Rule #1 Finance Blog
how to invest
This just came in from Michelle in Colorado:
My husband learned about your book from you at a motivational seminar you participated in here this past summer in Denver. He bought into Investools for me, thinking this was a business I could do from home. I purchased your book soon after completing the Investools 5 step classes via DVD.
To my question… Following your criteria for uncovering the annual income of CEO's of prospective businesses, I am discovering they tend to make incredible incomes. What is a reasonable yearly income for the CEO of a "wonderful" company?
It was disheartening to learn that the CEO of a "wonderful" company I like was on the top 10 list of highest paid CEO's in the country! That was obvious, but what is acceptable? One million? Three million? Including stock options of course. So far, none of the companies I like, which have meaning to me, have "low paid" CEOs. Bummer. I really don't want to share my profits with a "mercenary."
Happy Trails,
Michelle
Here's what I told her:
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.
WFMI: What’s the Future Look Like?
Lots of questions about whether WFMI is a 4M business, so let's dig in a bit. Because what we're all about is deciding if the business is going to be predictable for the next ten years or so and then, if we decide it is… is it on sale?
Meaning:
Pretty easy one. High end, natural food grocery. Best of breed. Murdering the competition. Lines all over the stores. This business definitely represents the future of food.
Moat:
Brand. And let's see if its a big wide moat or not by looking at the Big Five Numbers.
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.
YOUR HOMEWORK: QUALCOMM (QCOM)
Jeff is deep into Qualcomm. Here's his analysis, then mine.
Hi Phil,
Meaning
By partnering with and acting as an enabler to the business activities of these participants, QUALCOMM ultimately enables consumers, professionals and government entities — the end users who benefit from the success of the wireless industry today and into tomorrow.
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.
From one of my readers: [Edited for length.]
Hi, Phil:
I can't resist asking you something about what appears to be an absolutely wonderful company, except for one small thing that keeps bothering me. Coldwater Creek is a wonderful story of how Dennis Pence and his wife, Ann, started their business in their apartment in Idaho. After going through their life savings and Mr. Pence suffering a heart attack, the company went on to huge success.
The numbers all look terrific, but one thing keeps bothering me. The Pres., Georgia Shonk-Simmons and a couple of other executives all seem to be exercising stock options and selling all of them on the same day in late Sept. and early Oct., around $30/share.(current price $30.21). Earnings are out later in November. Is there anything necessarily insidious about selling all your options on the same day or is this a normal practice?
Thanks,
Phil Walker
My response:
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.
ARE YOU WATCHING THE ARROWS NOW?
I don't usually discuss investments I'm making, but Whole Foods just went for an amazing ride from $47 to $65 to $45 in about 6 weeks, and it's worth talking about.
If you have Whole Foods on your list of great businesses, and if you watch the Tools, you just cleaned up. You got arrowed into WFMI at $50 on the 10 day MA, out at $54, back in at $53, and then rode it for a month to a peak of $65 and got tooled out at $64 on Oct 24th. That's about $15 on a $50 investment. 30% from Aug 14th to Oct 24th. A great year's return in a bit over two months (and now you know why it's okay to sit in cash and wait.)
But that isn't the reason I'm writing this post.
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.
A question for Phil Town
from Mark in Falls Church, VA:
I just had a quick question about upper boundries. In Phil Town's book you often repeat the necessity of moat numbers remaining at or above 10% but do you believe there to be any moat numbers that are too high? I've heard that in general 25% earnings growth is about the highest one should allow before things get scary.
Can there be too much growth?
Oh yes oh yes there can be too much growth. The laws of compounding prove it.
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.
QUESTION OF THE WEEK: RULE #1 CASE STUDIES
New readers are finding the book, Rule #1 site and blog all the time, which means it’s a good time for another recap. This is a popular question:
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.
RULE #1 QUESTION OF THE WEEK: WHERE TO FIND FREE CASH FLOW ON MSN
Things are pretty busy for me right now, so this week's Question of the Week is a repeat post answering a question I get asked every day: Q:…
RULE #1 QUESTION OF THE WEEK: BANKS & ROE
Alfredo in Sao Paolo, Brazil is interested in banks. Read on. [Edited for length.] Q: Dear Phil, This email is to congratulate you because of your contribution to…
WHEN TO ADD MORE MONEY TO A POSITION
Here's a question from Gordon in Michigan: When is it ok to add additional money to a position? For example, I am up about 13% on my PNRA…