Hello and welcome to our community!

[Justin]

Hello Sax and welcome to the ROIC, its good to have you here with us!

[Hudman]

I am watching BBY, COH & EBAY along with you.

[dsteinke]

I was just browsing the web and stumbled on this site. I have just attended an InvesTools intro seminar and was looking for a cheaper option to get the same information. I feel like im missing something here, but what exactly is this Rule #1 investing, is it a book, or something that can be found in the forums. Thanks for your help.

[thetodd]

I'm new to this whole rule #1 thing too, but here's the review that got me interested in it.

Rule #1: Buy This Book - Wealth Junkie
[quote]
Most Americans want to get out of debt, retire comfortably, and not worry about money. In order to really accomplish that, they need to learn how to invest.
But how should they get started? It’s a tough question to tackle. When I’m asked, I always want to point the person towards one of Benjamin Graham’s books so they can learn the tried and true investing principles that I have been studying. But I’ve never been able to do it because the odds would be stacked against them from the start.
You see, the principles of value investing, while publicly available for the last 50 years, are just not easy to learn. Benjamin Graham was a brilliant man, but his writing can be difficult to understand. Asking a new investor to read one of his books and understand it is like throwing them into a pool with sharks.


Phil Town has done a brilliant job of digesting the principles of how to find a wonderful investment. He presents the essence of this wisdom, along with lessons he learned along the way, in the form of real world applications and examples that you will understand. His book, which will be in stores on March 21, is called Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week!
About Phil Town

After serving his country as an elite soldier (Green Beret), Phil had a variety of odd jobs, including one as a river raft tour guide in the Grand Canyon. In 1980, he did an Outward Bound rafting tour and his group was nearly killed. It was Phil’s courage under pressure - and everyone paddling because their lives depended on it - that saved them.
One of the rafters (”the Wolf”) taught Phil how to invest as repayment for saving his life. And the rest, as they say, is history.
Phil Town is a great American, and a rags-to-riches success story. I mean, I’m a veteran too, but I have never been shot at in the line of duty. My shipmates would agree - our hats go off to men like him.
From the eyes of this veteran, what Phil Town has done is truly the American dream. And since he’s showing me the keys to his success via his book and his blog, I’m trying to learn everything I can!
The Rule

The Rule - “Rule #1″ - is to not lose money. It is the time-tested principle that an intelligent investor can buy one dollar of asset value for fifty cents of actual cash. In doing so, you are buying assets for less than they are actually worth. These “assets” are companies via shares of stock, but we treat it like we own the whole thing.
Rule #1 was invented by Benjamin Graham - an investing legend, former Columbia University professor, and Warren Buffett’s mentor. The concept sounds easy enough, but figuring out the “worth” part is more than a “little” tricky.
An investment is only a potential value if you can buy it significantly below Sticker Price. If you know what it is worth, and you can buy it for substantially less, you are getting a good value for your money. That’s Rule #1.
Warren Buffett and Benjamin Graham often refer to the idea of buying a company’s shares below their “intrinsic value”. But you can’t just find that number on the internet, and you could spin your wheels for years trying to figure out this kind of stuff.
Phil makes it easy to learn. In Rule #1, Phil talks you through how to pick wonderful companies and determine their Sticker Price in “baby steps” that even the newest investor can take. He offers plenty of thumb rules in the book and calculators on his web site to help you figure things out.
You Know More Than You Think

To choose the right investment for you, Rule #1 uses criteria called the Four M’s. They are Meaning, Moat, Management, and Margin of Safety.
All of us know a lot more about businesses than we give ourselves credit for. One of the world’s greatest investors, Peter Lynch, once said, “Buying what you know about is a very sophisticated strategy that many professionals have neglected to put into practice.”
To me, one of the most striking parts of this book is Phil’s emphasis that an investment should have meaning to you. As Phil says, “the first M means its personal.” He says that the companies we own make a statement about what we stand for. Our ethics and our values as citizens and people are mirrored in the enterprises and business leaders we support.

When a company has meaning to you, it has created a brand that has impacted you in an area that you are knowledgeable or passionate about. And it has a better chance of possessing the characteristics of a Rule #1 investment.
What normally happens, though, is the Pharmacist buys technology companies and the car dealer buys biotech companies, while each ignores the professional insights they have into their own industry. That’s throwing away valuable information - and a violation of Rule #1.
Watching The Big Money

When shares drop to below the Margin of Safety price, Rule #1 shows you how to use technical indication Tools to keep an eye on the flow of institutional money. In the book, Phil says, “Believe me, they are always going to know a lot more about what’s going on and how that will impact your business than you or I ever will. So, once you’ve picked your biz, watch what the big guys do with buying and selling your stock.”
I believe him.
Large mutual funds and institutional investors move billions of dollars into and out of stocks each day. However, they own millions of shares and can only sell a few thousand here and there. It takes them several weeks to buy all the way in or sell all the way out.
That creates opportunities. A more agile individual investor, such as you or I, can watch the flow of institutional money and take advantage of price peaks and valleys. We can buy our shares one day and sell them the next. That’s an edge.
I had previously shunned the idea of using this sort of technical analysis because Buffett and Graham did not favor it. However, Phil convinced me right away when he said, “When you’ve been through as big a drop as we went through in 2000-2003 and didn’t lose any money while everyone else was getting slaughtered, you become a believer.”
I’m willing to give it a shot. In fact, it didn’t take long before I found a recent post on Phil’s blog where he showed yet another example of the power of these technical indicator Tools. In Getting Out of GOOG: A Reminder Why The Arrows Matter, Phil shares his very recent personal experience of why he sold his Google shares at about $440 and got out before it dropped. (It now hovers around $350.)
The concept of looking at who’s buying and who’s selling has been around for decades too. While Phil’s Tools do not actually delve into ticker tape analysis, if the net result is the same - i.e. Phil selling Google at $440 while it sits today at $350 - do you think that this millionaire is on to something?

Information may be power, but knowing when to act decisively can be explosive. I look forward to gaining personal experience with the Tools.
15 Minutes Each Week?

You might see the subtitle of this book and wonder if Rule #1 investing will really take you less than exactly 15.00000000 minutes per week, or whether you might actually have to spend a few more minutes now and again.
If this was your first concern, you would miss out on the big picture.
The first part of Rule #1 investing requires you to put together a list of wonderful businesses you’d like to own, and do some background research on them. Though it will almost certainly take you more than 15 minutes, it does not take that long, and Phil shows excellent examples of how to do Rule #1 analysis throughout the book.
Just because a company is worth owning does not mean you’ll be able to buy their shares at a discount right away. Since your research is done, you just need to spend about one minute per day checking up on things. According to Phil, “What you might find is that they’re wonderful and not so cheap. Put them on a Watch List, update their sticker prices about four times a year, and if they become cheap, buy them then.”
The Review

In Rule #1, Phil Town provides the caliper of wisdom that I’d always hoped to get from the millionaire uncle I never had. These are tried and true, street-hardened tips from a man that lives and breathes the American dream every day.
With this book and access to the internet, someone that has never invested a dime can learn how to make their money work for a brighter future. The techniques Phil presents cover all of the bases of buying and selling wonderful companies, and he provides all of the tools, tips and tables you’ll need to figure things out. He even tells you how to get the data you need from free sources.
I can honestly say that you will learn something from this book. I did. [quote]

[Ptw]

welcome

[Wealth Junkie]

Hi thetodd,
I'm flattered that my review of Rule #1 got you interested in the book and this forum. :)

Best of luck with your investments.
--Alex

[Wealth Junkie]

My name is Alex. I'm a week shy of 31 years old and I have been investing in stocks for about 6 years now.

I used to be a submarine Lieutenant in the US Navy. After 8 years in I got out at the end of June 2005. My wife and I started our own company and have been running our own business full-time ever since.

I originally learned about Rule #1 last year when Phil Town e-mailed me on my blog (wealthjunkie.com) and told me that his book was coming out and asked if I would be interested in previewing it and reviewing it. Phil was the first millionaire that had ever e-mailed me, and I ended up loving his book.

Prior to reading Rule #1 I had spent a lot of time reading and trying to learn the principles of value investing, including reading Warren Buffett's annual letters to shareholders and reading Benjamin Graham's works including "The Intelligent Investor".

Rule #1 investing is about finding companies that have solid fundamentals, including management, balance sheet, earnings, and growth potential, and then using advanced technical analysis tools to time when you move into and out of the stocks.

I watched a documentary on Warren Buffett last week and they asked him about his investing style. Here is an example of what he said that highlights the foundation of Rule #1:

He said he doesn't know anything about computers or the internet, but he does know something about candy bars. And he said that he knows that the Snickers Bar will probably be the #1 candy bar in 10 years, since it is the #1 selling candy bar today and has been for a number of years.

That understanding of the candy bar industry seems so simple yet it is a deeper and more profound understanding than many people have when they choose a stock to invest in. I love talking about stocks and investing but I find that many people don't really get that a stock is a piece of a company - and that each company does something. If you really want your investments to succeed, you have to invest in things that mean something to you because your understanding of what the company does and what they mean will give you an edge in the long term.

One of the things that I find strange is how so many people get wrapped up in the 15 minutes a week thing. They think that if they go through the trouble of reading the book and they can't make $1 million within 15 minutes then the whole thing is a scam. In my opinion that's BS and here's why - in the book Phil directly says that it takes time to get to the point where you can do it in 15 minutes. He says that research takes time but that once you understand what you are doing and have a short list of your Rule #1 stocks then all you have to do is check 'the tools' each week to look at the trends and indicators and determine if the time is right to move into our out of a stock.

Even if it takes you more than 15 minutes a week, this is your future you are talking about and the compound earnings potential of those few minutes here and there could be life changing for you. Most of the people that complain about this are the same people that watch way more than 15 minutes of TV commercials a day - yet how many minutes per day do they commit to increasing their own personal wealth?

I find the whole thing to be pretty ironic because the people that commit the most time to increasing their personal wealth are the people that become the wealthiest, whereas most people tend to focus on the shortcuts like stock picking services though many never achieve the wealth they desire through such means.

I love stock investing but I am by no means an expert on Rule #1 or Rule #1 analysis. That is why I am glad that Justin started these forums. I learn something new every day and I am really excited to be a part of these forums.

I signed up a while back and have done some lurking but have not participated much, though I look forward to participating more in the future.
--Alex

[hkimsey]

Are there any Rule #1 experts out there?? I downloaded the Excel spreadsheet and got it working. It has some really nice features, but I'd like to know a little more about how it comes up with sticker price valuations. Is this a discounted cash-flow calculation? I noticed it is highly geared to growth, as GOOG comes out valued much higher than it sells for now. The techincal indicators and short information are nice to see, but I'm not a trader!

Where is the best place to start and what would you recommend I read?

[jjvissi]

Thanks for responding - jjv

[hizki]

I'm new to all of this, but I finished reading " Rule # 1" and have been studying hard and searching for new ideas. Thank you all for the time and effort in providing all of us with information and help in the learning process.
Thanks