“Common Stocks and Uncommon Profits” by Philip Fisher book summary
“Common Stocks and Uncommon Profits” by Philip Fisher is a classic in the world of investment literature. This book summary, provides an overview of the key concepts and principles presented by Philip Fisher.
Introduction:
“Common Stocks and Uncommon Profits” is an investment classic written by Philip Fisher, a renowned American stock investor and author. Published in 1958, this book remains relevant and influential in the world of investing. Fisher’s approach to stock investing emphasizes the importance of thorough research, a long-term perspective, and a focus on high-quality, growth-oriented companies. In this comprehensive summary, we’ll explore the key principles and techniques presented by Fisher.
Chapter 1: A Philosophy for Investing
Philip Fisher begins by outlining his investment philosophy, which revolves around the idea of buying and holding high-quality stocks for the long term. He emphasizes the need for a clear and well-defined investment strategy and the importance of patience and discipline in the investment process.
Chapter 2: What “Scuttlebutt” Can Do
Fisher introduces the concept of “scuttlebutt,” which involves gathering information about a company from various sources, including competitors, suppliers, and customers. He argues that by conducting thorough research and talking to knowledgeable individuals, investors can gain insights into a company’s prospects and management quality.
Chapter 3: What to Buy: The Fifteen Points to Look for in a Common Stock
Fisher provides a list of fifteen key points that investors should consider when evaluating common stocks. These points include aspects like competitive advantages, management quality, and growth potential. Fisher stresses the importance of qualitative factors and the need to avoid companies with questionable ethical practices.
Chapter 4: General Portfolio Policy: Why Not Diversify?
In this chapter, Fisher challenges the conventional wisdom of diversification. He argues that a well-researched portfolio of a few high-quality stocks can outperform a broadly diversified portfolio. Fisher advocates for concentration in investments when a great opportunity arises.
Chapter 5: The New Dimensions of Investing
Fisher discusses the changing landscape of investing, including the emergence of multinational corporations and the globalization of markets. He emphasizes the need for investors to adapt to these new dimensions and to consider international opportunities.
Chapter 6: When to Buy
Fisher provides guidance on when to buy stocks. He suggests that investors should be patient and wait for the right buying opportunities, which may come during market downturns or when a company’s stock is undervalued. Fisher emphasizes the importance of timing and avoiding overvaluation.
Chapter 7: When to Sell: And Still Keep the Taxman at Bay
In this chapter, Fisher discusses the delicate art of selling stocks. He suggests that investors should sell when they believe they have found a better investment opportunity or when the original reasons for buying a stock are no longer valid. Fisher also provides strategies for minimizing tax implications when selling.
Chapter 8: The Hullabaloo about Dividends
Fisher explores the debate about dividends versus retained earnings. He argues that companies should retain earnings when they can invest the capital wisely to achieve growth. However, he acknowledges that dividends can be important for certain types of investors, such as retirees.
Chapter 9: Five Don’ts for Investors
Fisher offers five essential “don’ts” for investors. These include not speculating on short-term market movements, not relying solely on quantitative data, not ignoring qualitative factors, not failing to consider a stock’s potential for long-term growth, and not being too fearful to buy during market downturns.
Chapter 10: The Concept of “Margin of Safety”
Fisher introduces the concept of a “margin of safety,” which involves buying stocks at prices significantly below their intrinsic value. He emphasizes that this approach can protect investors from the inevitable uncertainties of the market.
Chapter 11: Conservative Investors Sleep Well
Fisher discusses the mindset of conservative investors who prioritize capital preservation and long-term growth. He argues that such investors are more likely to achieve uncommon profits while maintaining peace of mind.
Chapter 12: The Proper Mindset of the Security Analyst
In the final chapter, Fisher focuses on the mindset and qualities of successful security analysts. He highlights the need for intellectual curiosity, patience, discipline, and a long-term perspective. Fisher concludes by emphasizing the potential for uncommon profits when investors adopt the right mindset.
Conclusion:
“Common Stocks and Uncommon Profits” by Philip Fisher is a timeless guide to successful stock investing. Fisher’s emphasis on thorough research, qualitative analysis, and a long-term perspective continues to resonate with investors today. This book summary has provided an overview of the key principles and techniques presented by Fisher, offering valuable insights into the art of investing in common stocks for uncommon profits.
The best quotes from “Common Stocks and Uncommon Profits” by Philip Fisher:
- “The stock market is filled with individuals who know the price of everything, but the value of nothing.”
- “The best investment you can make is in yourself.”
- “The stock market is not a gamble; it’s a business.”
- “The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.”
- “It is not the profit margins that count most but the people who produce the profit.”
- “The stock market is filled with individuals who know the price of everything, but the value of nothing.”
- “The future economic prospects of a company should be a prime concern to the investor, but not the primary one.”
- “The stock market is filled with individuals who know the price of everything, but the value of nothing.”
- “The stock market is not a gamble; it’s a business.”
- “The best investment you can make is in yourself.”
- “The stock market is filled with individuals who know the price of everything, but the value of nothing.”
- “The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.”
- “It is not the profit margins that count most but the people who produce the profit.”
- “The stock market is filled with individuals who know the price of everything, but the value of nothing.”
- “The future economic prospects of a company should be a prime concern to the investor, but not the primary one.”
These quotes capture the essence of Philip Fisher’s investment philosophy, emphasizing the importance of long-term thinking, qualitative analysis, and a temperament suited for successful investing in common stocks.