Rule #1 Finance Blog
how to invest
Rule #1 Question of the Week: How Does Today’s Market Affect Rule #1?
Here's this week's Question: Q: Hi Phil Town, I saw you on ‘The Millionaire Inside’ on CNBC and I’ve ordered your book. I’m in my 50’s with a…
Rule #1 Question of the Week: Malkiel vs. Buffett
First of all, thanks to everyone who tuned in to CNBC to watch The Millionaire Inside this weekend. If you're new to Rule #1 investing, try taking a look through my FAQ to get familiar with the concept of buying $1 for $0.50 (buying companies on sale, as I discussed on the show).
This week's reader-submitted Question of the Week comes from Alex. It's a long one about EMT (Efficient Market Theory), which I talk about at length in the opening chapters of Rule #1. [Edited for length.]
Q:
Dear Phil Town,
It just so happens that malkiel's book is my favourite investment book. i think his idea that novices should buy cheap index funds & be done with active mutual funds is sound. After all some indexes, especially of emerging markets, make more than 15 per cent in the last couple of years.
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: Opening Price vs. Closing Price
Q:
Hi Phil Town,
I have a simple question. The software I am using lets you set the moving average based on the opening price or the closing price or the high or the low for the day. Which one do I select?
Peggy
A:
Peggy's investing software for Tools gives her four choices for price input to the Tools from the market. The high price, low price, opening price or closing price. So if you have a similar choice, which one should we choose?
The simple answer is usually best: choose the closing price.
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: The Buy Line
Note: This week's Question of the Week is also archived in the FAQ. Q: I'm looking at the 3 Tools, and nothing's crossing the Buy Line. Everything's floating…
Rule #1 Question of the Week: Time Frame on the Tools
This week's question for Phil Town: Q: What time frame should I use when viewing the tools? A: The time frame isn't important. The inputs to the tools…
No Question of the Week this week. If you're new to the Rule #1 Blog and are looking for information to supplement all that you learned in the…
Join Phil on CNBC! (April 17, 2007)
CNBC IS DOING A HUGE SHOW ABOUT RULE #1 (and a few other wealth
building secrets!) on April 17 AND YOU are invited to come to NYC to be in a LIVE
audience.
New!!! CNBC Wealth Summit / "The Millionaire Inside" Trailer:
(QuickTime version. To view the Windows Media Player Version, click "Continue Reading" below.)
For details on how to EMAIL TODAY to become part of the studio audience, click the "Continue Reading…" link below.
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.
Sarbanes-Oxley and Small Investors
In the comments a few days ago, Steve asked me about some corporate accounting issues I'd mentioned while speaking in San Diego.
Namely, I mentioned how important Sarbanes-Oxley is to small investors.
The big guys are trying to repeal the act… and for good reason, I suppose. The Big Three Accounting agencies are forcing companies to get crazy by being over-demanding — a kind of reaction to the previous laxness of the industry.
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: 30-Day MA or 10-Day MA?
Q: Does Phil use the 30-day or 10-day MA (moving average)? A: I prefer the 10, but I'm finding that the more I do this with tools the…
Rule #1 and Market Fluctuations
This question came in from Colleen last week:
Dear Phil Town,
Thank you for RULE #1 and for writing an excellent book. As a financial analyst I was never interested in stocks because of perceived risks, but thanks to your simplified approach, I am enjoying this new world. I began investing last August and realized a 37% return (annualized) for the first 3 months, then got emotional and impatient and lost some of it. But I am learning!
I am now investing about $8k in INFY, APOL, and LIFC, and got in based on buy signals, the MOS, the five #s, mgmt, etc. (And yes, APOL is probably risky.)
I was wondering how you use the three tools in comparison to the market fluctuations. I don’t want to sell when the entire market goes down a little but there is no bad news on the companies. I would rather buy then! Especially in the last few days when these 3 stocks keep going up and down. Shouldn’t I incorporate the fact that the DJIA, S&P, and Nasdaq are all down into my buying and selling decisions?
Maybe a better question is if there are any indicators for an overall stock market crash. (I suppose that’s a million dollar question.)
Thanks,
Colleen
My response:
Hi Colleen,
Congratulations on joining the revolution and on your success. You bring up an excellent issue. Do we take into consideration normal market fluctuations? Should we buy when those fluctuations give us our wonderful business at an even better price?
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.