Rule #1 Finance Blog

how to invest


Phil Town


Posted in how to invest

I just saw that Google is in the process of diluting its current shareholders by 14 million shares to raise $4 billion, diluting me by 8%.

Remember that Rule #1 investors act as if we own the entire business — so what does this mean if we like Google and feel like we own the whole thing?

It means the management just decided to take our pie — which we own all of — and cut a slice of it out and sell it to someone else.  On a per share basis, they just hacked about $20 a share out of my wallet.  That kind of sucks, doesn’t it?

I’ve given them the right to do it (somewhere along the line the shareholders approved issuing another 90 million shares of stock for just this sort of possibility, so management doesn’t have to ask for permission).  But why would I feel good about having 8% of my pie get confiscated and sold to someone else?


Phil Town


Posted in how to invest

About my trip:

I rode a severely modified 2002 Harley softail to Sturgis from LA and then from there over to Jackson Hole where I live. I got too hot, too cold, too dry, too wet and rode too fast too often. It was perfect. Gave me time to smell the sagebrush at 90 mph and see some of the most amazing country at 20 mph. I camped most of the time. Rode solo most of the time just to go where I wanted, when I wanted and as fast or slow as I wanted. Nearly ran out of gas in Wyoming but some folks that run a bar were kind enough to spot me a gallon of gas and a great breakfast burrito. Rode some around Sturgis with a Jackson cop named Sarah and an authentic Jackson Hole cow puncher named Jimmy. Talked investing for hours with a Rapid City school teacher while I watched guys burn their back tires off for no reason whatsoever. There were too many bikes and not enough time to enjoy it all. And now I’m back and thinking about what to tell you guys at the next event where I’m speaking.

Here’s what I’ve been thinking for the last ten days or so:


Phil Town


Posted in how to invest

I popped into Whole Foods last February at 90.  And as a Rule #1 investor getting into WFMI meant that I thought it was YUMMMMY.  Turned out it was!  Since then WFMI ran up to 104 and I bailed at 102.  Then again in at 97 and now its at 120.  That is some serious up.  About 40% in 5 months.  Good.   But here is where it gets real good.  That investment represented about 40% of my portfolio.  That means that my entire portfolio went up 16% in 5 months even if the rest of it was under my mattress.  That is just nuts! And it’s all about focus.  If you think you can do that by diversifying, think again.  Remember this:  Diversification is for the ignorant.