Phil Town Payback Time
phil town payback time
In Rule #1 Phil Town wrote about how to know if a business is wonderful and on sale – the two requirements that Phil Town teaches in order to be certain to make money. Most investors buy and hold because that’s all they really have time to do. So Phil Town wrote about how to do it right in his 2nd book Payback Time.
Phil Town Payback Time is about the proper way to buy and hold a stock. The most critical part of buying and holding is making sure you are buying a good business ON SALE. You’ve got to know what the thing is worth and buy it for a lot, lot less if you want your long term investing results to be spectacular – like 25% a year kind of spectacular. To get returns like that, you have to buy right. I call buying right the Payback Time Price. Phil Town’s Payback Time is a concept that he borrowed from doing private equity deals. When we buy a private business, we’re not so certain where we are going to sell it. Maybe no one wants it when we want to sell it. So we wanted to be sure we could get our money out of the deal from earnings in a short time. Like 7 years or so. The time it takes to get your money out of a deal is called Phil Town Payback Time .