Isabelle, thanks for reading and leaving a response. You may be bringing in things that Town writes in other books (I have only read Rule #1) with which I am not familiar. In this book, which I did finish and just skimmed again to confirm, he only gives one way to "calculate the sticker price of a company" (Chapter 9) and only gives two examples: Harley Davidson and GM. He doesn't recommend GM for investment, so I left it out of my discussion. He does give another example of the Cheesecake Factory in Chapter 13, saying that if you bought in March 2003 and traded in and out 11 times over the next two years (definitely NOT what Buffett and Munger teach), you would do well. However, CAKE also hasn't done well long-term, having less than a 4% CAGR since he called its a buy.

As I mention in the article, I agree with Town in principal on most accounts, but not his valuation method. I use his example (not mine that you suggest I cherry picked) from the book 15 years on to show how the valuation method used by him and the "wonderful company" chosen by him performed. I think the issue is he tries to over-simplify what Buffett and Munger do, and his "simple" valuation method is a prime example of how he gets it wrong. Buffett and Munger are not doing anything so simple when they analyze a company, and picking winners is MUCH harder than Town suggests, in my opinion and experience. The simple way to invest is low-cost indexes. To move beyond that takes a lot more work.