Value Investing With Rule #1

To most people, Rule #1 investors are value investors. They see us as endeavoring to buy cheap stocks and group us in with the authentic "value" investors who are centered on sub-10 PE ratios. We're not that dogmatic. We chase down "cheap" even in stocks with PE's in the 20's, yet its not out of line to put us with the primary group that Ben Graham at first made.

Value Investing as it Applies to Rule #1

We do for sure attempt to discover cheap stuff, although we prefer it to be wonderful cheap stuff, I'll buy less than wonderful cheap stuff if:

a) its cheap enough, and
b) its durable and reliable enough to determine(a).

I wrote in Rule #1 and Payback Time that I am hunting down 10% growth rates in the Big Four and ROE's in excess of 10% and no debt, I'm not dogmatic about it.

Yes, the Town Toolbox will paint scores that are short of perfect with red or yellow, then again its a computer program, not a human brain, and until I can assess a better approach to deal with what is out there, those Rule #1 Scores will need to do for a starter. The point here is to not let those Scores be an ender.

Moreover the best approach to do that is, to verify you know your industry and business.

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