Rule #1 Finance Blog

With Investor Phil Town

Invested: The Rule #1 Podcast, Episode 05- Is Your CEO a Leader or a Mercenary?

Listen on iTunes HERE

Phil and Danielle discuss finding a talented, honest CEO with integrity and why this is so important to Rule #1 investors. Phil explains the difference between a CEO that has the long-term mission of the company and keeps their employees, and stakeholders in mind, vs. a CEO that is a mercenary and puts a company in danger of running it into the ground. Phil and Danielle also make a few Star Wars references and discuss John Mackey’s book “Conscious Capitalism.”

“We’re looking to buy a wonderful business that has a talented manager with a lot of integrity.”

“Does the CEO explain the industry in the way that you understand it?”

“If you want to learn to do something well, like snowboard or ski or surf or write you would go to people who are really good at it and copy them. That’s what we do with the best investors in the world.”

In Episode 05 You Will Learn:

1. Why 99.9% of mutual fund managers are not long-term investors, they are momentum investors. 3:00

2. The reason professors don’t teach this style of investing is because they don’t believe that anyone can beat the market. 6:50

3. Why the leadership of a company needs to have a lot of integrity. 10:51

4. Where to find information about the management of a company. 12:00

5. The first step of judging the management of a company. 12:25

6. About 10Ks and annual reports. They should tell you what is really going on. 14:31

7. As Rule #1 investors, we love when a leader has a BAG or a “Big Audacious Goal.” People want to work for something other than money and do something that they are passionate about. 23:50

8. A great CEO has a great mission statement and a great mission for the entire company. 33:00

9. Is the manager passionate, are they stakeholder oriented, BAG, are they honest. 35:10

10. Why all companies aren’t run by good CEOs. What Charlie Munger means when he says, “A talented CEO.” 45:00

Show Notes and Resources in Episode 05

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.