RULE ONE INVESTING - TRANFORMATIONAL INVESTING COURSE

The concept of certainty is central to the RuleOne philosophy.

“Empty the coins from your purse into your mind and your mind will fill your purse.” ~ Benjamin Franklin

“What you’re doing when you invest is deferring consumption and laying out money now to get more
money back at a later time. And there are really only two questions. One is how much you’re going to
get back, and the other is when.” ~ Warren Buffet

Being aggressive at the right time will pay off big time. Being aggressive at the wrong time will cause
trouble that is tough to recover from.

Managing your emotions properly will make you into a great Ruler.

Gurus to watch:
Warren Buffet – Bershire Hathaway
Mohnish Pabrai – Pabrai Mohnish
Bill Ackman – Pershing Square Capital Management LP
Bruce Berkowitz – Fairholme Capital Management
David Einhorn –Greenlight Capital
Seth Klarman – Baupost Group
Julian Robertson – Tiger Management
Lou Simpson – SQ Advisors LLC
Prem Wasta – Fairfax Financial Holdings

1 . It must be a Wonderful Business

 We must understand it(Meaning)
 It has durable, competitive advantage(Moat)
 It is being run by honest, passionate people

2. It must have an attractive price MOS and /or PBT

 To know what attractive is we must know its fair value . . . what it is worth today based on the
profits it will make in the future.

Meaning – are you capable of understanding the business.

Moat – the company has a durable, competitive advantage. What is it? How good is it?
Management – the CEO has invested interest in the business and proves it with passion, talent, honesty
and is shareholder oriented.
Margin of Safety – buying the company cheap enough that we can make mistakes and still not lose
money.

To find a Wonderful Company we must use the three Ms

 Identify companies that have Meaning to you – you must start here
  Identify whether the company has a Moat – what kind and how big is it?
 Dig deep into the CEO and analyze whether the company Management is up to our RuleOne
standards.
*Out of the thousands of stocks available to choose from, our job is to choose the very few companies
we would own forever

Are you capable of learning more about the company?

What do you know about the company and industry?
Why does it have meaning for you?
What is the company’s meaning to the world?
Does the product or service the company produces conflict with your personal ethics?
Does their advantage guarantee increasing profit for years to come?

What are the steps to determine the fair market value of a business?
Start with “Stock at a Glance” looking for FGR and EPS(TTM)