Rule 1 Summary


#1

Originally published at: https://blog.12min.com/rule-1-summary/

Rule 1 SummaryThe Simple Strategy for Successful Investing in Only 15 Minutes a Week!


Have you ever thought about investing? Have you wanted to learn the “science” behind it, but you thought you are just not right for it?

If you are reading this, you have most probably been there.

Most people think that only experts belong on the market and that not anyone can profit.

“Rule 1”, however, destroys these popular myths and instead presents you with a way to do what was once thought to be undoable: beat the market.

Keep reading our summary and learn what the only rule you should have in mind is.

Who Should Read “Rule 1”? and Why?

Let’s take a moment and be honest here.

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!

In his book “Rule 1” he gives you useful, practical and proven solutions for making a profit on the stock market.

We recommend this book to all wannabe investors and puzzled participants on the stock market. Live by Phil’s rule and start earning.

About Phil Town

Phil Town is a motivational speaker, author, and millionaire. In the past, he was part of the U.S. special forces in Vietnam, a dishwasher and a river guide. Then, he learned how to invest.

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

"Rule 1 Summary"

When it comes to investing, there are only two basic rules: Rule #1(tm): Don't lose money and Rule #2: Don't forget Rule #1(tm).

Yes, we may have oversimplified it, but in essence, you will find that those are the bases for each investment.

Rule #1™ repudiates three famous market myths:

“Rule 1” offers you another reality.

What do we mean by that?

Here it is:

  • Investing is a snap, and you can ace it by working for 15 minutes a day on your stock portfolio.
  • It is not impossible to beat the market. In fact, you can figure out how to target underpriced stocks and get at least 15% returns on your investment.
  • Forget the banalities about diversification and buy-hold methods. Instead, use the Rule #1(tm) equation: Purchase stocks for 50 cents on the dollar and sell when the stock is trading at a dollar-for-dollar value.
The Rule #1(tm) fundamental point is: Don’t lose money. Indeed, there are no guarantees for anything in life, but you can limit risk by acquiring shares in good companies which are selling at bargain prices.

To do so, you have to stay aware of the “Four Ms.”

  • Meaning
  • Management
  • Moat
  • Margin of safety
How do we explain these “Four Ms”?

Well, to start with, put your cash where your heart and mind are and invest in profitable organizations which are significant to you. If you are a “foodie”, target firms operating in the food industry, if you are a fashion addict, invest in retail clothing shares.

Next, look for publicly traded corporations which are in possession of great management teams.

Furthermore, find companies that have barriers to entry and build walls around their profits.

Finally, invest securely by purchasing discounted shares that fulfill the other three “Ms.” You cannot lose much if you make sure you purchase stocks at low costs.

However, that is not all!

Next, we give you, even more, lessons which will help you comprehend the road to being a great investor more deeply.

Key Lessons from “Rule 1”:

1. Buy Stocks With Pride 2. Find the Moat 3. Key Performance Numbers

Buy Stocks with Pride

If you are a Rule #1(tm) investor, you are not a market speculator. Instead, you are an investor who takes pride in owning great companies.

Your choices rank and endorse the companies you invest in. For instance, if you buy stocks in a firm that uses animal leather for making its products, your investment is equal to approval for that kind of production.

Hence, make sure that you align your choices with your values and ethics.

Find the Moat

Warren Buffett, one of the most famous billionaire investors, trusts in entry barriers, also called moats. An organization without a barrier to entry is equal to a stock price merely waiting to fall. High barriers to entry are hard to penetrate.

Rule #1™ investors should purchase shares in organizations with a high wall built around future profits and growth.

Mots can take up several forms. However, there are five basic types:

  1. High-profile brand names (The Coca-Cola Company, Adidas, and Disney).
  2. Trade secrets and intellectual property protection
  3. Gate-keeper products that control niche markets
  4. Expensive entrenched products where it is hard for users to swap for another brand
  5. Low-cost, category busters such as Wal-Mart, Target or Home Depot.
In case the company lacks some protective moat, maybe it is time to consider investing elsewhere.

Key Performance Numbers

You can use some specific tools and measurements to make sure that you invest in companies with financial strength and will allow you to get Rule #1(tm) returns. Such measurements are:
  • Return-On-Investment Capital (ROIC)
  • Sales
  • Earnings per Share (EPS)
  • Equity or book value
  • Free Cash Flow
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“Rule 1” Quotes

[bctt tweet="My advice: Go find a wonderful business at an attractive price and live like a king when you retire." username="getnuggetapp"]

[bctt tweet=“Rule # 1 investors buy when others are fearful and sell when others are greedy.” username=“getnuggetapp”]

[bctt tweet=“Figure out what the sticker price is and pay less.” username=“getnuggetapp”]

[bctt tweet=“Be proud of what you own.” username=“getnuggetapp”]

[bctt tweet=“Read the annual reports. Ask yourself: Is the CEO being compensated as an owner or as a mercenary.” username=“getnuggetapp”]

Our Critical Review

“Rule 1” is packed with helpful charts, understandable explanations, and useful financial insights. Phil offers a map for finding an investment treasure. Of course, like many other how-to books, “Rule 1” can get a bit repetitive from time to time, but the investment advice you will get in the end is worth going through the repetitiveness.