So how did Phil do it?

[ApexAZ]

Starting with $1,000 of borrowed money and a yearly salary of only $4,000 (who knows what that would be worth today? Maybe 10k a year?) how exactly did Phil manage to become a multi-millionare?

I believe that Rule #1 is a good way to grow your money, but I don't believe he got rich just from Rule #1, so how did he do it?

Perhaps he made a few investments that exploded and got lucky? He mentioned he had a lot of real estate at one point, perhaps this added to his residual income?

I think Rule #1 is an outstanding method of trading on the stock market, however, I don't see how people can become millionares as Phil did by only following that method. There has to be other, faster ways to accumulate wealth. Yes, we can grow our money to a million and more, but to have 10 million plus seems unlikely with just rule #1 investing. Lets also not forget that Phil also claims he made his first million in his first 5 years let alone an entire lifetime of compounded interest.

Thoughts?

[pam32570]

I read somewhere about this, hmmmm..... I know he said in the book that he made that first mil using Rule #1. I remember reading somewhere that he got lucky too, with one or two companies that just exploded (I may have read this on the blog). So it can be done, but its not likely.

Sorry I can't be more specific!

I think he uses that luck as a selling point for his book, and it sets unreasonable expectations.

[Justin]

I dont' really know how he made all those millions of dollars either. But to be honest I dont spend a whole lot of time worrying about it. I'm not going to try to compare my results with results of those who have been doing this for years and years, that also have a bit of a "luck factor" that I may never have.

But one thing I am confident in however, is that Rule #1 its investing with a degree of logic that other investment strategies seem to lack. It just makes sense for this to work on at least some level. I dont have to be the best investor to ever roam the earth, but I do want to be pretty darn good at it. To me, this seems like it best outlines the way to put logic to use. This IS going to work. To me, there is no question that this is how investing should be done and thats why I'm sold on the process.

[ApexAZ]

I agree that it seems like a logical, no-nonsense approach to investing.

I'm just curious how he made 1 million in only 5 years.

[steve44]

I would have to agree with Justin. I don't spend to much time wondering how Phil did it.

But a few times, Over the last 2 years I have wondered.

How did Phil really make that much money that quick ?

Since I live around LA, I have had the chance to go and hear him speak live a few times. What a great speaker ! I have really never seen such a good salesman. It is good to witness someone so good at their craft.

And I like the way Phil has distilled the Graham / Buffet concepts.

I also subscribe to the Investools web site so that really helps reduce research time.

Although I am not spending 15 minutes a day on this stuff. More like 3+ hours a day as I try to get this thing off the ground so I can quit my day job !!

But I also wonder sometimes about who really is Phil just because I think he is such a neat guy. I would like to read his biography and get the whole story !! Maybe we will see that book in a few years :-)

Thanks , Steve

[vk1]

I do agree with Justin in that Rule #1 investing has a degree of logic to it. The research and calculations just seem to make sense to me. With Phil’s approach I know exactly what the business is worth before buying it. I want to know everything about that business before buying with my hard-earned money.

[jimbob4334]

I have been studying investing for about 8 years now and after trying a few things that made me money and a few that lost me money I came to realize that the best way was to have a combination of value investing along with some technical analysis. I was spending most of my time as of late studying technical investing and found a good set of tools that seemed to work pretty well. But I did not know how to measure the value of a company so I was missing that part of the equation. Then I read something about Phil's book and realized he had what I was missing.

I believe by mixing the two you increase your chance of success dramatically. I also have come to realize I am my own greatest enemy. I can tell someone else when to buy and sell, but when it is my own money it is a whole different game.

I have been following Phil's rules about 6 months and have made over 20%, I have lost over half of that by not following the rule and investing on speculation.

In terms of Phil making all that money. I believe you could have done it a few years ago when the market was taking off. I was in the market at that time and thought I was a genius. It was difficult to lose money. But the minute the market started to turn, I was losing it real fast because I could not tell when to sell. I think we will see those times again, but I believe due to the large number of people retiring after 2008, we will not see that for a while. Then again there have been some new laws enacted that may help to keep this run going.

Justin, thanks for keeping this board going. It is a great tool that helps me stay grounded and make less mistakes.

Jim

[Danklsr]

I'm not totally sure what he did, but if I can make anything on the little I have to start with, I will be happy. I have been logged on and doing a lot of reading with this site. You guys with these calculatrs really helped to encourage me that it may be possible not to have to lose money in the market, as many unfortunate people tell me will probably happen. I think I'm about to take a jump and buy something soon to start. Your homework section has helped. Thankyou again, and hopefully in the near future I may actually have some positive experience to share...

[npg]

I've been in that market and I remember some of my stocks climbing 30% a day!!!

It was sheer madness. Complete mass hysteria.

Phil made the dosh like most ppl did. However, the big difference being that he kept most of his gains (ie bailing out when the tools tell you).

Arguably, you can make more if you follow different exit strategies or, trade on the 200 day MA for eg. But that's with hindsight. And with hindsight you know what has happened and it's easy to perfectly trade. However, when stocks begin to go south you wonder where it stops, when it stops etc...

Thus I reverted back to the 10 day MA as exit signal. I rather give up a few % in gains than have it all slashed (like it happened to me 6 years ago).

Bail on the tools or whatever signal you have. Preserve your capital.

Rule#1: don't lose money
Rule#2: don't forget Rule#1

wisdom indeed.

PS: back then i turned 40,000 points into 120,000 points in a matter of 6 months. I can well believe Phil managed to ride that one pretty good --astonishing himself. You gotta be in a market going completely apeshit to do these sort of returns. Phil, and even Warren, were in markets where --armed with the right tools-- they could severly cream it off.

[dirkuys]

Hi all! I was wondering as well how Phil turned $1000 into $1-mil in 5 years, but like the others I don't worry too much on the how HE did it, I decided to focus on how I SHOULD try doing that.

One question I have here: Let's say Mr Novice starts with $1000 and he buys one great company. He gets in and out of that company as the tools tell him to do. Should he maybe add cash to his portfolio and use that to buy more stocks of the same company? Or does the $1,000 simply just grow by itself?