November 21, 2014

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.


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November 14, 2014

Bull Markets vs. Bear Markets

I sometimes get asked by investors what is a bull market and what is a bear market and how does it relate to Rule #1 Investing?  

Well let me put it in our terms…

We’re really excited about buying when there’s a lot of fear and we’re really excited about selling when there’s a lot of greed in the stock market. I’m going to tell you about how to take advantage of a bull and bear market.


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November 06, 2014

Events That Cause Stock Prices to Change

This is a one of the most critical things I could ever show you about stock market prices… 

How is a stock price determined?

What are the reasons stocks go on sale?

The reason this is so essential is on the grounds that there's a colossal number of individuals who invest into stocks, who have been taught in business school that stocks never go on sale.

They are taught that the value of the business is determines the price of the stock.

Rule #1 investors don't believe that is genuine. Warren Buffett doesn't think it’s true, and the rest of the best financial specialists on the planet don't think it’s true either. 


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