Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week!

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Editorial Reviews:

Product Description
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.

By far, the most controversial of the audiobook'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 stockpicking techniques are meant to walk investing phobes through the do-it-yourself process, equipping them with the tools they need to make quantum leaps toward financial security.

Rule #1 says something new, and it says it in a way that every listener can understand.

From the Compact Disc edition.

Customer Reviews: Read 150 more reviews...

5 out of 5 stars

Helpful March 27, 2006
265 out of 280 found this review helpful

I ordered this book sight unseen from Amazon because of the advanced reviews. If I had seen it first, I *might* not have bought it. But I'm still glad I have it anway.

What I really like about this book is that it explains key financial figures for calculating the future worth of a company and for deciding what a good price would be to pay for the company today (in terms of the paid stock price.) This aspect of the book is invaluable and is easily worth the cost of the book.

What I don't like about the book is the presumption that you can just sit down, at any given time, and with a little research, quickly find a company that's on fire sale and that will safely reap 15% a year or more, for many years out. It takes special circumstances to find companies in such positions. One of the author's inspirations, Warren Buffet, has not found many such opportunities for years now, which is why he is sitting on 46Billion in cash. He can't find anything to buy that's cheap enough and that would meet the author's criteria!

So the author is disingenuous in suggesting that you, after reading the book, and putting in a few minutes a week looking at web sites, can discover a gem that the greats like Buffet haven't been able to find. Bargains like this don't come along everyday. But they do come along over time.

And that's why I ended up really liking this book. The author's instructions on how to find such gems thrown into the trash by the market, when such situations occur, is the clearest, best, and simplest description I've come across (and I have no less that 3 sagging shelves of investment books.) I'm going to use the information the author gave so that, when the market tanks, say, I can pick up some of the great companies he describes and KNOW, because of his formulas, that I'm buying a jewel at a bargain basement price. I'd been looking for that information for some time, thus, in the final analysis, I really do value this book.

3 out of 5 stars

Heavy Hype March 25, 2006
136 out of 168 found this review helpful

This book does contain some good basic information on finding stocks. The problem I have with these type of books is when the author throws statements about how he use to make only $4,000.00 a year as a river guide,then he was taught how to invest... I borrowed $1,000, and five years later I was a millionaire. He does not tell you how that $1,000 made him a millionaire. I guess he wants you to believe "Rule #1" made him the millionaire, by the way, Rule #1 is - don't lose money.The author strives for at least a 16.0% return on your investment, but on page 18 he shows a bar chart showing what $10,000 invested from 1965-2005 would return if you used Buffett's Rule #1 Average return 23.3% as opposed to the S&P(9%) or DJIA(8%). Theres no back testing or other data to confirm this simple looking chart. On the back flap of the book it states the author addresses half a million people a year at the nation's largest touring success seminars. If only he comes out with a second book telling how that $1000 was turned into a million dollars...

5 out of 5 stars

Rule#1 Rules! September 8, 2006
65 out of 67 found this review helpful

Overall this is the best investment guide I've found yet. Rule #1 is "Don't lose money." Fair enough; no one wants to lose $$. But how? The author answers that question. First, buy wonderful companies. For Town, that means companies with strong and consistent growth: 10% minimum average annual growth for EPS, free cash flow, sales, and book value for the last 10 years. Efficient, well-managed companies, with great return (10% or higher) on invested capital. Once you've found that company, determine the fair value, and buy it ONLY when it's at a 50% discount, thus giving you a "margin of safety" against the vagaries of the "Mr. Market."

He makes it sound easy, but it's not. He admits that it can take 4-8 hours of research on each company to determine if it's "wonderful" or not. And even after you've done a preliminary search with a stock screening tool, you might have to research dozens of companies to find one that's wonderful AND trading at a 50% discount.

One great feature of this book is that Town provides a fairly simple method for determining the fair stock price of a company. This is a notoriously difficult problem, but Town's method is quite good. The problem is that you have to determine the expected growth rate of the company and the future PE ratio. He provides methods for doing so, but the process is necessarily quite speculative. But if you're going to invest in stocks (as opposed to mutual funds), this difficulty is unavoidable. At least his method is fairly rigorous and scientific. There is little guess-work. Town recommmends buying only when the price is at least 50% below the "fair value price."

Once you've chosen a "wonderful" company and sunk your life savings into it, Town outlines a trading strategy designed to avoid losing your money (rule #1). His trading method relies on 3 technical analysis indicators, MACD, Moving Average, and Stochastic. These indicators are easily available at many free stock charting sites. Basically, you trade out when the trend is going down, and trade back in when it's going up. It's therefore a form of market timing, which is very controversial and tricky. The advantage is that you will avoid the big market meltdowns like 2000-2002. Even if you don't know anything about technical analysis, his method is easy to follow. On the other hand, if you don't feel comfortable market timing, you can buy and hold, and still presumably do well if you've chosen your stock according to Town's guidelines.

According to Town, anyone who follows his method is guaranteed to get 15% minimum annual return in any market conditions, thus doubling your money every five years. Unfortunately, there are no "sure-fire" methods for getting that kind of return, especially in a bear market. But in any case, he still provides a detailed, coherent, and understandable method for finding great companies to invest in and avoiding losses.

1 out of 5 stars

Buyer Beware April 18, 2006
43 out of 71 found this review helpful

If it sounds too good to be true, it probably is! Let me first say that I have no personal or financial stake in this or any competing book. I just don't like the idea of well-meaning people getting hurt by bad ideas. Probably one of the most dangerous ideas in Phil Town's book is that concepts like asset management don't matter. In fact, asset management matters a great deal. In fact, as Peter Bernstein shows in his excellent The Four Pillars of Investing and David Swensen shows in Unconventional Success, 90% of the returns an investor receives are derived from asset allocation. That leaves only 10% to specific security selection or market timing.

The other very troubling thing for me about this book is the idea of investing in a handful of companies. As Warren Buffet suggests, buying a stock is like buying partial ownership of a company. Unless you have the time to constantly track that company, know the industry inside and out, and stay on top of it, the average investor should not buy individual stocks. No less an authority than the Oracle of Omaha himself suggests that the individual investor in most cases would be better off investing in a low cost index mutual fund that tracks the market. An even better strategy is to allocate your investments across a range of low cost passively managed mutual funds that give you exposure to U.S. and international small, medium, and large companies (by market capitalization) as well as real estate and bonds. Bernstein and Swensen can show you how to do this. If you want more proof of the foolhardiness of investing in individual stocks or actively managed funds, check out Burton Malkiel's excellent A Random Walk Down Wall Street.

5 out of 5 stars

Valuable Approach March 27, 2006
38 out of 47 found this review helpful

The substance of this book is solid--it is basically a value investing approach, which means that the ultimate worth of a stock or a company is determined by its return on investment, which the book teaches you how to calculate. It tells investors to ask this basic question: if I invest a dollar today, how much can I expect to get back in the future, and how does this compare with other stocks or investments I could make with this dollar? This isn't the most complex idea in the world, but it's the basis of the fortunes that Warren Buffett and other successful investors have embraced. The key is to do it as well or better than others. As the book points out, the future is hard to predict, with the right tools you can at least make reasonable guesses and do quite well. The book explains how to use these tools in down to earth, common sense language,

A quibble with the book, as a few other reviewers have pointed out, is that it seems at times to want to cloak the sound investing principles it puts forward in "magical thinking"--as if saying "I want to become a billionaire" enough times before you go to bed every night will make it come true. Well, unfortunately, most of us have figured out it just doesn't work that way.

That said, if you follow the sound principles and financial calculators explained in the book, you should have an excellent chance of doing as well as you need to, and with a little luck, maybe doing a whole lot better.

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