Rule #1 Finance Blog

With Investor Phil Town

InvestED: Ep. 45- Payback Time & The Lemonade Stand

Most people think you need to understand difficult financial statements in order to make a good investment decision. In this week’s episode, we show how you can value a company with only basic financial understanding, and how to find payback time.

In Episode 45 You Will Learn

  1. The difference between value investing and Rule #1 investing.
  2. The simple principles that Warren Buffett and Charlie Munger use to invest.
  3. The principle of arbitrage.
  4. How to value a hypothetical lemonade stand using basic financial information.
  5. How to generate financial statements to value what a company should be worth.
  6. How to figure out the total value of a company based off of expected cash flow.
  7. What payback time is and how long you should be willing to wait to see a return on your investment.

Show Links

Ben Graham – Security Analysis

10 Great Investing Books

What is Book Value?

What is Cash Flow?

Phil Town – Payback Time Book

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On the InvestED podcast, Phil and his daughter Danielle shine a light on the successful investing strategies that gurus like Warren Buffett have used for 80 years. Listen in for a great stock market education on basics, learn how to invest on your own, and follow along with real-time examples and investing tips from week to week.