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Payback Time by Phil Town

In Payback Time [3], Phil Town teaches you the tenets of value investing, the same approach that Warren Buffett takes, with today’s tools. With all the value investing books out there, what separates Town’s Payback Time, and his earlier work Rule #1, from the pack? Two reasons – first, he’s not a long time investor who is very far removed from “Main Street,” he was a regular Joe just a short time ago and he’s able to explain concepts in terms most people can understand. Second, he explains these terms and walks you through the tools, like the screener from Yahoo Finance, you can use today to find good companies.

At the core, the book is about value investing and finding good companies you can understand, have a strong moat, and allow you the opportunity to accumulate, or “stockpile,” as the years pass. It’s value investing at its finest and a topic that really isn’t glamorous. Value investing is one of the best ways to accumulate wealth and it requires work, though Town makes a good point – it sounds like a lot of work to do this research but “does it sound like more work than flipping burgers all day when you’re seventy-five?” 🙂

The main title is a bit misleading because it seems to imply that we’re going to do something that “gets back” at the investment bankers and mortgage lenders that got us to where we are today. However, the subtitle is really what the book is about – “Making big money is the best revenge,” which is exactly what Town seeks to teach with his book.

A few years back, when he released Rule #1 [4], I had a very entertaining interview with Phil Town [5].

The book delves deeper into value investing by talking a little about technical indicators (chapter 6 is good), like supports and ceilings. It’s a great chapter on the subject if you’ve never read about them before but my favorite part is this insight about technical indicators – “It’s just a sophisticated form of guessing, but if enough Big Guys are guessing the same way, the guesses turn out right over and over again.” (As an side, I thought it was interesting that one of the examples, Burlington Northern (BNI), was recently acquired by Buffett)

If you want to learn more about investing in a way that is very approachable, I think Town’s book is a good start.