hey guys I'm Phil Town from Rule One Investing Today this is going to be great We're going to be covering a really common question I've seen popping up in the value investing community that says "Should I really be looking to buy stocks right now or should I wait for a big market correction?" It's no secret that the stock market has had a massive run over the past 5 years And I get it It feels like every time you check the Dow or big name tech companies are just hitting all-time highs Nobody really wants to be that person who buys right before everything crashes And of course we know if we've never been in the stock market that's exactly what will happen That's called the emotional rule of investing Moment I invest everything goes down So what do we do about this is waiting actually the smart move or does sitting on the sidelines end up costing you more in the long run because ERI works both ways If you don't invest well then it goes straight up like a rocket So let's break it down [Music] Hey are you ready to master the rule one strategy you guys join me and my coaching team We've got a 3-day online workshop where you're going to become a Warren Buffett style investor with our toprated education Spots are limited So scan the QR code on the screen right now and sign up today There's no doubt about it Investing is an emotionally charged experience No matter how logical we try to be our brains are constantly being pulled in different directions by fear greed and everything in between It is definitely an emotional tugof-war And right now I feel like those emotions are twofold On one hand there's that lingering fear of buying at the top What if I invest today and the market crashes tomorrow but on the other hand there's FOMO fear of missing out watching the market hit all-time high after all-time high feeling like you're just missing out if you're not invested So if you're a newer investor somebody who's looking to just put some savings to work what should you be doing right now well that really depends on what kind of investor you want to be If you're a passive investor if you're taking that passive route where someone uh is buying index funds somebody who doesn't want to think too much about it just wants broad market exposure honestly timing doesn't matter at all Whole idea behind passive investing is that you just buy in all the conditions whether the market's booming or tanking You just keep dollar cost averaging going on a regular schedule and the math backs that up Staying invested continuing to buy through the ups and downs historically leads to decent long-term results For a passive investor noticing the market is volatile or historically high just irrelevant It's a discipline You just put the money in no matter what the market's doing And here's why this works There's a saying that time in the market beats timing the market And it's not just a nice quote It's backed up by the data Fidelity has a really cool website that basically shows what would have happened if you had invested $10,000 in the S&P 500 back in October of 2003 But since then you missed 10 of the best days in the market And from that point up until today they found that if you missed the market's 10 best days just 10 you'd have $50,000 less in your account If you had stayed invested you'd have 88,000 today But missing the 10 best days knocks almost 40 grand out of your portfolio That's how much your return can hinge on a few key moments And here's the wild part Those best days usually happen right after the worst ones when everything looks bleak and the headlines are screaming "It's time to get out." Okay so if you try to time your way in and out of the market chances are you're going to miss the best recovery days And that's a recipe for underperformance Now there's a little problem with passive investing And that problem is that the market does not go up all the time The returns I just talked about occurred in one of the hottest 20-year markets in history In the last 120 years there have been three 20-year periods when the market did not go up at all Half of the time in the last 120 years the market shot up and half of the time it went nowhere If you're a passive investor just starting out and you hit that 20-year period when the market happens to go nowhere your $10,000 is still going to be $10,000 20 years later Now that's a bit scary but passive investing with the discipline to keep putting the money in no matter what And leaving it in is one way to approach investing And for many people that's just where the discussion ends But you guys that's not the strategy I personally use nor is it the strategy the best investors in the world use It's just what you do when you don't know how to invest properly If you do know how to invest you do the kind of investing we do which we call rule one investing Leelu who is one of the best investors in the world found that there is no other method of investing that assures you of excellent returns in all markets up down and sideways As rule one investors we are laser focused on finding individual businesses that we understand that have strong moes trustworthy management and that we can buy at a price that gives us a margin of safety Now when the market was going nowhere from 1965 to almost 1985 Warren Buffett made billions with this strategy The good news is that anyone can do it You just need a bit of training you guys Charlie Margaret once said "You could learn all you need to know in a week." This is why they don't teach it in college because what would they do the rest of the semester i think you can learn it in three days And one of the things you're going to learn is that sometimes you just have to be patient Sometimes there's nothing on sale In fact right now finding opportunities is really hard Even Warren Buffett the most famous rule one investor of all time has said again and again over the past few years that he's struggling to find high-quality businesses trading at anything close to fair value much less on sale And if Buffett with $350 billion in cash right now and Greg Ael who works with him Ted Wesler Todd Combmes all by his side if those guys can't find bargains you better believe the rest of us are feeling it too So what does that mean for us right should we pack it in and wait around for the next market crash should we stop investing altogether and just come back when things look cheaper no absolutely not And this is where it's important to understand this really critical nuance between rule one investing and timing the market Rule one investing is not about sitting on your hands waiting for some perfect moment that somehow you're going to see in your crystal ball And it's definitely not about trying to predict when the next dip or crash will come Even the best investors in the world can't reliably call market tops and bottoms If Warren can't do it what chance do the rest of us have so that's why rule one investing isn't about market timing It's about applying a strategy rain hail or shine and being ready for anything That means doing the work knowing your businesses knowing your watch list and being patient enough to wait for great companies to drop to get great prices And when they do that's when we act Charlie once said "We're like passive aggressive investors." We're very passive most of the time doing nothing But when it's time to act we are aggressive Warren Buffett said "Every decade or so dark clouds are going to fill the economic skies and they will briefly rain gold And when downpours of that sort occur it's imperative we rush outdoors carrying wash tubs not teaspoons Now in that quote Buffett was returning to a marketwide event But even in hot markets like we're in right now short-term problems in an individual industry or company can arise and that's what we need to be looking out for It's not market timing It's just adhering to a strict set of rules in all market conditions And yes that will mean that when the market's high you probably won't be putting the cash to work as much But that's a protective mechanism of the strategy itself It's not saying "I'm not buying the market because it's so high." It's just simply you following the triedand-true rule one strategy If the market isn't tossing you fat pitches then you just don't swing until you get one Now that isn't to say there aren't still opportunities out there that we can dig out Remember the stock market isn't a monolith It's made up of thousands of individual companies Each of those have their own story their own opportunities their own risks Even from my own experience we've been looking at a hot market since about 2016 or 17 And despite the Wilshshire GDP ratio or the Schiller PE being skyhigh I and my team have still been able to find good rule one investments at a margin of safety price over that time period We bought Apple Netflix Sprouts Farmers Market and several others that went on sale even in a hot overall market So it's worth remembering even during strong bull runs opportunities still arise and even great businesses can fall out of favor Now maybe they missed their earnings for a very short-term reason Maybe there's some drama in the news maybe there's a whole industry under pressure and any case we find that as a good reason to step in Now one of my investments that I've spoken about before is Chipotle Mexican Grill I mean I've written about this in my book Rule Number One This is a wonderful company but in late 2015 they had an E.oli outbreak Now these things unfortunately do happen in the restaurant industry but they're inevitably a short-term event Every good restaurant gets control of it Yet despite knowing this the market dumped 60% off the stock price from around $15 down to $6 Now these are postsplit prices when you look at their chart And it's worth noting that this happened in a market that's been surging Now this was a market that basically hadn't gone down since the 2009 lows It certainly wasn't a cheap time to buy stocks And yet Chipotle went on sale for six bucks and then eventually hit $63 a share So it really shows you that opportunities can still come up even in overvalued markets Think about that It went from 6 to 63 in about 6 years you guys Imagine that $1,000 invested right there becomes$10,000 I mean in six years that's stunning So what do we do now do we abandon investing now do we come back after the market crashes no Our job as rule one investors is to stay steady We build our watch list We do our homework We study the businesses we love and we wait for the market to give us a gift in one of those businesses And sure when the market's sky-high those gifts are much less frequent but they do happen And believe me when that gift comes when a high quality company with a wide moat and honest management drops to a price that gives us a solid margin of safety man that's when you have to swing Big fat pitch big fat swing Not because the market overall is up or down but because the business is undervalued relative to its sticker price Now that's the mindset you need you guys It's not fear It's not fear missing out FOMO but it's focused preparation We don't need to predict the future of the market We just need to stay patient recognize a great deal when it's right in front of us and have the courage and clarity to act when the time comes Now as I sign off here if you're someone who's looking to take the next step and properly learn rule one strategy my team and I would love to teach you so you can join us at an upcoming workshop I teach for 3 days entirely online We go through everything you need to know to become a rule one investor like Warren and Charlie and me We have over 25,000 graduates who will tell you this is simply the best investing education in the world And we have the MPS scores to prove it averaging 82 far better than Harvard and Yale MBA programs So please check out the links in the description and pin comment to learn more I'd love to see you there Apart from that thanks for watching Now go play