Common Stocks and Uncommon Profits

Common Stocks and Uncommon Profits by Phil FisherI reread the classic Common Stocks and Uncommon Profits by Philip A. Fisher. The original edition was published in 1958 and is still as relevant today. The book is ranked up there among the best investment book of all-time. It’s worth picking up once in a while to reread certain sections. I have the updated edition, which includes the perspectives of the author’s son Ken Fisher, a respected investment guru in his own right. You can find some of Ken’s writing at Forbes and books at Amazon.

It’s not a big book but you can’t slam it. There’s a lot of material to digest, although pretty straightforward. Phil Fisher well-known for having a major influence on Warren Buffett’s investment style. Buffett went from Graham’s “cigar butt” approach (dirt cheap companies with one more puff in them) to pay up for quality and hold it forever. Warren Buffett once said his investment philosophy was 85% Ben Graham, 15% Phil Fisher. Today if you look at Buffett’s past investments I think he’s more Phil Fisher than Graham. Fisher was all about companies that could grow, grow and grow. Phil Fisher’s strategy was to buy well-managed, high-quality growth companies, which he held for the long term.  This is not a message to go out and buy growth at any cost. His philosophy calls for making a relatively small number of investments but only in unusually promising companies. He’s looking for signs of growth potential in the companies he’s studying. The book provides a fifteen points guide on what to look for in buying a common stock. Fisher is also an advocate of the scuttlebutt method.  The scuttlebutt method is when researching for investments you need to go beyond the annual report and talk management, employees, former employees, customers, supplier, the competition and more. It’s a lot of work but that’s one way of finding outstanding investments opportunities. The book also provides a list of “what not to do” such as don’t invest in a promotional company instead of “what to do”. If you can avoid pitfalls and mistakes you are already ahead of the game. Remember that the key is no to lose any money.

I won’t go into details about the book since there’s plenty of resources available online. However I will provide this golden nugget of knowledge, which I think summarizes the book: “What are you doing that your competitions aren’t doing yet?” This question is a home-run to me. It’s a powerful question. The company or individual that’s always asking itself that question never becomes complacent.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s