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

The Simple Strategy for
Successful Investing in Only
15 Minutes a Week!

Phil Town

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Epub ISBN 9781409060048

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Published by Random House Business Books 2007
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Copyright Philip B. Town 2006

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First published in the United States in 2006 by Crown Publishers

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To Alaina and Danielle
Without you none of this would have happened.

RULE #1

The Simple Strategy for Successful Investing in Only 15 Minutes a Week!

Phil Town addresses half a million people a year at Americas largest touring success seminars, sharing the stage with such respected public figures as Bill Clinton, George H. W. Bush, Colin Powell and Rudy Giuliani. He lives in Jackson Hole, Wyoming.

Change your thoughts, and you change your world.

N ORMAN V INCENT P EALE (18981993)

T HIS BOOK is a simple guide to returns of 15 percent or more in the stock market, with almost no risk. In fact, Rule #1 investing is practically immune to the ups and downs of the stock marketand by the end of this book Ill have proved it to you.

Rule #1 investing is important today for many reasons, the least of which being that baby boomers currently have an average of about $50,000 in the bank to retire on, twenty years from now. They think they need a million but arent going to get there. Younger generations have a hard time paying off debt, saving money, and even thinking about investing on their own in the market. If people do nothing but invest in low-risk government bonds that pay about 4 percent, theyre guaranteeing themselves a stressful retirement. On the other hand, striving for a 15-percent return by guessing what to invest in (speculating in investor-speak) is a guaranteed way to lose money. Rule #1 solves the problem of how to get high returns with low risk, and it can get you to retirement a lot sooner with a lot less money than you imagine.

I didnt invent The Rule. It was first set by Columbia Universitys Benjamin Graham and then, more famously, adhered to by Grahams student and the worlds most successful professional investorWarren Buffett. According to Buffett, There are only two rules of investing: Rule #1: Dont lose money and Rule #2: Dont forget Rule #1.

The reason Im writing about The Rule is that Im not a Buffett or a Graham. If you have to be a genius to use The Rule, theres not much point in writing about it, is there? Im an ordinary person just like you. I like things simple and straightforward. I didnt go to business school or work on Wall Street. I learned how important The Rule is in the school of hard knocks. If you could invest without the danger of losing your money, wouldnt you be more willing to take control and do it yourself?

Because the answer to that question is obviously yes, I get invited to show at least 500,000 people a year how easy it is to apply Rule #1. Ive been speaking about Rule #1 on Peter Lowes monster arena tour, Get Motivated, where Im introduced as the man whos taught more people how to invest than anyone in the country. On that tour, Ive shared arena stages with Rudy Giuliani, Bill Clinton, George H. W. Bush, Gerald Ford, Jimmy Carter, Margaret Thatcher, Colin Powell, Mikhail Gorbachev, and General Tommy Franksand spoken to more than two million people about The Rule. Now its time for me to finally reach you.

Before I learned Rule #1 and started touring, I mostly got dirty for a living and didnt dare dream of buying expensive real estate or traveling the world in luxury. I dug ditches, washed rental equipment, pumped gas, drove trucks, bussed tables, and machined leg braces. I was an average high school student and it took me four tries to get through college. During my nearly four years in the Army, I spent two years with Special Forces (aka the Green Berets) and four months in Vietnam.

On March 1, 1972, I finished my military service in Vietnam and returned to the United States. On my last day in the army, I was walking through SeaTac Airport in Seattle, proudly wearing my uniform and green beret, when a man ran up, spat on me, and ran off. Id been away from the United States so long that I had no idea how much Americans despised me for what Id been sent overseas to do. After years of serving my country, it took me only a few days as a civilian to discover that many people thought I was a fool (or worse) for putting my life on the line.

I felt unemployable, but I finally found a job as a river guide. And after a couple of years of guiding in California, Utah, and Idaho, I ended up in the Grand Canyon. By then my hair was as long as everyone elses, I wore black leather, grew a goatee, lived in a teepee in the woods near Flagstaff, Arizona, and drove around on a really loud black Harley-Davidson, scaring people. I was as far from Wall Street and the world of investing as possible. I was still getting dirty for a living. Except now I had an attitude.

Life changed in 1980, when I took the trustees from Outward Bound down the canyon for two weeks. Outward Bound is an educational program that challenges people of all ages in various settings, usually in adventurous wilderness expeditions, so that they learn about teamwork, leadership, building a better world, self-discovery, and so on. Because Outward Bound makes the participants do all their own work, we decided to do the same to the trustees; instead of rowing them down the river, we put them on small rafts and forced them to do most of the paddling. After seven days we got to Crystal, the nastiest rapid in the Grand Canyon. Eighty thousand cubic feet of water per second crashes into a granite wall, turns 90 degrees, and drops 35 feet. At the wall, the drop and the volume of water creates a huge recirculating hole (famously known as the Hole). In all my trips down the canyon, Id never been near that hole, and the only person I knew who had well, hed barely gotten out alive. Hed emerged with deep lacerations and almost a broken back. We always maneuvered the boats way to the right of the Hole and snuck by it. But this time we were paddling, and I needed my crews help to drive the boat to the right side of the river. We started off okay, drifting down the right side, but when I told my charges to paddle for the right shore, we went nowhere. In fact, we kept drifting closer and closer to the Hole. Paddle faster! Harder! Your lives depend on it!