Payback Time by Phil Town

Author:Phil Town [Town, Phil]
Language: eng
Format: epub
ISBN: 978-0-307-46188-9
Publisher: Crown Publishing Group
Published: 2010-06-06T16:00:00+00:00

Dollar Cost Averaging is stupid. It’s a brain-dead way to buy into a business or an index. The fact that it appears to be a simple and effective way to avoid buying at a bad price makes it a great tool for clueless financial “experts.”

Built into the DCA strategy is the same old mindless assumption that has messed up professional investors for thirty years—that price is the same as value. There is nothing about DCA investing that demands you know the value of the stock you’re buying.

If you’ve liked DCA in the past, then you’ll love stockpiling as a basic investing strategy. Think of stockpiling as DCA with a brain. It requires that you start buying with a big Margin of Safety and a good Payback Time, then continue buying as long as that MOS and Payback Time hold. If the stock price goes down even more, we get more shares for the same money. If the price goes above the MOS price or the Payback Time gets too long, we don’t buy.

Instead of riding the market up and down through idiotic DCA, stockpiling gets you great returns by limiting your purchases to when the stock is undervalued.

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