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.