of Buffettology was great. I also liked Chapters 8 and 20 from The Intelligent Investor but do not recommend the rest of the book to a novice.

Your forum has had a tremendous growth in activity. It’s a place I visit once a day. Has the forum met your expectations? Any plans to expand it in the future into a complete website?

Yes after I was banned from Gurufocus I set out to create an environment that would have more posters and an intelligent dialogue that encourages dissent among “stock choices” but no personal attacks. In a capitalistic society the consumer will decide what is in he or she’s best interest. My partner Steven Walthall ( Doctor Options) will decide if and when he wants to do that. He is knowledgeable about computers ( and options) unlike me.lol

Any stocks you are looking at right now?

I am looking at all my bargain bin picks listed at the website but have bought heavily into Burlington Northern (BNI),especially between 77 and 79 over the past week or so.It is a no brainer.

Assuming you were forming an investing partnership and had to choose between Charlie Munger and Warren Buffett who would you choose?

Buffett no question,everyone lies to say Warren Buffett could make 40% on a million dollar portfolio. Warren Buffett could do it but no one else could. Charlie is smart too but Warren Buffett has made over 125 billion and Charlie admits that Warren Buffett is better at this than Charlie is.

Some people claim their value investors, but when everyone is selling everyone runs towards the same exit. What separates Warren Buffett, David Dreman, John Neff from the rest?

What separates Buffett is that he does not sell unless the fundamentals change. Dreman is a contrarian and a great investor and he was a voice of reason when I bought Altria (MO).But like Bill Miller and other “great gamblers” they take too many chances in my opinion. Buying Washington Mutual (WM) was a huge error. I am more like Buffett, I only own 5-7 stocks but those stocks have little downside risk .

You made a killing in Altria (MO), what did you see? What was your thought process? Can you go into that investment in detail?

When I bought Altria in 2000 and 2001 there was talk that smoking would become illegal in the US and the lawsuits that saw multi billion dollar verdicts that could bankrupt the company. My “theory” was that all the talk about smoking being illegal in this country was not valid and these lawsuits would be overturned on appeal. Would a country that was 6 trillion dollars in debt “bankrupt” the largest taxpayer to the US Treasury? Would the legal system be able to handle all the lawsuits that would surely flood the system? Even if this did happen Kraft was worth about what I paid for the entire company and International tobacco would be “basically” free. The 9.5% dividend yield was MORE than covering my debt service. Since 1957 18 of the top 20 performing S&P stocks were either pharmaceutical or consumer staples companies if reinvested dividends were factored in. This information and the low PE, High ROE and High Dividend yield (read past articles to “recap” how important these traits are) made me feel that with #1 US food company #2 Beer company and #1 cigarette producer with the discount price from averaging down provided a sufficient margin of safety. The “uncertainty” in this instance was actually more “imagined” than real.

Thanks for the interview Billy

William Spetrino Jr, a disciple of the great Warren Buffett has been managing money and been self employed for 22 years now. He has spent the last 22 years buying and selling assets with one major focus. To buy dollar bills for less than a dollar. He wrote his first book on becoming rich titled Consume Consume and Consume More: Spend More Work Less. His text while unconventional is one a few that takes an investor from point zero to millionaire status provided they do one thing :follow the program. He can be reached at ticketbill@aol.com and at his forum.

William Spetrino Jr owns stock in Burlington Northern Santa Fe (BNI) and Altria (MO)

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