Unfortunately, you need to read Rule #1 prior to reading Payback time. As well, at times, I felt that this could have just been added to Rule #1 since it is referenced many times. Therefore, if you are considering this book than buy both Rule #1 and Payback time and read away.

The basic premises of the book is to “stockpile” stocks by buying when the market is low and selling when they are overvalued (high). Although this sounds like the same thing as Rule #1 this book concentrates on investing rather than trading. Rule #1 teaches you how to jump in and out of the stocks based on the trends using a great company as your basis. This book teaches you to buy a great company as if you were going to own it forever and keep on buying it at whatever price as long as it meets your “stockpile price”.

As with many investing and self-help books a large part is selling you on their system. This is no different with Payback time, however, Phil does back up his advice with numbers and provides an alternative (index funds) if you’re not going to follow his advice. Chapter 2 breaks down why Mutual funds are a terrible idea and how you should consider moving your money elsewhere.

The gold of the book is Chapters 3-6 so I will provide a brief review of each chapter.
Chapter 3 is a higher level review of Rule #1. This is quick refresher and does not provide the same detail with the numbers.
Chapter 4 introduces the Sticker price and Payback time. Both of these concepts are pivotal to successful investing with this strategy and can’t hurt learning for future reference.
Chapter 5 provides the steps required to start investing with the Payback time method.
Chapter 6 provides a quick guide to using floors and ceilings to have an idea when to enter the market.

Overall, this book provided simple explanations, a method that works and made me consider my investing future. If nothing else a book like this allows you to reconsider how and where you are investing your money and if this is the best option.

My recommendation: Read it!

The first chapter deals with speculative investing compared to intelligent investing. Graham states that investing consists equally of three elements:

1. Thoroughly analyze a company, and the soundness of its underlying business, before you but the stock
2. must deliberately protect yourself again serious losses
3. must aspire to ‘adequate,’ not extraordinary, performance.

Now the question is does Rule #1 investing actually follow these three elements?

1. Yes. The keys to Rule 1 is to throughly analyze the company in question.
   • You must ensure the company has high and stable growth rates.
   • The company must have a moat to protect itself from outside attacks.
   • You must trust the management that they’ll be protecting your best interests
2. Protect yourself again serious losses
   • You must insist on having a margin of safety (MOS) which is half the sticker price.
3. Adequate performance
   • Rule #1 investing is striving for 15% return. This is not considered extraordinary returns and is definitely adequate.

Rule One Investing passes all the requirements of Intelligent Investing as considered by Benjamin Graham. This demonstrates that it’s not a flash in the pan method like The Foolish Four: How to Crush Your Mutual Funds in 15 Minutes a Year and other speculative investing methods.