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> Phil Town claims to have turned $1,000 into $1,000,000 in five years
> in the early 1980s. That's a CAGR of 297%. From August 1982 to August
> 1987 the Dow had a terrific bull run but it only managed to have a
> CAGR of 28%.

There is always some hype behind such marketing. But in his book Phil
doesn't claim or offer any such phenomenal returns. He aims for 15% and claims to be consistently getting 20%.

My own experience with the Rule#1 method has been quite good. I only started investing last year, so I certainly cannot claim any consistent historical returns. But all I can say is that I have not lost any significant money on a single stock I have bought using Rule#1. And here are some of my Rule#1 successes: AAPL, NVDA, NTRI, CRDN, FCX, RIMM, MTW, GRP. Admittedly, I applied Rule#1 to some of these companies over a much shorter historical time span than what Phil recommends in his book. And I sometimes even buy stocks when the margin of safety isn't quite 1/2. Even so, the strategy seems solid.

My thoughts are that Rule#1 is quite good on consistent performers. But BMW may be better on old businesses that are going through some temporary weakness. Rule#1 wouldn't permit buying a stock whose numbers
are showing inconsistency. For instance, MMM had negative equity growth
in 2006. So its not a Rule#1 stock. But obviously, the BMW method has been quite successful on it. On the flip side, the BMW method would have considered AAPL to be overpriced when it was at $80 - given that the historical avg CAGR was just 6.9%.


- Mohit
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