Rule #1: The Simple Strategy for Successful Investing i… (2024)

I SO want to give this only four stars for starting the sequence of events that put me into podcasting about investing, writing our own book together, and generally making me learn this investing stuff -
but I won't, because it absolutely deserves five. Rule #1 is the classic and I go back to it over and over. To my surprise, this method of investing works even for non-numbery people like me, and I send my respects to my dad and the tradition of value investing masters (and I think our new iteration is even better). Invested: How Warren Buffett and Charlie Munger Taught Me to Master My Mind, My Emotions, and My Money Thanks Dad xx

I own both the hardback and peperback of this one. The paperback is the best of the two to buy because it has an extra chapter in the back of it full of great advice on 401k's.

Warren Buffett had two rules, Rule #1 is not to lose money, and Rule #2 is to remember Fight Club. Buffett was a student of Ben Graham's where he learned how to value a business on a purely quantitative level. Buffett later became also quite influenced by Phil Fisher, who was the grandfather of qualitative analysis. Graham and Fisher were polar opposites in their investing style: Graham knew all the valuations and numbers for the businesses he owned, but sometimes didn't even know the name of the busniness! And Fisher could have cared less if the business was overvalued..just so long as it had a great product and great managment and a solid moat. Buffett obviously took an approach that balanced the two extremes which proved very successful for him. What Town does is basically explain what a Rule #1 busnines has got to have which is Meaning (you have to understand the business like it was your own) a Moat (competition can't invade your investment and take all your money away on their horses) great Managment (think Steve Jobs or the Google guys) and Margin of Safety (like Buffett you want to buy a business for 50 percent off what it's trading at) As for the last one--margin of safety--Town explains in detail Buffett's method--which isn't written about in many places--how to value a business based on future earnings, rather than on p/e ratio--which is graham's method. This way, you get the odds in your favor that the business you are holding is going to beat earnings over and over again, and go up and up to it's real value (just as long as you bought it at a significant discount)

The last part of the book is Town explaining certain trading tools---the MACD, the Stocastics, and the moving average. No matter how great a stock, Town says, if the big guys are selling it, it could tank.

Trading a great company is definately something that makes Town's approach unique. Buffett never did this, but then again, Buffett is the biggest big guy--it;'s too hard for him to get in and out of a company to actively trade it--so it makes sense that he's been mostly a "buy and hold" guy. Town's approach makes definate sense in the internet age because one can, A) get the tools to track the stocks and see if the big fund managers are buying or selling and B) you can buy or sell within 10 seconds. It takes fund managers weeks or even months to get in or out of a particular stock. Why not profit from that?

ALl in all--very readable, very informative, wonderful approach. By far and away the best investment philosophy and the first book somebody should read on investing. Now go and play.

Okay, so you've heard about these things called "stocks" and you know that the way to make money long-term is to invest in them, but you don't want to be a casino gambler. So how do you learn how to invest intelligently?

If you're like me, you invest in an index-tracking mutual fund and call it a day, but when I read this book a few years ago, I was all fired up to start tracking individual stocks with spreadsheets and pouring over company 10Cs and P/E ratios, and even signed up on Phil Town's website.

Problem is, that's actually a lot of work. You have to be pretty dedicated. Or else you turn into an idiot day-trader.

So, I've been meaning to look at it again and maybe dabble a bit, with "pretend" money at first. Of course the reality is that we have no idea if historical trends mean anything in terms of what the stock market will do in the future. So committing yourself to stock investing in the first place means committing yourself to the idea that stocks will continue to be more or less profitable in the long term no matter what sort of financial turmoil afflicts us.

I found this book to be fairly balanced and based on sound financial principles, if a little too formula-driven, mainly because it's trying to "simplify" investing for people who aren't stock market experts, which is potentially dangerous. Remember you should be looking at the long term, not trying to make a quick profit.

On the plus side, most people investing in stocks are stupid so it doesn't take much to do better than them.

On the negative side, if everyone followed the advice in this book, nobody would "win." So you're basically relying on being less stupid than the majority.

So if you're going to play the stock market, read a few books like this first.

Alternatively, start hoarding gold and bullets under your mattress.

TL;DR: It's a good book if you don't take Phil's advice into how to start a portfolio and don't try to "time the market", focus on "time *in* the market" :)

The core concepts of Phil's investment strategy is sound, although a bit cheesy: Don't loose money.
Phil expect to do this by getting into companies which value will quadruple in 10 years on average (~15% compound annual growth rate) while also buying them when they are cheaper (or in Phil's words, buy a dollar bill for 50 cents). In the end, the goal is to even if your company don't growth with the perfect case you had in mind, you built enough margin of safety to be ok with it.

The way he find those companies is also reasonable, from getting a company that has meaning for you, to looking at a few (5) statistics from them - to either gauge if they are solid and if they can keep growing as expected - to finally doing a bit of research on their CEO to have a sense if it's someone you can trust or not. (As you can see, there is more here than what you can pack into 15 minutes a week, but I hope this don't turns anyone down from the book.)

I also really appreciate when Phil's goes on to explain why an individual private investor can actually get better results than professional fund managers. I think all of the reasoning here is pretty good.

Now, for the not so good parts there is two main ones that really bothered me:
1) Phil's advocate to time the market. Not only when to enter, as you are looking for a good price (and you can see how much Phil is passionate about *not* believing in the Efficient Market Theory, which I think it's fair to have opinions on theories) but also by moving in and out of your positions based on a few (3) technical indicators.

The second part bothers me, and everyone should be aware that "time *in* the market" beats by miles "time the market" by now. Unless your goal is to become a trader instead of an investor.

A last remark here is that it's highly dependent on the taxation regime of where you're investing, so take this with a huge bag of salt. For example in UK, one would need to pay 0.5% everytime they want to re-enter the position, not counting the capital gains realised of exiting them... which could kill any profit observed.

2) Phil really don't believe in diversification. For him, you use this super Rule-1 technique, find one good company and put all your money there (unless you have a lot of money). Sigh... this hurts.

What makes it worse is the example of a couple that wanted to retire in 20 years and realised they don't have enough money (their pot was something like 20k USD). And then Phil's advice was to put all 20k on a single good company (Cheesecake Factory) as the couple used his technique, it passed the checklists, the indicators, etc.

Now, imagine if for some crazy reason this particular company goes broke or something horrible happens (black swan events). This couple, will go from 20k to 0k. Really undermining their chances of building this up for their retirement.

I just cannot agree with this. I would prefer that they invest in 5 companies, maybe with a bit lower expected annual return rate (10% instead of 15%), that still passes all the Rule-1 checks, then putting everything like this into a single company.

Αυτό το βιβλίο προσφέρει 4 βασικούς κανόνες που πρέπει να ακολουθήσει ένας επενδυτής πριν επενδύσει σε μια μετοχή: 1 να ξέρει τον τομέα που δραστηριοποίηται η εταιρεία , 2 να είναι γενικά μια αξιόπιστη εταιρία με μακροπρόθεσμα συγκριτικά πλεονεκτήματά, 3 να ελέγξει αν το ΔΣ είναι αξιόπιστο και 4 να βρει την ευκαιρία να την αγοράσει όταν η τιμή της είναι πολύ χαμηλή.
Αυτές οι, πολύ χρήσιμες κατά τα άλλα, συμβουλές, μαζί με της επεξηγήσεις τους, θα μπορούσαν μάλιστα να αναπτυχθούν σε ένα βιβλίο το πολύ 70 σελίδων. Από την άλλη, είναι ένα πολύ καλό βιβλίο για να ξεκινήσει κάποιος που θέλει να μπει στον κόσμο των χρηματαγορών.

I’d call this a blue collar investment guide. It is aimed at people early in their stock investing, ones that haven’t spent a lot of time and effort investigating and managing their investments. Given the author’s stories, he’s looking for those that threw some money at a stock or fund without much thought and got burned. The author even positions himself as “one of the guys”, repeating stories about his being a river tour guide and not mentioning more than in passing his career in hedge funds. The advice itself is typical of an investment guide from the 80s, think “One Up on Wall Street” with a bit more math. This runs counter to much of the recent and common investment practice of focusing on matching the market through buying market-spanning funds or ETFs. Instead of that tact, “Rule #1” suggests researching individual stocks. The author includes some basic fundamental company and stock price analysis, mixed with a dollop of subjectiveness based on a person’s familiarity with the stock or industry. The author then suggests market timing using simple technical analysis, buying and selling stocks on a regular basis.

A couple of things I didn’t like about this book. First, in the 9 disk CD audio version of this book, the author spends the entire first disc “teasing” the suggestions he gets around to making afterwards. This can be entirely skipped without missing anything of value. Second, like many books that suggest a process, this starts off very easy – Rule #1 is the only rule. But then you find additional steps are involved, then you find each step consists of more steps. It is a very involved process. And during the teasing part of the book, the author states it’s only 15 minutes a week to make all this money. Only near the end of the book does the author start to mention the hours of research that precede the period where you spend 15 minutes a week. And while there are plenty of opportunities to prove through data analysis that the process being suggested actually works, the author totally avoids providing proof of his partially objective process. After reading this and understanding the process being presented, I find that the way the story is told feels more like it is being told by a salesman, not quite telling the whole truth while ingratiating himself with his audience, than by an advisor just setting out the story. I tend to avoid books with this voice, and I tend to discount what they are (over) selling.

I am a bit of an old school investor. I feel there could be ways to invest in individual stocks and beat the market at times. So I’m primed for the story in this book. But I don’t appreciate the salesman tone, and I feel the lack of data shows the author cannot prove his process works. Some non-anecdotal proof would go miles to give this some worth. Nice for a step back to the 80s, though. We’ve come a long way as investors, true, but I have a hankering now to visit the library and read Value Line updates.

My first investment related book. the way author has explained the concepts is very good (especially considering that am a novice). i really liked the book very much. having said that am not sure how well i can use it in my country because am finding it bit difficult to get info and yahoo/msn are very good for US companies. nonetheless am still hitting the bush, not sure when i will be finding one :).
I WOULD SAY GREAT BOOK FOR FIRST TIME INVESTOR :))

A priceless book about managing your own investments. Every time I had a question regarding the teaching, Phil would answer it in the next paragraph. Quit making fund managers rich and quit losing money!

* Breaks down (in a simplified way) how Warren Buffett and other deep value investors go about valuing companies
* Highly informative and valuable, especially the focus of the 4M’s as it already embedds the idea of using a checklist which many great investors swear by

Full of cherry picking and bad examples. I turned the book off when the author said equity was the key measure of a company.

Certainly one of the best books I ever read on investing. I wish I read this before I started to try investing on my own.

This is an excellent book for all small investors. Town is a value investor influenced by Ben Graham, Warren Buffett, Phil Fisher, and a few others. My partner and I use much of his stuff but we combine Graham with Rule #1 investing. We especially like Town's ideas about using the three tools and finding a good value stock that has grown 10+ percent in five different categories over ten years. We tend to find the value of stock not from Town's idea on the issue, but Graham's ideas. We also use a few other of Graham's tools to go with what Town has to offer, and Town has a lot to offer. I would say we use most of Town's methods and all of Graham's methods. I should point out that when you combine the two, you are still a Number #1 investor.

If I had a choice to go with only one or the other, I would go with Town because his book is far more readable than Graham's The Intelligent Investor. In addition, Graham deals with additional investing ideas like bonds, and his book while worthwhile reading is kind of boring.

Nice rules to arrive at value but most of the other are just rhetorics

This was an excellent book in every regard. Not only does Phil Town cover essential metrics and values which benefit value investors, he writes in a way that is highly accessible. Whether you have no knowledge on investing whatsoever, or you have extensive knowledge on investing, this book can teach the reader interesting and effective concepts of investing. I would recommend this book to anyone who would like to have a comfortable retirement.

Learn an investment strategy based on looking at the market indicators and getting in and out accordingly, easy to understand and not that hard to follow.

If you're future facing and value logic over emotional impulses, this book is all you need for smart investing.

I better be filthy rich in a few years or i'm coming back and changing my rating to 1 star.

The most influential book on investment strategies that I have ever read. Combines the time tested and proven strategy of value investing that have made Benjamin Graham and Warren Buffett millions--make that billions. It has a very easy to understand system to follow in order to find solid investments and makes a nice compliment to other way people utilize to find their next investment. It doesnt hurt that he is a good writer that keeps your attention--oh and did I mention he started investing late in his life and when he was a river guide and is now very successful using the strategy he talks about.

I love personal Finance, so this book kept me glued due to the interesting topic. I feel that it could have been more concise, instead of 313 pages, it could have been done under 200 pages.
The key message is simple, it makes you think like a business owner before you invest rather than an investor.
I would suggest this to be a starting point for someone who is looking for Value Investment and Fundamental approach like the Buffet. I like how the author has also spend some time on Technical analysis and combining it with the Fundamentals.
A good read, but not the only read to be influenced with and Jumping right into investing.

This was a great book that quantitatively showed one how to choose stocks that are significantly underpriced in the market. I likely would have rated the book lower if accessing the necessary data was more difficult, but Town has a website that makes it easy to determine what a stock's return on investment capital, sales growth rate, EPS growth rate, etc are. He has been heavily influenced by Buffett (and why not!) who is acknowledged (and widely known) to have been heavily influenced by Graham. This is for anyone wanting to "invest" long term (not speculate short term) in companies that have a 10+ proven track record of providing excellent returns under excellent management.

If I could only remember one book on share investing from all that I've read I would choose this one. Rule #1 is REALLY one rule with a few effective systems built around it. Phil Town doesn't waste time waffling until the end of the book, the rule is pretty much on the first page of the book. You only need basic maths to follow it up. A valuable lesson for investors at any point in their lives or investing journey. I might just read it again. A must-read book that gives all stock market investors a must-use rule.

I would have liked more guidance on the "how." Recognize that the "15 minutes a week" isn't actually feasible, but I was more impressed that the entire system is really rational and makes sense to me. Stocks seem huge and impossible to understand. But having a set box to work within seems like a good way to go.

Good approach to investing using both value and technical tools. Determining value is easier than other approaches I've seen. Technical tools used are good. I would recommend to investors. Only part I didn't like was the early sell based on getting rich without working hard. Once you get to the approach the book is good and easy to understand.

I wish I followed the plan in this book, years ago it told me to buy Samuel Adams, I didn't, and now they are all over the place, never even tried to see how much I could have made. The system works, I fine tuned it with another system, and it verified what this book said. I'm sure it's not fail safe but I would like to give it a try again.

I would consider this a "theory" book of investing, as you have to believe his concepts and ideas. But there are some solid concepts and ideas in there, though I doubt it can realistically be accomplished in 15 minutes a week as Town suggests. I'll keep the book as a reference for a while, but continue to do research on stock investing strategies.

i think in general its a good book, gives you some good ideas of how to analyze a company's financial situation. The title is a lie, of course and the technique, at least in Brazil, is impossible to be applied.

it's very helpful for beginners with case studies and examples.

De los mejores libros que he leido con el tema de inversiones.
Desearia habermelo topado hace años, pero a sacarle lumbre!

Rule #1 is really interesting investment guide. I used the method from this book when purchasing my first stocks and was fairly successful.

Eines der Bücher was man sich gut und gerne sparen kann. Es gibt kein richtiges Learning, außer das ein Autor ein Buch publiziert hat. Schade!