anyone read Rule #1 by Phil Town?

[yupyup]

Has anyone read Rule #1 by Phil Town. Not sure if I should waste much more time reading it. He's pretty much shot down what I have done to date: Diversification, Dollar Cost Averaging and Mutual funds.

Any one read it?

Any one found it useful in the valuation of companies?

I suppose I'll finish it up and let you all know if its worth a read for the beginners (that being me).

-yupyup

[Jelly]

I, for one, would appreciate that. For individual stocks, I try to put out the basics, for follow up by those who might be interested (and without recommending them).

A summation of good text saves a ton of time however, considering the "over the top" amount of information, much of it spam.

In fact: Quick facts about the Livermore method, I just read.

1) Cut you losses quick and let the winners run.
2) Bull or Bear, follow the trend. It's hard to buck.
3) Pyramid up during the first moves, if you want. (Cramer said to double going down if you like the stock, to average the price. Don't know about that!. Of course, attachment should not be a part of trading).
4) Go to bed early, get up early and start your day analyzing the world trends and news. I get up at 4am Pacific, actually.
5) Allow few or no interruptions during your productive hours.
6) Trade for yourself. Do NOT take tips.

For me, change of direction is extremely hard to anticipate with world markets and the fact that big players can whipsaw sentiment.

[Firecracker]

I haven't read it but an article on Motley Fool says :

For new investors who want a simple approach for mimicking legendary investors Benjamin Graham and Warren Buffett, Phil Town's Rule #1 is a good start. However, the big flaw is that the author makes investing look too simple -- implying that somehow, by working 15 minutes per week, you too can build your own miniature Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) fortune.

side note: Post this in take a break from trading talk section

-FC

[atanas]

Rule 1: Never loose money
Rule 2: When in doubt ... look rule 1...


Capital preservation.... your first priority... the upside will take care of itself

[jrstafford1]

How can you never lose money trading stocks? I mean, you can't always know a stock will go up after you buy it, right?

I use those 2 rules in my business but I typically have more control over those transactions than I do a stock price.

Am I missing something?

Happy New Year!

[yupyup]

I'm getting farther in to the book and ready to try out Rule #1 investing. I had to get past the Margin of Safety chapter to figure out how to actually value a company. I'll give it a shot on a few companies and see what I come up with.

[yupyup]

First company I ran through Rule #1 was SRZ, Sunrise Senior Living. Turns out the company is on sale but not within the margin of safety that the book would require in buying a company. Assuming I did all the math right (thats probably a stretch) the company is worth 34.74 per share, while currently trading at 26.30.

[ShawnRyder]

yupyup - just wondering how you found the book? I know it has been a few months since the post, but checked and SRZ is now at 22.22.