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Phil Town: Navigating the Rapids of Investing

Army Veteran and investment advisor, Phil Town served in the military for four years. Town had the opportunity attend different trainings and he got to travel to different countries around the world. After leaving the military, Town had no idea what his next chapter would be. It wasn’t until he was introduced to a company […]

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Army Veteran and investment advisor, Phil Town served in the military for four years. Town had the opportunity attend different trainings and he got to travel to different countries around the world. After leaving the military, Town had no idea what his next chapter would be. It wasn’t until he was introduced to a company that did white water river adventures.

After 9 years of working in the whitewater industry and traveling the nation, a series of events led him to move to San Diego and become an investor. Throughout time, Town developed a passion for investing and wanted to share it with the world. In 2006, Town published “RULE #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week!” which became a best seller and led to the founding of Rule 1 Investing. His mission is to shift the paradigm from mutual fund manager’s managing people’s money to empowering individual investors to manage their own investments.

Through Rule 1 Investing, Town helps people take control of their money and transform their lives the Rule #1 way. He believes that investing on one’s own is rewarding and he can show people how!

What was your experience in the military?

I joined the military in 1968 and after infantry basic and AIT I was selected for Infantry Officers Candidate School, then Airborne School and then Special Forces Officers training. As a First Lieutenant, I was assigned to 8th Special Forces Group, Ft. Gulick, Canal Zone where I was given the job of S-4 of B Company overseeing logistics for six ODAs conducting operations in Latin America.  In addition, I helped conduct training at the School of the Americas for jungle warfare and counter guerilla warfare for soldiers from countries in Latin America.  In 1971, I went to Vietnam and was assigned the CO of base security for Ft. Baxter near the Marble Mountains south of Da Nang.  I left Vietnam on March1, 1972, and was back in civilian life on March 2nd. 

Tell us about your transition from military to civilian life?

My transition from military life left me in a weird state where I couldn’t plan anything.  I’d been out of the country for two years doing serious and dangerous work and it was hard for me to take this new life seriously.  I was just going day to day.  I didn’t really want to see anyone or make any plans.  I was disconnected emotionally. 

My mother had a part-time job with ARTA, a company that did whitewater river adventure trips. She introduced me to the owner of the company, Lou Elliot. He’d decided to hire a few Vietnam vets as a kind of affirmative action program and just four weeks after leaving Vietnam I was hired to train as a white water guide along with a bunch of hippies from Berkeley.  I got the job, moved into the mountains and was back in the wilderness again doing something I was good at.  I felt comfortable out there on the river, rowing hard all day, exerting myself physically, dealing with a fun kind of danger. It was similar to what I had been trained to do and I fell right into it. 

The second event that helped me transition was getting introduced by my brother to Transcendental Meditation. Meditating twice a day was a good stress reliever but I really saw the benefit after going on what they called a ‘rounding’ course.  Each day the routine was the same, wake up, do some yoga, do some breathing exercises then meditate.  That’s one round.  Repeat that round multiple times until lunch.  The afternoons were more of the same.  I did that for 8 weeks straight and when I was done, I felt like a different person; I felt much calmer and more caring and the rage that could be triggered by anything was gone.

I finished the whitewater rafting season in California and thought I’d try college again at a community college. For the first time in my life, I paid attention in school and studied hard and that spring I began working white water trips again, this time in Idaho and then by mid-summer, in Arizona on the Colorado in the Grand Canyon.  For the next 9 years I alternated studying philosophy, practicing meditation, traveling and working in the Grand Canyon.  I was mostly intentionally homeless, living on $4000 a year in my VW bus or on the floor of the meditation center in Flagstaff.  And life was good.

In 1980 I guided a group of trustees from Outward Bound down the Grand Canyon on a two-week whitewater paddle adventure. On day 7 at Crystal Rapid, the most dangerous rapid in the Grand Canyon, I made a mistake and instead of guiding the raft to the right side of the river, we were pulled by the heavy current toward a huge hole in the middle where, if we went into it, we could easily die.  To this day I don’t know how we managed to get the raft around the left side of that hole but when we got to the beach, one of the guys on the raft jumped out and threw up so I’m pretty sure he had an exciting time of it.  Another guy on the raft, told me I’d saved his life and that he owed me big time.  He wasn’t aware that I’d screwed up and nearly killed him … and I didn’t tell him.  For the next 7 days he worked on me to come see him in La Jolla, CA to see if I’d be interested in learning to invest as a way of paying me back. When we got to the end of the trip, I thanked him for his kind offer and told him I’d be in touch at the end of the season and then promptly forgot all about it.  Months later, when it was freezing cold in Flagstaff, I remembered his offer and decided to go get some sunshine in California.  He convinced me I could be an investor and I moved to San Diego and apprenticed myself to him. That was the time I think I transitioned to real civilian life so for me the transition process took 9 years.

What is your business and what do you do?

This mentor taught me to be an investor, which was remarkable since I was starting out with no money. But it was a fit: the right place, right time, right kind of thing for me to do. I learned from him for a year then I started my first partnership, raised a small amount of capital, invested it successfully then added more capital and at the end of five years, I was managing over $20 million and, by taking a percentage of the profits, I became a millionaire. 

Year later, I wrote a book about it called “RULE #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week!”. The book became a worldwide bestseller and led to a side career speaking to large groups about investing and then teaching those who were interested. I’ve spoken to over 2 million people over the last 20 years and been on stage with Presidents Ford, Carter, Clinton and Bush as well as many other notables including Prime Ministers Margaret Thatcher and Benjamin Netanyahu and General Secretary Mikail Gorbachev. And my education company, Rule One Investing, LLC, has taught thousands of students the basics of Warren Buffett-style long-term investing.  I continue to invest and have over $100 million under management today.

What are 3 things you learned in the military that you have applied to your business? 

The first thing is risk recognition. Special Forces operations are inherently dangerous, but the Special Warfare School taught us asymmetric warfare – to attack only when we knew we would win. We learned not to conduct guerillaoperations that might fail because one failure and you’re done. That is exactly the kind of thinking that an investor must have.  One of my teachers, Charlie Munger, said, “If you want to avoid losing money, invert, always invert” meaning, look at each investment the way the people are looking at it who want to sell it to you.  In fact, Warren Buffett taught us all that there are only two rules of investing: Rule #1 is ‘don’t lose money’ and Rule #2 is ‘don’t forget Rule #1’.  That could easily be the two rules of Spec Ops, just drop the word ‘money’.  

The second thing I learned is that what civilians feel is a high-risk situation almost never involves real risk.  When I came back into civilian life, I had the enormous advantage of seeing what most civilians think is risky and scary, just isn’t.  They can be terrified, but the risk is that they’ll lose their money, not their lives.  That really helps me as an investor. Something as simple as opening up a brokerage account, buying a share of stock — those are scary things to a lot of people. Experience in the military reduced my level of fear about things like that to zero and gave me the ability to remain calm and detached when a lot of investors are getting dangerously emotional.  Staying rational when others are getting fearful is the single greatest asset for an investor to use to get wealthy.  Essentially, what I do is buy fear and sell greed.  I think my military experience made it possible for me to do that well.

And third, the military taught me to lead.  The motto of infantry OCS is ‘Follow Me’.  In the military, at least in the junior officer and NCO ranks, leaders don’t just manage, they also lead from the front.  That form of leadership, where the leaders have serious skin in the game, is inspirational and brings out the best in the people who follow.  That sort of leadership is rare in corporate America. If you led people in the military, you eat last, you sleep last, you’re the last one you’re taking care of.  As an investor, that understanding of leadership makes me look for CEOs who are on a mission to do well for their people, their employees, suppliers, owners, community and environment, not just themselves.  That focus has made me and my investors a lot of money by investing with people who bring out the best in others and who build wonderful businesses that pass the test of time.

How have you used your success to send the ladder back down? (pay it forward)

The reason I write books and blogs, record podcasts and shoot educational YouTube videos is to help the little guys, people like me, transform their lives and gain financial freedom.  And people I teach pass it on, too.  There are now over 400 volunteer coaches who help us educate thousands of people every year.  And part of that education is to remind all of our students how precious our soldiers and sailors are and how easy it is for politicians to put our military people in harm’s way for the wrong reasons.  I remind people of the sacrifices made by our troops in places like Vietnam, Iraq, Syria, Somalia and Afghanistan.  I ask them to ask themselves this question: Is the reason to go to war important enough that if my kid went and died I’d feel it was worth the sacrifice?  For my entire life, the answer to that question has, with a few exceptions, tragically been ‘no’.  I learned that in the military and I’ll never forget it.  That lesson shapes my life every day, it shapes my politics and it shapes my business.  It was a harsh lesson that, unfortunately, civilians and veterans in Congress can’t seem to learn or remember.  But if enough of us make enough noise, perhaps we can keep the next generation of our warriors from making the ultimate sacrifice for nothing.

Where can readers find you on social media?

Facebook: https://www.facebook.com/rule1investing

Twitter: https://twitter.com/Rule1_Investing

Linkedin: https://www.linkedin.com/company/rule-1-investing

Youtube: https://www.youtube.com/channel/UCA8P3Rgfjn0IFZL4bmrKbrg?sub_confirmation=1&via=tb

Instagram: https://www.instagram.com/ruleoneinvesting/

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