Being Thankful

I spent some time in Japan with a good friend of mine named Wahei Takeda. He’s known as the Warren Buffett of Japan, who made his entire fortune from scratch in post WWII Japan. Let me share with you what he told me about being thankful...

Wahei told me that the most important thing that you can do every day, the thing that was responsible for him making billions of dollars, is...

"Be thankful 1,000 times a day."

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Rule #1 Investing Call Options

Call options are a fantastic way to generate cash flow and reduce basis on companies we already own. When we already own a company we call a call option a "Rule #1 Call Option." Let me briefly explain the call option definition.

What is a Call Option?

Essentially, a call option example is a coupon to get cheap milk. There's two sides to this coupon. There’s the grocery store, which is essentially selling the coupon at a very, very, cheap price and there's the buyer of the coupon who is getting a right to go buy this milk.

So, when we use the coupon between the store, the store has an obligation to sell the milk at a set price and the buyer of the coupon gets the right to buy that milk at a set price. That’s just a coupon and we’re used to using them all day long.

Call Option Definition

Call options are just like that. Basically, if you sell a call option to someone, you are now obligated to sell them your stock at that price. If you buy a call option you now have a right to buy that stock at that set price for a set amount of time.

Selling Call Options

Why would we do that as Rule #1 Investors? If we own this company, and we sell someone the right to buy our stock at a price higher than we think it’s worth, then we have almost no risk whatsoever. Because, if the stock price goes up to that super high price, we want to sell it anyway. We want to sell into greed and we want to buy into fear.

If there is greed going on and the stock price is shooting up like a rocket, we want to be a seller of that stock. We can pick up cash flow, by putting out and selling call options, which basically gives someone the obligation to buy our stock at that higher price so that they buy it from us. They pay us a premium and we can put that money in our pocket.

If the stock price doesn't go up we get to keep our money. If the stock price does go up, then we sell the stock. Either way we win.

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Responsible Investing With Your Own Personal Values

Our individual values are imperative to effective investing. Practically nobody discusses how to join your values to where your cash is going.

I think it is the most important vote in your life to put your cash into the things that you esteem and that you need to see on the planet a long time from now.

The Importance of Socially Responsible Investing

Keep in mind that wherever you're putting your cash is what is going to develop on the planet.

I realize that you don't think you're going to change the world by investing your $1,000, $10,000 or even your million dollars given that the stock market is something like $15 trillion. 

Contemplate this, we as a group of small investors, have 85% of the cash in stocks. The California Teacher's Retirement Fund is one of the biggest financial investors on the planet. Those educators have about $180 billion in the stock market. 

It's extraordinary how effective we can be when we vote our cash with our values...

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3 Common Stock Market Investing Myths Busted

There are consistent myths about investing that to an extensive degree can scare the individual investor and make them consider whether investing is really worth it.

Here are 3 investing myths and the realities so you can create your wealth and attain your financial goals. And you can do it with Rule #1.

Myth #1: You Have to be an Expert to Manage Money

You don't have to be an expert. All you must be is an expert at one part of the business area. We call it being an inch wide and a mile deep…

What are the other two myths?

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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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Coattail Investing Strategies: Following the Best Investors

One of my most loved privileged insights about investing is the manner by which to discover extraordinary organizations that are on sale. It's so straightforward and it’s stunning that more individuals don't do it, yet they don't. The mystery is that we are going to coattail or duplicate the best financial specialists on the planet.

Coattail Investing: What We Search For and How We Discover Extraordinary Businesses on Sale

When we utilize coattail investing on the best speculators, we need to look and duplicate the individuals who we know have made tremendous rates of return in excess of 20 to 30 years of time.

A few illustrations of these sorts of speculators are, Warren Buffett, David Einhorn, and Bruce Berkowitz to name a couple.

On the off chance that you had put $1000 dollars in Berkshire Hathaway, in the year 1970 you would now have $4.86 million dollars in 2014. So modeling after what Buffett is doing works really great.

How to Coattail Investors to Help Discover the Best Stocks to Purchase

How would we coattail the best financial specialists? What is really cool is that investors who oversee more than $100 million dollars need to record what they purchased and what they sold each quarter with the SEC. You simply find it. It's free data.

Figure out what financial specialists you want to copy and afterward go to the SEC website and take a look at what they are purchasing and selling each quarter.

They report every quarter, so check to verify the cost of the stock is still around what they paid for it. In the event that you like the organization, apply the 4ms and verify it at a bargain and afterward get in there and purchase it.

Related: Figure out how to invest and apply the 4ms here.

Warren Buffett's Stocks In excess of 30 Years

There was a study done at the College of Nevada that began in 1976 for 30 years. They found that In the event that you had purchased what Warren Buffett was purchasing...

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6 Worries That May Hurt Our Economic Recovery

Economics professor at NYU, Nouriel Roubini, who called the financial crash in 2007, has these 6 things to caution us about in our financial recuperation (from a June question on CNN):

1. Economy of China is slowing and will astonish investors to the drawback. This will create issues in Asia.

2. Developing markets will suffer as the US raises interest rates, worldwide interest for crude materials winds down and China slows.

3. Ukraine-Russia clash turns into a war and includes Europe and the US; Russia slices off gas supplies to Europe and sends it into a depression...

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