Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week!

Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week! | Phil Town | I'm pretty sure Warren Buffett would approve of this book

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	Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week! Phil Town Three Rivers Press, 2007 - 336 pages average customer review:based on 145 reviews view larger image
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highly recommended

Phil Town is now a very wealthy man, but he wasn't always. In fact, he was living on a salary of $4000 a year when some well-timed advice launched him down a highway of investing self-education that revealed what the true "rules" are and how to make them work in one's favor. Chief among them, of course, is "rule #1": "don't lose money." Other rules are: don't diversify...think like an owner, not an investor ... never, ever be seduced into thinking the market is efficient. Town also believes strongly in "betting on the jockey," putting your faith in managers who've proven their financial mettle. Not only does Town reveal fresh methods for identifying who the truly reliable managers are, but he shows you how to test whether they really have faith in the businesses they're running.

By far, the most controversial of the audiobook's assertions will be that giant 401(k) type mutual funds can't help but regress to the mean, and in the next twenty years, the mean could be very disappointing indeed. There's a very real chance that a 401(k) investor could see his holdings not grow at all in the next few decades. Fortunately, Town's stockpicking techniques are meant to walk investing phobes through the do-it-yourself process, equipping them with the tools they need to make quantum leaps toward financial security.

Rule #1 says something new, and it says it in a way that every listener can understand.

From the Compact Disc edition.

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Great Book

Rule #1 is not necessarily easy to understand for the FIRST time investor, but having lightly dabbled in stocks for a year first, I was very comfortable reading and understanding Phil's methods. After finishing the book and doing the initial research I bought stock in my first "Rule #1" company with more confidence than I ever had buying a stock before.

This method make more sence to me than anything I have seen from Jim Cramer, Benjamin Ghram, or any online strategy. I still do more "Paper Trading" using these methods to test them out, which the book encourages until you are comfortable.

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I'm pretty sure Warren Buffett would approve of this book

First off, I was actually embarrassed to pick and read this book given its cheesy marketing. On the surface it looks like a ridiculous infomercial with outrageous claims. For example, the author claims he turned $1000 to 1 million in 5 years. That is approximately a 400% rate of return. Very impressive but I was and still am skeptical. 15 minutes a week is also an exaggeration. He also portrays himself as a guy with average intelligence and drive. I don't believe that and I mean that as a complement to Phil Town. He strikes me as well read, driven, and with above average intelligence. He is also an outstanding teacher.

But getting past the marketing, I am extremely impressed with Town's book. It is very clearly written, engaging, and has sound investment advice. As a Warren Buffett fan, I have tried to copy his investment strategy but no other time have I seen his strategy laid out so clearly for readers to follow. Of course, I believe there are some points that diverge from the Buffet school of investing. For example, I don't believe Buffett would endorse technical analysis as much as Town. Partially this is due to Buffett dealing with enormous sums of money but even if that were not the case, I don't think Buffet would ever talk about tools like stochastics or MACD. I understand Town's rationale for introducing these concepts to individual investors but am still skeptical. Furthermore, his explanation of how these tools work was unsatisfactory. In all fairness, he does admit that he does not want to go into details as to how the tools work.

Phil Town does an outstanding job spoon-feeding his methodology. He definitely deserves praise for that. The book is valuable to the reader especially for a non-professional investor, but if you really step back and try to understand what drives his model, you will find it to be a very simple and perhaps un-elegant model. Basically you look at past growth rates and assume that the company will continue its trajectory (huge assumption). If the growth rates are over 15% (which is rare in a company that has been in business for awhile. Microsoft grew at about 8%) and the current PE ratio is significantly below historical levels (or 2 times growth rates) then you buy the stock. Using this methodology does give the investor a huge margin of safety but good luck finding companies that meet the criteria. If they do fit then you have to find out if there is a good reason why they are trading at such a large discount.

Phil Town does a great job enlightening readers but I think he probably makes most of his money now by giving advice and not by actually investing his own money.

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It can be hard to find Rule #1 companies but the results may be worth the effort.

I really enjoyed Phil Town's Rule #1 Book. I found it very easy to read, especially with the illustrations that Phil has given.

One of the things that Phil's book emphasizes is capital preservation. That is Rule #1, #2, etc. One doesn't have to be invested in equities full time to get a decent return on their investment. If the money is flowing out of equities why hold on to your long positions (own stocks) when the price of them is declining daily.

Initially creating the watch list can take many hours per company that meet the Rule #1 criteria. However, once the watch list is created, checking the technical indicators(Phil refers to them as the arrows in his book) can easily be done in 15 minutes per week.

I've noticed that some reviewers are critical of the results of investing in Rule #1 type companies as well as "timing" the market.

If you google the following keywords: "hyperdiversification legacy" and click the first link shown, your will see charts of all 15 stocks with a 50% or better MOS(Margin of Safety) that were based upon the Rule #1 Report that was originally generated by my servers.

Please note that there is no "cherry picking" of the results. The arrows show when one would buy or sell stocks based upon the arrows mentioned in the Rule #1 book.

It is important to note that the results are more consistent on stocks that have a higher average trading volume.

I have saved a lot of time by writing a program to screen through 9000+ publicly traded companies that meet all the Rule #1 criteria except for cashflow. Cashflow can be temporarily impacted when the company is investing heavily for future growth. I've also noticed that sometime Phil uses Operating instead of free cash flow in one of his blog posts on WAG.

Yesterdays list had 82 stocks on it. This a fairly manageable list to review to determine what companies do and don't have meaning to me. I can then perform additional due diligence such as determining their moat/unique competitive advantage and learning about their management team.

Thanks,

Jonathan

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A Clear Read

I first saw Phil Town on "The Millionaire Inside" on CNBC, which prompted me to pick up his book. I found his book provides clear, step-by-step instructions on how to buy wonderful companies that have personal meaning, and purchasing them for at least a 50% discount, and then watching how they perform in the market. He introduced "tools" to check every day for a couple of minutes, depending on how many companies you purchase, but he advises to start slow with one company until you get familiar with what you are doing. I thought this book was great and has motivated me to find my first company to invest in and start earning those 15% returns.

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