Philip A. Fisher - Common Stocks and Uncommon Profits and Other Writings

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PHILIP A. FISHER

Copyright 1996, 2003 by Philip A. Fisher. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Fisher, Philip A.
Common stocks and uncommon profits and other writings / by Philip A. Fisher. p. cm. (Wiley investment classic)
Originally published: Common stocks and uncommon profits. Harper & Brothers, 1958.
Includes index.
ISBN 0-471-44550-9
1. Stocks. 2. Investments. I. Fisher, Philip A. Common stocks and uncommon
profits. II.Title. III. Series.
HG4661.F5 1996
332.83'223dc20

95-51449

This book is dedicated

to all investors, large and small,

who do NOT adhere to the philosophy:

I have already made up my mind,

don't confuse me with facts.

This book grows on you. I know because it grew on me. It took me about fifteen years to understand Common Stocks and Uncommon Profits.When I first read the book, it made darned little sense. I was eight. It was a waste of the start of a perfectly good summer vacation.Too many big words that required I use a dictionaryugh. But it was my father's book, and I was proud of him. I had heard at school and from neigh-bors and had read in the local paper that his book was making a big splash. I was told that it was the very first investment book ever to have made the New York Times bestseller list, whatever that meant. I felt it was my absolute duty to read it. So I did, and when completed, I was glad to be finished and free for the summer.

Who knew that I would later go on to found a large investment management firm serving thousands of clients, write my own books, and become the sixth-longest-running columnist in Forbes magazine's formidable eighty-plus-year history or that I would write numerous annual Best of the Year investment book reviews and recommend dozens of books over the decades to readers? And, yes, maybe it helped in route that I could say I'd read my first investment book when I was eight, even if I didn't understand it.

The book next seriously crossed my mind at age twenty as I faced college graduation. Father had offered me a job working with him and my older brother. Anxious, but skeptical, I was curious to see if this job was really an opportunity. So, I read Common Stocks and Uncommon Profits again. (There were only a few words I didn't understand this time.)

Reading about my father's fifteen points to look for in a stock, I wondered if I could apply them to a local stock. If so, I thought this would affirm the benefit of working with my father.

Well, it didn't work.There was a local publicly-traded lumber stock, Pacific Lumber, that looked like a good profit opportunity. But the few folks I approached weren't impressed with some wanna-be kid-sleuth seeking competitive detail who was clearly ill-prepared to analyze or do anything with it. I didn't even know how to ask meaningful questions. After being shut out by the first few folks I approached with my fact- seeking questions, I gave up. But it showed me that I needed quite a bit of polishing.

Working for my father was a bumpy ride, a bit like my first professional stock purchasea reverse ten bagger: it fell from ten to one. I tell you all this only so you can see that even a kid in his twenties, without a lifetime at the top of his school class, having never attended a big-name university, and with no major accomplishments under his belt to brag on, even that kid could go on and in just a few years learn to effectively use the principles in this book. And so can you.

Ultimately, when you're a young man starting out in the industry as I was and haven't yet bought any stocks, figuring out what to buy seems immediately more important than figuring out what to sell. Fortunately, this book teaches that if you figure out the right things to buy, selling becomes a lot less important because you can hold the stocks you own longer. And what to buy derives directly from my father's fifteen points.

Applying his fifteen points was a repeatable real-world experience linked to scuttlebutt, as he described it, all aimed at researching one stock here, another there. And it worked. I will not here recount in detail the successes that the fifteen points helped me achieve early in my career. But I gained tremendous career momentum by discovering a handful of great stocks that did wonderful things for me. From the fifteen points, I could fathom generally where a firm fit into the world and how it would or wouldn't prosper. If it wouldn't, what might its hiccups be? I soon understood why my college try at the fifteen points failed. The craft is in the scuttlebutt, which, like all craft, takes time to learn. Scuttlebutt is simply about finding out from real, Main Street sources if a firm is strong or weak. Most folks don't use this approach, relying instead on the local rumor mill and Wall Street noise, most of which is aimed at selling you product.