To most individuals, Rule #1 investors are value investors. They see us as attempting to purchase cheap stocks and group us in with the genuine "value" investors who are centered around sub-10 PE ratios. We're not that dogmatic. We hunt down "cheap" even in stocks with PE's in the 20's, yet its not out of line to order us with the main group that Ben Graham initially created.
Applying Value Investing to Rule #1
We do for sure attempt to discover cheap stuff, although we prefer it to be wonderful cheap stuff, I'll buy less than wonderful stuff if:
a) It's cheap enough, and
b) It's durable and consistent enough to determine (a).
I wrote in Rule #1 and Payback Time that I am searching for 10% growth rates in the Big Four and ROE's over 10% and no debt, I'm not stubborn about it. Yes, the Town Toolbox will paint scores that are short of ideal with red or yellow, however its a computer program, not a human brain, and until I can evaluate a finer approach to sort what's out there, those Rule #1 Scores will have to do for a starter.
The point here is to not let those Scores be an ender. Furthermore, the best approach to do that is, obviously, to make sure you know your industry and business.