"Always buy more earnings with fewer dollars."
When you complete this book, you will be able to build your own world-class portfolio of stocks with confidence. It will be a fluid and dynamic portfolio that will change composition as the market changes. The concepts you will learn here will keep you from losing a lot of money in terrible markets and help you make a lot of money in great markets. You will know what to buy, when to buy, and, most importantly, when to sell. No more guessing—and no more sleepless nights.
Before I get into the objective of this rule, let me share a quick story with you. One day, when I was about 16, I was getting ready to go out with some of my friends. Way back then (in the mid-1960s), a dollar was enough to buy some gasoline and a pretty decent meal at the local drive-in. And I was broke. So I asked my dad a question, and after his response, I never asked again.
I asked, "Dad, do you have an extra dollar?" Of course, my assumption was that he would give me a dollar. But he looked at me and said, "Just what is an 'extra' dollar? I've never seen an 'extra' dollar. What does an 'extra' dollar look like? In fact, I've never even heard of an 'extra' dollar." He kept on and on about it. Finally, after he quit driving his point home, I restated my request. I said, "Dad, may I borrow a dollar from you?" His answer ...