If you’ve followed Finance Friday for long enough, you’ll know that I’m a huge fan of rule one investing. Today, let’s look at the guy behind it- Phil Town. So who is he? What did he do? Why is he so successful?
If you follow financial media, chances are that you’ve seen or at least heard of Phil Town. Whenever there’s something going wrong with the financial markets, be it a crash, correction or anything, Phil Town is the guy they interview.
Before Rule One Investing
Phil wasn’t always the investing guru he is today. Phil Town was born in 1948, in Portland Oregon. In 1966, he graduated high school, enlisting in the US Army two years later, becoming a Green Beret.
As a part of his US Army service, Town saw service in the disastrous Vietnam War. After his tour was over, Town left the US Army after three and a half years of service.
Following this, Town found himself working as a river guide up and down the Colorado River, earning $4,000 per year (in 1972). In the off-season, Town was collecting welfare payments and living in a tepee in Arizona.
In 1980, he was guiding the trustees of the Outward Bound Program. This trip was almost catastrophic, with the boat almost capsizing. The only thing that prevented everyone on the boat from dying was Phil Town.
Back at shore, the trustees all thanked him for saving their lives. One of these trustees thanked him with more than just a “Thank you”, but with advice: Why live like this, when you could be rich?
This trustee taught Town about the not so complicated world of investing. This trustee also helped guide Phil down the path of investing in his early years. This trustee was the one who lent him his first $1,000.
Within five years, Phil had turned that original $1000 loan into $1 million. This began Phil’s passion for investing and the stock market in general.
Rule One Investing
Over time, he began to realize that not everything Benjamin Graham wrote about was relevant anymore. The industry had evolved far beyond what it was in 1949, leaving what Town thought to be huge gaps.
As such, Town began to modify what Graham had written in 1949, adding in things he believed to be relevant today, and removing those that weren’t. After much trial and error, he believed he had perfected his new philosophy.
After watching an interview given by Warren Buffett, Town got the name of his new investing philosophy: Rule One. This was after Warren Buffett gave the now infamous “Rule One” speech:
There are only two rules when investing. Rule one: don’t lose money. Rule two: don’t forget rule one!
With that, he christened his new philosophy: Rule one investing, a name it has gone by ever since. In 2006, Phil town published his first book, outlining the principles of rule one investing and how it differs from value investing.
This book, Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week! has often been called one of the best personal finance books ever written.
It’s not only me who’s said that. In 2006, it became a New York Times Bestseller, as well as a Business Week Bestseller. Not to mention being one of the best business books according to USA Today.
Response to Rule One
When Rule #1 was released in 2006, it received both positive and negative reviews. Due to Town not being a big name in the investment industry at the time, many people didn’t trust what he had written.
Reading book reviews dating from around 2006, many financial commentators said as much. Many people did point out that his book, whilst detailed, didn’t have much proof, either from a hypothetical or real portfolio.
Many other financial commentators talked about how his book was rather hypocritical. He repeats in all of his books not to borrow money to invest, yet he himself borrowed $1000 to invest.
One of the main premises of their more negative reviews is that it is rather unrealistic at times. Town claims you can do this with only 15 minutes per week, which, even as a rule one investor myself, I have to disagree with.
Since then, with the release of his subsequent books, the reviews of Rule #1 and his other books have been far more positive. A look at a recent review of Rule #1 on YouTube compared to an older one shows that many people do believe in Town.
This is perhaps down to people taking a leap of faith after reading his books. Perhaps it is that he has been featured on several news outlets such as CNBC. Or maybe its just that he has become more well known.
After all, when Benjamin Graham released The Intelligent Investor in 1949, people didn’t trust him. People said that he didn’t know what he was talking about and ridiculed him. Today, he is one of the most famous investors of all time!
Today
Today, rule one investing has become fairly commonplace with many new investors. Town has written two further books: Payback Time and Invested, the latter of which he wrote with his daughter, Danielle Town.
Before publishing Rule #1, Town started the Rule One Investing blog in 2005, which has since become a respected investing news site. I recently ranked this site as one of the best personal finance blogs.
Phil also started up the Rule One Investing YouTube channel in 2015. At the same time, Phil Town also set up the InvestED podcast, which he runs alongside his daughter, Danielle.
In 2013, after the success of his books, Phil Town decided to use the contacts he’d made and his newly found fame in the industry to establish a hedge fund. This hedge fund uses his rule one investing techniques.
As a part of his Rule One brand, Phil also runs a weekly webinar alongside his wife, Melissa Town. This webinar focuses on ethical investing and spirituality whilst investing.
Since 2008, Phil Town has been a favorite interviewee for a plethora of financial media outlets, most notably CNBC. He has also been a favorite of MSNBC’s show Your Business, being featured in several episodes.
Can I Replicate What Phil Town Did?
Short answer: You can’t. And in all honesty, why would you want to? Town has already filled that niche himself, making himself the “new” Benjamin Graham, hoping that one day, an investor using his philosophy will outdo Warren Buffett.
Town has turned his passion for investing into a multimillion dollar brand, not to mention his private stock and business holdings.
Long answer: Patience, understanding and education. Phil Town isn’t just an investor and hedge fund manager, he’s also an educator. He takes what he’s learned over the last 40 years and teaches it to people like you.
If your goal is to become a world famous investor, there are biographies of other investors. Try reading biographies for people like Warren Buffett, Sir John Templeton and Charlie Munger.
If your goal is to become a world famous hedge fund manager, read the biograhpies of famous hedge fund managers. If your goal is to become an educator, read biographies and books of educators in your niche.
By doing this, you’ll begin to learn about what made them tick. Or more importantly, what they did to make themselves so successful. By doing this, you’ll soon realize that have an upper hand over others!
What Can You Learn From Phil Town?
Besides just reading his books, blogs and watching his YouTube videos, the story of Town himself can teach you a lot!
Reinvention
Town was taught about the principles of rule one investing by a client he was a river guide to. However, he found a strategy created over 60 years previous to potentially not cover everything a modern company would.
Instead of saying something like “Oh well” and just investing using a philosophy he believed was broken, he decided to do something about it. He broke down what Benjamin Graham said and improved upon it with his own knowledge.
After doing that, and realizing his new philosophy works better (for him) than value investing does, he wrote it all down for other people. Today, rule one is used by hundreds of thousands of people all over the globe!
If you find yourself in that same position, don’t be afraid to just go with it. Find a way to make something old, new again! This can be used, not only for investment philosophies, but also for business, real estate, or investing in general!
Timing
The stock market is all about timing. Town has proven this time and time again. He has proven that if you can time it right, with the right research and planning, you can become a millionaire in a short period of time.
Phil Town has proven that time is either your greatest ally or your greatest enemy. As an investor, you make part of your money from the year-on-year increase in price (ROI).
However, as a businessman, time can either be the best or worst thing. When you’re building your business, it may seem as though you’re doing all this work for nothing. When its built, it may seem like a cash cow!
If you want to invest, start a business or do just about anything else, timing is everything. If you can time it just right, you can become a millionaire, and perhaps even a billionaire, in only a few short years (or decades!)
Patience
Investing is all about patience. Town himself embodies that quite well. He took $1,000 and turned it into $1 million in five years. Quite impressive. However, he didn’t expect that to happen overnight.
He understood that it takes time for his investments to grow. He didn’t rush this, instead, he left it to grow. And by the end? He had $1 million to play with!
Entire sections of his books, and even entire videos on his YouTube channel, are dedicated to being patient. Not only do they go into the reasons why you should be patient, but they also go into how you can be patient.
Patience is something that you’ll probably need in life, regardless. If you are investing in particular, waiting for the market to crash is integral to getting the best deal. As it is with running a business or just about anything!
Age Doesn’t Matter
When I cover people in my Surprising Wealth Stories segment, and “Age doesn’t matter!” I’m often talking about it being the other way around. You’re never too young to start, not you’re never too old to start.
I often talk about kidpreneurs who’ve started up big businesses at young ages, such as Mikaila Ulmer, Rachel Zietz or Moziah Bridges. However, Phil Town started investing during his forties!
Since then, he has built a large investments portfolio. As of the time of writing, Wealthy Persons estimates his net worth at around $5 million, including his privately held businesses and stock portfolio.
Regardless of your age, you can start something good. If you’re young and want a business, you’re never too young to start. If you’re old and you want a business, you’re never too old to start. Age is never your excuse.
Build! Build! Build!
Personally, I believe that Phil Town shows this incredibly well. After the release, and subsequent success of his first book, Rule #1, Town has built a brand around that, as well as several offshoot businesses.
Following on from the success of Rule #1, Town has also released two separate books, one of which was released with the help of his daughter. Along with his daughter, Town runs a weekly podcast about investing- InvestED.
Town also runs the Rule One Investing blog and YouTube channel of the same name. These go into more depth than his books can, as well as providing a face to the philosophy as well.
Using all of this, Phil Town established his own hedge fund, Rule One Partners LLC. This hedge fund invests its client’s money using the Rule One formula that Town himself uses!
Did the story of Phil Town inspire you? Tell me in the comments!
