Phil Town on MSNBC
Filed under: Phil Town, Phil Town Investing, Phil Town Investor, phil town payback time
Here is Phil Town at CNBC Studios recording for the YOUR Money broadcast for this Sunday October 11th. Phil Town is an investing expert and bestselling author of the NY Times bestselling book RULE #1.
Phil Town PAYBACK TIME book will be in stores on Feb. 2010. In this new book Phil show’s you how to get back in the market and capitalize on buying companies that are on sale for cheap.
Phil Town teaches Stockpiling
Some of you have been doing some thinking and digging around in the new book by Phil Town called PAYBACK TIME. You want to know why you shouldn’t buy and hold a wonderful business we buy on sale instead of trading it. Trading has a transaction cost, can be inaccurate in the short run and will certainly cost you some of your profit. It also has the advantage of getting you out of a stock that is about to take a huge nose-dive. Its not perfect but it is pretty good insurance and it reduces the amount of effort you have to put into determining whether the business is a good one and whether you got the price/value thing right for Rule #1 investing.
Phil Town’s Payback Time presents the buy and hold strategy of Phil Town investing in a whole new light with step by step instructions for implementation. Its the price of the business that will be repaid in a very short number of years out of earnings.
Therefore, in 5 years you have your money back (assuming you don’t need any additional working capital to keep it going).
Of course Mr. Town teaches, that with public companies, we’re not going to be able to buy the whole thing. But if you buy right, if we use Payback Time as a measure of the purchase price, we should properly expect that the market will properly price the business as time goes along and we will see a profit on our investment. In fact, we might even be able to get our money out of the investment in a short time - a year or two - and what we leave in the deal is all house money.
And to jack up our profit, we can add some cool techniques to generate cash flow using Puts and Calls with absolutely zero risk. Phil Town knows that seems crazy but the whole origin of options was to reduce or remove the risk of owning something scary like a wheat crop.
Phil Town on Weak Management
Ayn Rand wrote this back in 1957 when General Motors was a very strong company but starting to be strongly influenced by the AFL-CIO Unions. When employees have a union and put a gun at the head of weak management, and weak management agrees to go along with demands that they reasonably know they shouldn’t be able to afford, you end up producing more and more bad automobiles. That is when you take the gold stamp of General Motors, the great brand and you ruin it. That wonderful American brand is destroyed now because the company is completely gone. But it took 40 years to destroy the best brand automobile in the world and it was basically done by weak managers that didn’t have the guts to stand up for what was right with the unions. The trade unions were not so interested in the survival of a company but just tend keep milking the cow, taking more than they could possibly afford. At that time, when they started this whole downward pressure on GM, there wasn’t any worldwide competition but competition ended up killing them. The capitalistic system cannot be screwed with. You can’t take more than it’s worth because somebody’s going to come along and take your business.
Japan took it this time and if they don’t continue developing better and better automobiles then China will take it away from Japan. So, Atlas Shrugged just got a whole section of the 20th century motor company which went down the tubes because of that sort of a situation, so it’s worth reading man. I like that book a lot. I feel like everything she says but I like — the general principles are very, very good. If you want to be a good investor long term, you should read Atlas Shrugged by Ayn Rand, written in 1957, very good stuff for Phil Town investing.
Phil Town soaring on a private jet
Because I expected the pilot of the aircraft to be competent and it wasn’t a big surprise to me that he did his job without a problem. That’s also what we should expect from the CEO of any company we use for Phil Town investing. Remember, if we buy one share of something, its no different than if we own the whole thing. Therefore, the CEO is our employee and we should expect … no, demand, the CEO be as certain to do the right thing as my pilot. I don’t expect my pilot to wreck the jet. And I don’t expect my CEO to crash my company. Pilots go through a certification process and constant re-certification to make sure they are competent. CEO’s do the same thing even more often than pilots. The exams are called quarterly and annual reports. The pilot has an FAA examiner who grades him. I am my own examiner and I do the grading. If the pilot fails, he doesn’t fly. If the CEO fails, I don’t buy. I sell. There is on old saying in venture capital (to switch metaphors): Bet the jockey, not the horse. Because its all about how they ride the horse, fly the jet, run the business. Its all about competence as a Phil Town Rule 1 follower.
Breaking News on Phil Town
Phil Town was speaking at an investing conference in Singapore for the last week. It sounds like it was a success investing workshop with lots of attendees. Phil Town and Melissa were scheduled to fly out from Singapore on Monday August 31 from Singapore. However, they were detained and unable to leave the country to fly back to the US. The details are still coming about why this was a “BIG Problem” but as of now Phil hopes all this can be cleared for them to leave in a few days. Follow all the latest Phil Town Tweets on Twitter at http://twitter.com/PhilBTown
Phil Town on Real Estate Investing
Filed under: Phil Town, Phil Town Investing, Phil Town Rule#1 Author, Rule #1
Phil Town’s Real Estate Investing advice 2009.
“You’ve got money to invest”, says Phil Town. What should you do? Maybe buy a house cheap in today’s bad real estate market.
But why is it a bad market? Before the bubble it was common to pay 8 or 9% for a mortgage. If you have $1000 per month available to pay the mortgage you could handle a $130,000 mortgage for House X. But if the bank lent you the money at 4% you could handle a mortgage of $210,000. What happened in real estate is the mortgage rates went down and people discovered they could buy a more expensive house for the same monthly payment, so they started buying a more expensive house – HOUSE Y. And the market responded by raising house prices. Eventually prices rose to a point where the only house you could buy for $210,000 was House X. That’s where we are today. So what happens when mortgage rates go back up to 8 or 9%? The opposite. Prices of homes collapse downward.
So why would mortgages go up to 8 or 9%? A home loan is a long term loan. Someone is holding the mortgage for 30 years before its paid off. How would you feel about lending me money at 4% if inflation is running 6% per year? You should feel stupid. You lent me $1 Million of buying power today and over the next 30 years you’ll receive money which has the buying power of about $600,000.
Lenders have to lend at a rate above what they think inflation is going to be over a 30 year time frame or they get screwed. Instead of making money on the money you lent me, you’d be losing it. Bankers don’t get all those nice bank buildings because they are stupid. If we are going to get inflation, we are going to get high mortgage rates. And real estate is going to go nowhere. Phil Town is a Rule#1 investor.
Now go play.
Investing Seminar with Phil Town
Filed under: Phil Town, Phil Town Investing, Phil Town Rule#1 Author
Phil Town Investing
Here Phil Town is speaking at a large investing conference in Greensboro, NC. The crowd was so enthusiastic as Phil talked about investing and having the right investools for building wealth. Phil Town is a great speaker and the audience went wild for nearly an hour as he spoke about investing.