Rule #1 is don’t lose money. If you’re not losing, well, you are not losing. That doesn’t mean you are winning either, but odds are that are winning. Rule #1 Ivesting is also a book by Phil Town on his investing strategy that was taught to him by mover and shaker while he was guiding them on a river rafting adventure. His methodology is practically the same as Warren Buffet and Benjamin Graham. Of all the books I’ve read or skimmed, this may be the only one I would recommend for someone interested in long term stock market investing.

The principles are quite easy. Find a solid company whose stock that is selling very cheap, well below it’s sticker value (true worth) and you can buy it with a high degree of confidence it will go up quite a bit. When the stock is no longer cheap (overvalued) you sell it, take your profit, and if and when it does become cheap again, you buy it back. You do this with as many stocks in as many sectors as possible. The problem is, in this current market, despite the recent downturn, almost everything is overvalued (likely a good part of the reason for the downturn outside the obvious credit, housing and employment issues).

Every time you find a stock to research and spend the 10 or 20 minutes to calculate the formula and back check everything, you find out it falls well outside the realm of a solid Rule #1 stock. What I decided to was not spend months waiting to stumble upon good buys, but to screen every stock on the three majors and get a list of them all. This wasn’t an especially easy task to program, but I did, and it turned out to be quite profitable as one would expect. Truth be told, at this very moment there are no Rule #1 superstars. There are Rule #1 applicable stocks in sticker price and margin of safety (MOS), but they are mostly ADRs. To find superstars right now, you need to bend the rules a little.

I will discuss this more in a future entry.