Invested: The Rule #1 Podcast is LIVE. Here Are Episodes 00-03

Episode 00: Introduction to Invested: The Rule #1 Podcast

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In this podcast, Phil Town and his daughter Danielle Town introduce themselves.

Phil talks about his story as a river guide on the Grand Canyon, and how he became an investor. Danielle discusses her career as an emerging companies attorney and why she wants to learn to invest.

Danielle has never had much interest in investing and thought that talking to Phil about the subject will not only get her interested in the subject and to also help others learn about it, and hopefully grow to love investing as much as Phil does.

“My hope is that first of all, I get interested in investing and that others can also listen to this podcast and hopefully get invested in this world as well learn how to handle situations that are stressful, do research, and look at the world a little differently. ”(6:44)

With that said, enjoy the podcast. We hope you have as much fun listening as we did making it.

Episode 01: Understanding a Business and Investing With Your Values (Part 1)

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In this first series of podcasts Phil and Danielle discuss the basics of Rule #1 Investing and how to choose a business you might want to invest in.

Phil and Danielle explore the importance of understanding a business completely before even considering investing in it.

Danielle asks how do you even find the business to invest in when your time is super valuable and Phil answers.

Understanding a business is one of the most important concepts to understand when it comes to investing Rule #1 style.

“You have to understand a business. It has to pass that filter. You don’t move on to the next three stages without first understanding a business.” -Phil Town (4:20)

“I want to love a company and feel like this company deserves to be in the world in 20 years -Phil Town (25:00)

Enjoy the Podcast!

In Episode 01 You Will Learn:

1. Charlie Munger’s, partner with Warren Buffett at Berkshire Hathaway’s 4 principles to investing. 1:00

2. Phil explains the 4 principles to investing 4:13

3. What is the difference between understanding a business and being capable of understanding it? 5:25

4. What it means for a company to be on sale. 7:30

5. Resources Phil reads every day New York Times, Wall Street Journal, Barons, Forbes, Fortune, Financial Times, Guardian, BBC, Economist. 11:15

6. Websites that Phil uses sumzero.com, gurufocus.com, motleyfool.com, seekingalpha.com. 14:11

7. What reports Phil uses to understand a business. 10K and 10Q transcripts. SEC Edger and how to find 10K filings. 16:08

8. Mohnish Pabrai’s lifestyle as a Rule #1 investor. 18:05

9. How we can copy big investors and get ideas of companies that might be on sale. 19:40

10. The importance of paying attention to companies and industries you absolutely love and are passionate about. 25:00

Show Notes and Resources Mentioned in Episode 01

Episode 02: Understanding a Business and Investing With Your Values (Part 2)

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In this episode, Phil and Danielle continue to talk about the importance of understanding a business, on the road to finding a great company to invest in.

“Investing is really simple, but so is snowboarding, and so is riding a bike. Sometimes we need some training wheels.”

You really have to understand the company that you want to put your money into. Phil discusses everyday practices and how to find a business that matches your values and exactly what that means.

“When we buy businesses we do it differently from everyone. When you buy a stock in a company, think of it like you’re buying the entire company.”

Listen to this podcast if you want to find out some great tools to help you “dig your canyon” and research your company, and some pitfalls to watch out for on your journey to understanding a business.

In Episode 02 You Will Learn:

1. What a Rule #1 Investor is and why they’re different. 1:32

2. What is the moat of a business? 2:50

3. The importance of understanding a business, everyday practices to do so. 5:30

4. How to find an industry that matches your values, that is meaningful to you, that you understand. 6:30

5. How to stop yourself from investing if your knowledge of the company ends. 13:00

6. How critical it is to control your emotions in investing and knowing yourself. 13:45

7. Exactly what to look for in 10K filings 16:07

8. What it means to match your values with your money. 19:58

9. When we buy businesses we do it differently from everyone. When you buy a stock in a company, think of it like you’re buying the entire company. 33:10

10. Don’t be in a hurry to invest. Do your homework and be sure you understand the company. 41:00

Show Notes and Resources Mentioned in Episode 02

Episode 03: Finding a Company With a Durable Competitive Advantage

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In this episode, Phil and Danielle discuss why it is important for a business to have a defined competitive advantage in the market. They also discuss the 5 different types of these advantages that almost all great companies fall into.

“The whole idea of a moat is a metaphor for water around a castle to prevent it from getting attacked. When a business has a very large moat, it protects it from other businesses attacking them.”

There are 5 different types of moats that Phil explains:

  1. Brand
  2. Secrets
  3. Switching
  4. Toll-bridge
  5. Price

How has a company such as IBM been able to survive and navigate through market changes because of their switching moat? Learn how they do it in this podcast, and why it is so important to choose a business with a large moat.

Listen to this podcast to learn about the second M in the 4M’s: Moat.

In Episode 03 You Will Learn:

1. The stock market is not random and the market can price businesses wrong. 3:10

2. Emotion in investing can create prices in the stock market that are not connected to value. 3:25

3. Phil explains what, “groking it” means. 6:30

4. How to “graduate” from your current understanding of business to thinking about businesses to invest in. 8:00

5. How to overcome the pressure to invest due to retirement or other factors because you have plenty of time to compound your money. 10:00

6. Phil explains why a “durable competitive advantage” is so important, and what it means to an investor. 11:10

7. Phil explains the 5 types of competitive advantages or “moat’s.” 15:00

8. What is happening with IBM right now. 28:00

9. Phil explains what a “price moat” is and how companies like Wal-Mart create them. 37:00

10. Why it’s so important to dig deep into a company and into an industry. 43:00

Show Notes and Resources Mentioned in Episode 03

About Phil & Danielle – Phil Town is an investment advisor, hedge fund manager, two-time NY Times best-selling author, ex-Grand Canyon river guide, and a former Lieutenant in the US Army Special Forces. Danielle Town is an attorney specializing in emerging corporation law. She has her Master of Laws Degree from the University of Colorado, her J.D. from NYU, and her M.A. from Oxford. Danielle plays the counter balance to Phil in this father-daughter duo podcast. Danielle asks all of the questions that everyone wants to ask about investing.

  • Paul Hawkins

    Very enjoyable and well explained. Thank you!

  • Andrew Xavier

    I really enjoy the conversations. I read the rule 1 book. There are 3 methods of investing in my view.

    1) profit from security selection
    2) Market timed trading and betting future economic growth
    3) Diversification

    Rule 1 investing in my view should be presented as optimizing all 3 choices for individual investors who are willing to spend time, money & energy to be worry free in future.

    As you said there is no certainty and people can loose money following this principle

    Eg:

    Horse holding
    Apache is another where valuations are cheap due to assets in Egypt and uprising caused the stock to go down but annelated by oil price and big companies CEO didn’t predict.

    I disagree Charlie comment on college teaching on finance.
    I don’t believe they are teaching efficient market theory in colleges as explained in the podcast. Please listen to the live class.

    https://youtu.be/3EzdvkRgToY

  • Adam Nealis

    It’s been bugging me for a while. Here is a correction proffered to Phil via Wikipedia.

    Grok /ˈɡrɒk/ is a word coined by Robert A. Heinlein for his 1961 science-fiction novel, Stranger in a Strange Land.

    I’m enjoying the podcast as Danielle (speling [sic]?) tries to grok Rule #1 investing. She’s putting up a good fight. Hats off to Phil for spending all this time arguing with a lawyer. A true optimist!

  • Wick Van Wagenen

    Have already listened to all of the podcasts. The natural interaction between Phil and Danielle is extremely helpful as Danielle helps Phil to not take any investor knowledge for granted. She expresses the concerns that many of us novices have. Thanks to both of you for taking time to provide these podcasts. I look forward to listening weekly.