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Rule 1 investing summary of books

rule 1 investing summary of books

Investing isn't just for experts. Really, anyone can become a savvy investor without even studying finance. Rule #1 teaches you all the specific qualities. Rule 1 Summary: The Simple Strategy by Phil Town is a perfect guidebook for people who struggle to find time in their busy schedule. Rule #1 Investing is about. BETTING DIFFERENCE BETWEEN CAUCUS

His advice neither mumbo-jumbo, nor particularly new. Look for moats around the businesses you invest in. Ready to invest yourself to wealth? If you want to save this summary for later, download the free PDF and read it whenever you want. But he sure acts as if he did. Your investment into a business is a vote for that business to continue its practice as it operates today.

So before you invest, ask yourself this: Would you buy the whole business, if you could? What this question does is force you to be a lot more cautious, make better decisions and do your homework. Lesson 2: Try to spot what moats a company has built around itself. Warren Buffett famously explained his idea of economic moats around companies in a talk once. Heck, shoeless jungle kids somewhere deep in the Amazon Rainforest will turn up wearing Coca Cola shirts — a kind of presence that sure makes for a wide moat.

You want: A company that means something to you you know its inner workings because you're passionate about it. A company that has a wide moat, or protective buffer whether this is a competitive advantage, a huge cash reserve, or an exclusive license.

A company with excellent management. A company with a margin of safety that is, a company priced so low that even if you miscalculate its target price, you're not going to lose money. Using Town's method, an investor creates a watch list of companies that meet each of these four criteria. Each company's financials are checked against five measures of fiscal health return on investment, revenue growth rate, earnings-per-share growth rate, equity growth rate, and free-cash-flow growth rate over periods of one, five, and ten years.

If a company's numbers look good, the investor develops a target price for it. And then the waiting begins. Sort of. Ideally, says Town, you would hold a company's stock forever. In reality, he argues that there are a couple of times to sell: When a company has ceased to be wonderful. When the market price is above the sticker price. It is here that the Rule 1 system begins to resemble day trading. When you've found your ideal business, and when it passes the Rule 1 criteria and is selling at half-off the sticker price, you begin buying and selling the stock based on market conditions.

You use a set of tools to make your decisions, constantly moving in and out of the stock. You're committed to the stock for the long haul, it's true, but you're attempting to use market timing to maximize your returns. Town stresses that these tools should not be used to find and value stocks, but only to time the re-purchase or sale of a stock to which you're already committed.

The author, though, is clear that more time is needed to make this work. He admits that constructing a watch list takes several hours per company. It's only after the watch list is created that the time investment declines. I can't recommend this book, but that's because it's beyond my ken. I don't hate it. In fact, I find the ideas fascinating, even plausible, but I lack both the experience and the expertise to evaluate Town's system.

It seems to be made of equal parts sound advice and gimmicks. I'd love to read a review from somebody more firmly rooted in investment theory. One saving grace — and it's a big one — is that the system includes a built-in escape hatch. It's unlikely that they could fall further. But not impossible. For more information on Rule 1 , check the following web sites: Rule One Investor is the book's official site.

It includes additional information, including handy calculators.

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Rule #1: The Simple Strategy for Successful Investing (Phil Town) - Book Summary

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Reinvest the dividends from stocks and income from bonds — and enjoy the miracle of compounding over your lifetime! RULE 4: Invest with diversification and balance. For balance, invest across at least two of three major asset classes. Use mutual funds for balance and diversification. For example, you could invest your funds into an all-stock and all-bond index fund at Vanguard to ensure a diversified portfolio. RULE 5: Control your costs.

Choose no-load funds that have low expense ratios. For example, at Vanguard, the best index funds have expense ratios as low as 0. RULE 6: Manage risk so that you can sleep at night and not get stressed in volatile markets. Consider the levels of risk. For example, small companies with no net income but rapidly growing revenue are considered higher risk investments than for example, Coca Cola which has more of an established history of positive net income and growing dividends.

However, these smaller, fast-growing companies can also potentially provide you with the most growth because eventually, the small company will be profitable and could grow into a large company. On the other hand, Treasury bonds are considered low risk because the United States government can almost guarantee your money. Set up a sensible portfolio and stick with it through thick and thin, holding onto these investments for years or longer, allowing them to compound year over year as the interest, growth, and dividends continue to get reinvested and grow.

RULE 8: Avoid fads and once-in-a-lifetime opportunities. Instead, remain diversified and stick to your game plan. RULE 9: Tune out distractions, including the constant news updates on television that scream to buy one industry and avoid another and then say the complete opposite one day later. RULE Maintain a long-term perspective because there will be good times and challenging times.

When times are good, be grateful, not greedy. Keep reading our summary and learn what the only rule you should have in mind is. You read the business section of the daily newspaper, you get the bulletins from Wallstreet, and you wish you knew how to invest. However, a big part of you thinks that investing is a gamble, and you would much rather find a low —risk solution for your earnings. You may have had those thoughts until know, but Phil Town will change them all!

We recommend this book to all wannabe investors and puzzled participants on the stock market. About Phil Town Phil Town is a motivational speaker, author, and millionaire. In the past, he was part of the U. Then, he learned how to invest.

And, you know how they say — the rest is history.

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