Product Description

Don’t get mad, get even…
 
Phil Town’s first book, the #1 New York Times bestseller Rule #1, was a guide to stock trading for people who believe they lack the knowledge to trade.  But because many people aren’t ready to go from mutual funds directly into trading without understanding investing—for the long term – he created Payback Time.
 
Too often, people see long-term investing as “mutual fund contributing” – otherwise known as “long-term hoping.”  But the sad truth is that mutual fund investors are, to a stunning degree, pinning their hopes on an institution that is hopeless.  It turns out that only 4% of fund managers consistently beat the S&P 500 index over the long term, which means that 96% of fund investors see a smaller return on their nest egg than a chimpanzee who simply buys stocks in the 500 biggest companies in America and watches what happens.
 
But it’s worse than that.  The net effect of hitching your wagon to mutual funds is that over a lifetime they’ll fritter away as much 60% of your nest egg in fees.  Once you understand how funds engineer this, you’ll rush  to invest on your own.
 
Payback Time’s risk-free approach is called “stockpiling” and it’s how billionaires get rich in bad markets.  It’s a set of rules for investing (not trading but investing) in the right businesses at the right time -- rules that will ensure you make the big money. 

Product Details

• Amazon Sales Rank: #17646 in Books
• Published on: 2010-03-02
• Released on: 2010-03-02
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 288 pages

Features

• ISBN13: 9780307461865
• Condition: New
• Notes: BUY WITH CONFIDENCE, Over one million books sold! 98% Positive feedback. Compare our books, prices and service to the competition. 100% Satisfaction Guaranteed

Review
“Finally, an investment book that’s easy to understand and actually works in the real world.  PAYBACK TIME will make a lot of people very, very rich!”
--T. Harv Eker, author of the New York Times #1 bestseller, SECRETS OF THE MILLIONAIRE MIND
 
“There's never been a better time then now to start over and finish rich!  Recessions make millionaires and Phil Town's strategy for stockpiling wealth in the stock market is a fantastic vehicle for achieving that goal.  You'll realize when you read this that it’s still possible to recapture your dreams of a richer, better future.”
 --David Bach, #1 New York Times bestselling author of START OVER, FINISH RICH and THE AUTOMATIC MILLIONAIRE
 
“Masterful in its insights...brilliant in its simplicity and practicality! With uncompromising clarity, Phil Town exposes the truth about how poorly mutual fund managers perform, then proceeds to teach a very precise methodology for finding, evaluating, and investing in valuable businesses. PAYBACK TIME is a must read for everyone who's ready to take complete control of their financial freedom, and wants to do so with confidence, safety, and sound investment principles.”
--Tony Martinez, Founding Partner, Wealth Without Risk, LLC
 
“Town knows how to play by the rules in the ‘making big money’ game. Consider his book a gift to your financial library.”
--Robyn Spizman, New York Times bestselling author and founder of The Giftionary.com

“An incredible book that will teach you how to achieve financial independence faster than you ever thought possible.”
--Brian Tracy, President, Brian Tracy International
 
"Town has nailed it…PAYBACK TIME gives you the insight and mindset to maximize your investments.”
--Joe Sweeney, President of Corporate Financial Advisors and author of NETWORKING IS A CONTACT SPORT

About the Author
PHIL TOWN has addressed millions of people, sharing the stage with such respected public figures as Bill Clinton, Colin Powell and Rudy Giuliani. He appears frequently on CNBC as an investing expert.  Currently, he makes his home in Jackson Hole, Wyoming.
 

Excerpt. © Reprinted by permission. All rights reserved.
CHAPTER 1

HOW the WEALTHY USE DOWN to GO UP

"There are risks and costs to a program of action. But they are far less than the long-range risks and costs of comfortable inaction."
—John F. Kennedy
 
The best investment strategy I know is so counterintuitive, so shockingly upside down, such a crazy way of thinking about investing that hardly anyone who uses it wants to even try to explain it. It’s not at all hard to do, but it is hard to explain. It just sounds so . . . impossible. But smart investors do it all the time and, man, does it work! I mean it really works. It’s an “I can do whatever I want the rest of my life” kind of works. It works so well, it’s the secret to the investing success of the best and richest investors in the world. Seriously.
 
I know that sounds like hype, but honestly it’s impossible to overstate the effectiveness of this strategy. It really is the basis of the biggest fortunes in the world, including those of quite a number of Forbes’s World’s Billionaires list. For example, #3 is Carlos Slim Helu, the Mexican telecom entrepreneur who is worth $35 billion and is currently buying into cheap media, energy, and retail assets, including the New York Times, using this strategy. Lakshmi Mittal, #8, of India, created a $19 billion fortune and now runs the world’s largest steel company, ArcelorMittal. He built ArcelorMittal using this strategy in Eastern Europe in the 1990s after the Berlin Wall came down. Number 15 is Bernard Arnault of France, who built a $16 billion fortune by acquiring Christian Dior with this strategy.
 
Number 16 on the World’s Billionaires list is Li Ka-shing of  China, who made $16 billion acquiring energy, banking, and utility companies with this strategy. Charles Koch and David Koch are ranked #19 with $14 billion each, which they got by using this strategy to build Koch Industries—one of the largest, privately held corporations in the United States. Michael Otto of Germany is ranked #23 and is using this strategy to take advantage of weak markets in the United States to buy up shopping centers in America. Don Bren is #26. He used it to become the sole owner of the Irvine Company and bank $12 billion. The Irvine Company is one of the largest construction companies in California and the developer of about a fifth of Orange County.
 
 
The list of billionaires who used this strategy to become mega-wealthy goes on and on but wouldn’t be complete without mentioning that the world’s second wealthiest man, Warren Buffett (worth $37 billion), the world’s best investor, used this strategy of investing to build his immense fortune and to increase his ownership and compounded return in companies like American Express, Washington Post, GEICO, and Coca-Cola.
 
This strategy is also the basis of thousands of little fortunes, including mine. In fact, as any of the billionaires I mentioned above would agree, it’s much easier to use the strategy if you are a small investor. Being a big investor is actually a huge disadvantage in using this strategy. Mr. Buffett once said, “Anyone who says that size does not hurt investment performance is selling. The highest rates of return I’ve ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It’s a huge structural advantage not to have a lot of money.”*
I used this strategy to build my wealth by buying shares of bioscience, software, and other private companies. And soon, if you pay attention and are willing to do a bit of fun work, you’ll discover that this incredible strategy can be the basis of your fortune, too.
 
STOCKPILING
 
I call this amazing strategy “stockpiling” . . . as in “stash,” “accumulate,” and “collect.” It means exactly as it sounds—stockpiling, as in piling up stocks. Not just any stock at any price, though. The essence of stockpiling is to buy stock in a business you’d be excited to own all of, then hope the price goes down so you can “stash,” “accumulate,” and “collect” as much as you can afford at as low a price as possible. Sounds strange, I know. But again, all of the billionaires I listed above and many more on Forbes’s World’s Billionaires list are stockpilers of businesses. (Note: This list might have changed by the time you read this but not the stories behind these guys’ wealth-building strategies.)
 
Buy a Business, Not a Stock
“Buy a Business, Not a Stock” was a chapter title in my first book. It’s such a key way of thinking that I can’t reiterate it enough: You must stop thinking that stock investing is any different from buying a business. When you buy a business you’re buying shares of the business. If you buy some percentage of the total shares, you become a part owner. Buy all the shares and you own the whole business. There is no difference between that process and buying public stock in a business. As long as you treat owning shares of public stocks as different from owning a piece of a business, you will fail to understand and execute the stockpiling strategy. A typical stock investor is unhappy when the price of his stock goes down, because he has no understanding of the true value of the business that stock represents. But that’s because typical stock investors are not investors at all. They don’t understand stockpiling, so they inadvertently have become speculators and outright gamblers.
 
The unfortunate truth is that the financial services industry has conned many millions of people into their game of stock speculation via mutual funds. I’ll have a lot more on that in the next chapter. For now, let’s just remember that for this book and for the rest of your investing career, you must think of stocks as shares of a business, and yourself as the owner of that business. So if you buy just ten shares of Coca-Cola, you’re a part owner of Coke—not a stock investor in Coke. Got that? When you begin to think like this, you’re joining some truly great investors like Buffett, and you’re on the first step toward becoming a solid stockpiler of stocks, er, businesses.
 
“The basic ideas of investing,” Buffett says, “are to look at stocks as a business, use a market’s fluctuations to your advantage, and seek a Margin of Safety. That’s what Ben Graham taught us. A hundred years from now, these will still be the cornerstones of investing.”
 
From the late 1990s until 2008, Warren Buffett bought very few public stocks. He mostly just sat on about $45 billion of Berkshire Hathaway’s cash, waiting patiently for Mr. Market to become fearful enough about the future to bring the prices of wonderful public businesses down to levels at which he was willing to buy. In May 2008 Mr. Buffett told his fans at the annual Berkshire conference that he hoped the stock market would drop 50 percent so he could finally put all his cash to work. Then the market crashed, and in October 2008 he invested $20 billion in public companies.
 
But here’s the classic part of the story: As prices of the businesses Berkshire owned—and still owns, as of this writing—plummeted, and the Berkshire stock price dropped accordingly, Mr. Buffett was attacked, again, for being over the hill and out of touch. The proof? The prices of businesses he owns were going down.
 
This is not the first time he’s been accused of losing his touch. In the late 1960s he was sitting on a lot of Buffett Partnership cash. His unwillingness to chase high prices disturbed enough Buffett Partnership partners that Mr. Buffett dissolved the partnership, gave his partners back their money, and shifted his stockpiling strategy to Berkshire Hathaway, where he would no longer be required to deal with limited partners whining about his lack of investing activity.
 
Of course, he turned Berkshire into the world’s most successful investment vehicle. Ten thousand dollars invested in Berkshire in 1969 is now worth $40 million. Again in the late 1990s, as mutual funds racked up big gains by buying technology stocks, Mr. Buffett was accused of being behind the times. His ideas became more popular after the Nasdaq plunged 85 percent during the dot-com bust.
 
The fact is, stockpiling is something people either get right away or never understand at all, no matter how much sense the strategy makes or how much money the people who practice it make.
 
The Secret to Risk-Free Stockpiling Is Knowing Price Is Not Value
 
Okay, there’s obviously more to stockpiling than just buying a stock and hoping the price goes down. What Warren Buffett and a lot of other billionaires know is that the price of a stock doesn’t always have a whole lot to do with how much that business is actually worth. To put it another way, you have to learn how to look beyond stock price and at a business’s value.
 
The one and only secret to stockpiling is to make sure the value of the business is substantially greater than the price you are paying for it. I swear to you that’s all there is to it. If you get this right, you cannot help but get rich. Most investors make the mistake of thinking the price they paid has some necessary connection to the value of the thing they bought. I don’t know why stock market investors think that when it’s so manifestly and obviously not true in any other sort of market they buy in regularly. Surely they bought a used car sometime in their lives. They wouldn’t confuse the price being asked for a used car with the value of that car, would they? Just because a guy is asking $5,000 for his old Toyota doesn’t mean it’s actually worth $5,000. If you&rsqu...

Customer Reviews

Little new information
I've read Rule # 1 back when it first came out and I thought it was excellent. I'm about halfway done with Payback Time and so far 90% of the information is simply rehashed information from his first book. The one thing that appears to have changed is that MSN now apparently gives 10 year data for free, which was not available when Rule # 1 came out (back then you had to pay a third-party company to obtain 10-year data about a stock and MSN and Yahoo only offered 5-year data if I remember correctly). So if you haven't read either book and are wondering which one to pick up I would say go for the second one (Payback Time). If you've read Rule # 1, reading the second book certainly won't hurt for repetition sake, just don't expect any major new information. The concept of stockpiling is nothing revolutionary. Simply buy more shares when the price goes down. Wow. The one thing I did not like about Payback Time is how Phil is constantly directing the reader back to his website for every little piece of extra information. And he doesn't tell you what link on his site to click on for each piece of information so you end up randomly clicking on his site until you find what you're looking for (not to mention the fact that you have to register in order to use the site in the first place and it keeps on logging you out every few minutes for some reason).
Having said that, I still have to give credit to Phil for his clear writing style. He has a special ability to take complex information and making it understandable to the average person. I also like the fact that he gives his email address in the book and encourages readers to contact him with any questions. I like that type of service. I will update this review as soon as I'm done reading the book.

3/16/10: As a side note, I also have noticed, like others, that many of the raving reviews for this book sound fake (some almost sound like an infomercial) and are from users who have only reviewed a single item (i.e. this book).

4/1/10: In chapter 5, "Eight Baby Steps to Wealth", Phil walks you through a tool on MSN's website called "Deluxe (stock) Screener" (also known as "Supercharge your search"). It's supposed to be a free stock screener that lets you find companies that match Phil's criteria for great companies (saves you a ton of time). Unfortunately, this tool no longer exists (MSN retired it back in November of '09!). However, Phil recently posted an entry on his blog saying that you can find the exact same information on google's website. If you go to "Google Finance" look for Stock Screener. It's supposed to be just as good as MSN's Deluxe Screener. I will be playing around with this tool and will post an update soon.

5/26: Remember how I said that Phil gives out his email address in his book and encourages readers to ask him questions? Well, I sent him a question (regarding the use of Google Finance - see my post from 4/1) in late March all I got was an automated reply saying that someone would get back to me and no one ever did. So much for that. So if you have any questions, I would call the number listed on Phil's website. They will answer your questions.

Valuable Introduction to Buying Low and Selling High as an Individual Investor
"Both low and high,
Rich and poor together." -- Psalm 49:2 (NKJV)

If you read and liked Rule #1 and are using that method, you probably will be disappointed in Payback Time. If Rule #1 seemed appealing, but was beyond what you could apply on your own, you'll probably find Payback Time easier to use.

I once attended a major investing seminar conducted by one of the most famous motivational speakers in the world. He spent two hours on an exercise where we were supposed to learn to buy low and sell high. Most people were delighted with that lesson, even though we only learned the principle . . . not how to implement it. I was shocked to see how little it takes to please those who don't know much about stock investing. But I assume you are well beyond that level.

If you are fan of Rule #1 (as I am), let me cut to the chase: Payback Time primarily gives you a buy-low-and-hold version of Rule #1 along with an update concerning online resources available and a more complete Web site to help you perform the details. Of the two books, Rule #1 is for those who want to be very active investors. Payback Time is for those who want to do less work and pay less attention to the market day-to-day.

Lest you take that point lightly, let me mention that I once had a book contract to write a similar book. I returned the contract after a few months of struggling to explain in simple language with not too many words how to do some similar evaluations. I found it to be harder than it was worth doing. As a result, I admire Phil Town for sticking with his writing to produce a book that is clear, simple, and not too hard to implement.

Do I take exception to anything he had to say? Sure I do. Anyone would. But the advice is pretty sound.

I thought the best part of the book was in defining the sell discipline, something few investment books take seriously. I think he sets a pretty high target, one that may cause you to miss some well-timed selling opportunities.

The main problem with the method is that to have lots of opportunities you require stock market collapses occurring reasonably often. During a period such as the 1990s (especially on the NASDAQ), you might find it difficult to apply the method to stocks you understand well that are dramatically under priced. In today's environment, I suspect bargains by this method are few, for instance.

My main quibble with the book is that Mr. Town spends about 20 percent of the content explaining that mutual fund returns aren't very good, the expenses piled onto mutual funds cause your returns to be much lower, and sharing his view that you cannot count on Social Security. All of this material was worth about two or three pages, not fifty.

Do your homework!

Great add up to Rule #1
I have my own results to prove what I learned from Phil's Book Rule One and Payback Time. I started a 100K portfolio in february 2009 when all the technical indicators on the S&P 500 where indicating me to get in. I picked 8 stocks that I screened according to his methods that meet the Big 5 numbers criteria , had meaning, moat and good management. Its been a little more than a year , i sold a few times and bought back. Currently my portfolio is up 161.5% in a little more than one year. I started using packback time as a screening tool now and picked a few Rule one stocks with Payback times of less than 7 years 1 month ago, since then I am up 11% compared to the Dow 3.26% . I am a believer in Phil's teaching. If you follow every step methodically and get your emotions out of you decision making I am sure you'll more than beat the market. I am doing it and expect to keep doing it. I knew very little about investing before reading Phil Town's . To me this are the best practical books about investing in stocks for the long term. Anyone that doesn't get the result I am getting is not following all the steps thoroughly.

Great job Phil.

I hope to to talk to you soon on your blog.