Hello,
my name is Tom and I am in my graduate year of my bachelor 'finance & insurance' in Belgium, Europe. I have found this website through google as I am a big fan of both Warren Buffett and Prem Watsa. I hope I can be of some value to the community here, although I am rather new to investing.
I have been reading a lot, the first book I read was The Intelligent Investor by Benjamin Graham which gave me a lot of insights. Also, I have been reading tons of blogs and this forum. :)
Now I am halfway through Rule#1 by Phil Town but I have my doubts as it is written in a very commercial way and because he claims its "so easy" to get 15% annual returns. He also says that, in order to prove the moat of a company, it should at least have a growth rate of 10% on the big five (being ROIC, EPS, equity, sales and cash) for 10 years in a row. With that thought in mind I started looking for such companies (leaving out 2008-2009 which would make it even harder). After I looked at about 20+ companies which seemed to be very strong growers with a good moat compared to others, I still didn't find one company that had most of the criteria fulfilled, let alone all 5 of them.
Before I start looking any further I would like to ask your opinion about this method. Totally useless?
It seems to me that only extreme growth companies which are widely known such as Apple and Google might get to fulfill those 5 criteria + have a strong moat. Then I am wondering how you could ever get such stocks at depressed prices with a big margin of safety which mostly only occurs when the results are down (which means again that they wont fulfill the criteria?).
What am I missing?
Anyone any thoughts or experience with this book/method?
Tom
