Money Rehab with Nicole Lapin · Monday, September 28, 2026
Nicole Lapin discusses Bill Ackman's investment philosophy, focusing on 'durable compounders'—dominant, unkillable businesses like Amazon, Meta, and Microsoft. Ackman suggests flipping the price-to-earnings (PE) ratio to understand earnings yield, where a 5% yield means earning 5% of your investment annually. He emphasizes that these businesses, with their consistent earnings growth and dominance, are the key to long-term investment success.
“PE stands for price to earnings ratio. It's the price of a company divided by the profit the company earns per share. So a PE of 20 means you're paying $20 for every $1 of annual earnings. I've done a few episodes all about this, so I'll link those in the show notes as well. But Bill makes a different point. He says, flip the PE ratio upside down instead. What percentage are you earning here? To use the same example, $1 of earnings is 5% of your $20 investment. That's your earnings yield. Basically, the interest rate the business is paying you right now on your money.”
“He wants businesses where that 5% yield gets bigger every single year, run by companies so dominant that nobody can knock them out. And he has a name for them. Durable compounders. These are the boring but unkillable businesses. The Amazons, the Metas, the Microsofts, that don't need a hot new product cycle to keep printing money.”
“And compound is the keyword here, because compounding is the closest thing to magic that finance has.”