INVESTOOLS BUILDS RULE #1 SEARCH

Kudos to Investools for building a Rule #1 search.  Their team did a lot of work to determine how to best use the 700 some data points that they collect on each stock to find wonderful businesses that we can buy at attractive prices.  The main focus of the Rule #1 pre-built search is to find stocks that demonstrate with consistent long term key numbers that they have a solid moat.

 

You can now let the computer do the digging by clicking on Search, then on the left menu click on Strategy Searches.  Click on Rule #1 Search and then scroll to the bottom of the criteria screen and click on "To find stocks in good "moat" please click here."

I just ran the search for the first time after being alerted by Kymberly K. (see the bottom of this post for her email) that the search is up and running.  I have to say that this search does a great job of isolating some seriously wonderful buisnesses. 

On my list yesterday I saw Cognizant, Ultra Petroleum, Usana, ITT Ed., Panera, Armor, Fiserv, Harley Davidson, Fedex, Exxon, Sherwin Williams, Pepsi, Costco, Amgen, Walgreen's, Wrigley, Executive Board, Williams Sonoma and many more. 

What this search digs up are really good long term growers that are consistent.  That is a sign of a great moat -- that wonderful protection against competition that only some sort of quasi-monopoly provides. 

Look on this list and you'll see businesses that don't have to spend a lot of money to keep the competitors away. That means that they can use that money to grow their markets, not just to keep their customers. And that is the heart and soul of a great business money-making machine.

But remember that no matter how wonderful the business, it's the price you pay for it that makes it a great investment.  While we certainly agree with Mr. Buffett's partner, Charlie Munger, that we would rather have a wonderful business at a fair price than a fair business at a wonderful price, what we really want to find is a wonderful business at a wonderful price.

This search will find some wonderful businesses as I define them in Rule #1.  But you are going to have to use the valuation tools on Investools or do it with spreadsheets or the tools here on this site to determine the Sticker Price of these businesses.  It's pretty quick.  You can do one a minute easy. 

 

Nirvana is a wonderful business that is on sale.  That's what we are waiting patiently for -- and when we see it, we load up the truck.  This search certainly helps us shorten the process by finding great businesses quickly.

But what if you don't have the money for Investools?  You can still find great businesses.  Look on Yahoo Finance/Industries and look at the biggest businesses in each industry for a kind of "best of breed" search. 

This is not super fast and you have to do more work, but you're building sweat equity and learning more about the industries you might want to become an expert in -- so it's not a waste of time.  So even if you don't have the best tools, no excuses.  I don't want to hear "I can't ..." because that inevitably leads you to "I won't."  You will if you just take a few baby steps.

 

Now go play.

 

Phil

Kymberly's email:

Hi Phil!

Did you know that INVESTools/Success has created a Rule #1 Search in your  honor?  Go the Searches tab and on the left hand menu you will see "Strategy searches."  After clicking that link, a new page will appear.  The search with the title "Rule #1 Search" was made for those that invest the way that you do!  If you click the title you will get a new screen with one hundred qualified stocks.  The results are phenomenal!  Every stock on this list is extremely high quality!  Thank you!!!

I'll be honest, I hadn't heard of you before I saw the search, but they credited you as the genius behind it and I must say, your criteria are stringent but powerful!  After doing a little digging (okay I "Googled" you), I discovered your book.  I bought it yesterday and I couldn't put it down until I finished it (moments ago).  You have renewed my core beliefs in building wealth.  The simple truths that you share have set me free.  Again, thank you!

Do you plan on sharing the news about the "Rule #1 Search" with your fans?  I can't imagine trying to find great stocks without it, and it is so fast and easy!  I feel like I'm making money already just because I found the kinds of great stocks you promote!

Thanks for being the "real deal."  I hope to see you at a "Get Motivated" event soon.

Kymberly K.
CA