Basic Investing for Retirement

The first Phil Town rule is never ever lose money as an investor. So ask yourself, if the market melts down again in 2010 will you get bamboozled in a diversified traditional mutual fund? Probably . Look at Warren Buffett right now is he out of the market and in cash? Yes. Why? Because the market is too expensive and is likely to go back down. What do you lose by going into cash (money market account)? You lose the upside if the market goes up. Is it likely to go up from where the DOW is today around 10,000? Nope, no way man.

This Phil Town simple analysis should answer a lot of questions about what to do when it comes to mutual fun investing. If you don't know what you are doing right now in this market, get to cash like Mr. Buffett unless you have 30 years before retirement. And most of us probably don't.

Phil Town Investing is about investing in something you understand, that has a big moat around it, with super good management and a huge margin of safety below the real value. Your mutual fund manager is not going to do that for you, so you have to choose: start your education quickly and little by little bring up your knowledge to where you can invest it all on your own. At this point there is no other way to go that I know of.
So once you get into cash, what can you do to 1) not lose any more money and 2) make a good rate of return - absolutely a 15% a year?


So it all boils down to this: invest in stocks as businesses, understand the business so that you can know what the business is worth, and then wait for Mr. Market's regular fluctuations to price it with a big margin of safety. This way of RULE #1 investing has worked for the last hundred years and it will be the basis of investing for the next one hundred as well.