Rule #1

Submitted by Book Library on 14 March, 2010 - 22:27

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.

Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week! says something new, and it says it in a way that every listener can understand. By far, the most controversial of the audio book'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 stock picking techniques are meant to walk investing phoebes through the do-it-yourself process, equipping them with the tools they need to make quantum leaps toward financial security.

Positive Review of Book

This Is Not The Fluffy Goalsetting Junk That Many Business/Investing Books Are, Nor Is It An Overly Technical Piece That Only An Mba Could Understand. It Simplifies Intimidating And Confusion Material Into A Real World Easy To Follow Format.

This book is probably one of the best business/investing books I have ever read. The 15 minutes per week part may be misleading, however I will not hold that against him as the book is so good. I have ordered copies for my dad and brother. If I had only been able to read this book six years ago.

Negative Review of Book

I bought this book, Rule #1, because I wanted to learn how the author married up value concepts and technical analysis. This is possible, but why bother? if you identify value stocks, then why not hold them as Buffet does through thick and thin. The author suggests timing purchases by using MACD (8day and 17 day), Stochastic (14 day) and a 10 day moving average- this -imho-and I have looked at this on quite a number of charts- is ridiculous. you are using short term timers with long term fundamentals. In an up trending market you will be fine, and yes, you will be out in a down trending market, but in a sideways market (possibly 70% of the time) you will be savagely whipsawed, with severe loss of capital, and the fact that you are in value stocks is likely to make not the slightest difference.

The book lacks any credible back testing, and I therefore wouldn't risk my money on this approach. If the author made his money in the last bull run, I suggest he is making the biggest mistake of all - confusing the tide which lifts all boats with his own approach. Its a good read on the fundamentals, but I would steer very clear of this confused approach to investment. I would tend to use a longer timer say 50 day and 150 day to get in and out.

Author Biography

Phil Town was working as a Colorado River rafting guide when one day his life changed forever. After saving a group from a whitewater disaster, Phil was rewarded by his client with a crash course on investing, based on Warren Buffett's investing principles. Today, Phil believes that educating others about those same financial principles has the potential to make a significant difference in the lives of others. A sought-after speaker and author, Phil has written two books about personal investing: Rule #1, a #1 New York Times bestseller, and his newly released Payback Time.

Table of Contents

  1. Chapter 1: The Myths of Investing
  2. Chapter 2: Rule #1 and the Four Ms
  3. Chapter 3: Buy a Business, Not a Stock
  4. Chapter 4: Identify a Moat
  5. Chapter 5: The Big Five Numbers
  6. Chapter 6: Calculate the Big Five
  7. Chapter 7: Bet on the Jockey
  8. Chapter 8: Demand a Margin of Safety
  9. Chapter 9: Calculate the Sticker Price
  10. Chapter 10: Know the Right Time to Sell
  11. Chapter 11: Grab the Stick
  12. Chapter 12: The Three Tools
  13. Chapter 13: Take Baby Steps
  14. Chapter 14: Eliminate the Barriers
  15. Chapter 15: Prepare for Your First Rule #1 Purchase
  16. Chapter 16: Q&A

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