THERE IS A CONTRADICITION BETWEEN THE TWO BOOKS. "THE MOTLEYFOOL INVESTMENT WORKBOOK" AND THE NEW "RULE BREAKERS AND RULE MAKERS". MOTLEYFOOL INVESTMENT BOOK SAYS USE SOME RATIOS FOR PICKING SOME STOCKS AND THE RB & RM SAYS USE LOGIC.I KNOW THAT THERE SHOULD BE NO CONTRADICTION BETWEEN THE TWO. BUT I AM THE ONE, CONFUSSED. PLEASE HELP CLARIFY.
The two books are written for different stages of investment education. The general structure followed by the books is:1)Pay off debt2)Index funds3)Foolish Four4)What I describe as "classic" investing, going through all sorts of standard ratios5)Rule Makers- using different criteria from "classic" along with judgement decisions6)Rule Breaker, with few numbers but more judgements.The idea is that, as your experience grows, you can move away from mechanical investing, through number crunching and finally into pure evaluation of the business itself. Many RM and RB stocks would fail the ratio tests- Yahoo's P/E ratio isn't exactly small, but it has made money. Ratio investors would have steered clear while those who understood the company would have been willing to take the risk. The key word is risk. If your judgement is poor, you will lose on RMs and RBs, whilst if you are using the Foolish Four, your judgement has no effect.AngusP.S. One request, KASEM5139, drop the capitals- it will be easier for others to read your posts.
In the beginning of RMRB it is stated that they wrote the book to explain why they sometimes went outside the small-cap selection perimeters (in there portfolio) given in other books. In there fool portfolio they used a mix of both investment approaches (RB and foolish 8). They actually have written about two radically different agressive long strategies. One uses numbers a lot more and one uses a lot more logic.
Is it recommended to invest in the Foolish Four before investing in a Rule Breaker?
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