Rule #1 Question of the Week: Digging into the 10K

This week's Rule #1 Question of the Week comes from AhYap, who commented on a past post:

Q: I read your book and now I am reading your blog post from post #1 until this one.  I am amazed on how you can dig so deep into the company. I try to dig the info but doesn't manage to do so... I click on the form 20-K on MSN and there are 139 pages of tiny text. I don't think you read all of them. So what is the trick to quickly get all the important information ?

And thanks for devoting your time on your book and this fantastic blog! I never read someone's blog from post #1 to the end. And this is the one I will do so. :D

A: AhYap, my friend, if you keep learning about investing, you won't be so amazed that the info is this accessible.  You'll learn, for instance, that most of the pages of the 10K filings (the annual report
filed with the SEC) are either boilerplate written by lawyers or accounting stuff that you can summarize in the Big Five Numbers (ROIC, and the growth rates for sales, earnings, equity and cash).  And once you read the useful parts of the 10K (and 10Q) you don't have to do it again. 

I hope you enjoy the blog posts.  Remember that it all boils down to finding wonderful businesses that are available at attractive prices and then moving in and out with the big guys.  If you do that you will not violate Rule #1 and in the end, you'll be a very rich person.

Now go play.

Phil