Letters to the Editor
To the Editors:
After reading Wayne Thorps article on Rule #1, I am confused [The Rule #1 Approach to Finding Wonderful Companies, October 2007 AAII Journal]. There seems to be a disconnect between the conservative dont-lose-money philosophy espoused by Mr. Town and the fantastic returns he claims to have achieved ($1,000 to $1 million in five years). He tripled or quadrupled his money annually. In finance, reward is generally tied to risk. His results indicate a high-risk, high-reward philosophynot one that seeks to prevent losses. Perhaps he addresses this discrepancy in his book. But for readers who havent read the book, it would have been enlightening to address that issue. Even your own backtesting doesnt produce those kind of results.
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