Common Stocks and Uncommon Profits
Hightlight
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Ethics
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Personal Development
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Psychology
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Strategy & Tactics
Common Stocks and Uncommon Profits
Author
Philip Fisher
Published Date
1958
Page Count
320
Overview
“Common Stocks and Uncommon Profits,” authored by the renowned investor Philip Fisher, is a foundational text in the field of growth investing. First published in 1958, Fisher’s book introduced innovative concepts and strategies for investing in high-potential growth companies. He emphasizes the importance of qualitative analysis in the evaluation of a company, a perspective that was groundbreaking at the time. Fisher’s “scuttlebutt” approach — a method of gathering comprehensive information about a company beyond its financial statements — is particularly notable.
Key Themes
- Growth Investing: Fisher focuses on identifying companies with significant potential for long-term growth.
- Qualitative Analysis: Emphasizes evaluating the non-financial aspects of a company, such as the quality of its management, its business model, and its competitive advantages.
- The ‘Scuttlebutt’ Method: Fisher details his approach of collecting information from diverse sources to gain a comprehensive understanding of a company’s potential.
Historical Context
Written in the post-World War II era, a period characterized by rapid industrial growth and technological advancements, Fisher’s investment strategies were innovative and well-suited to the economic climate of the time. His emphasis on long-term growth potential over short-term earnings was a significant departure from the prevailing investment practices.
Notable Chapters/Sections
- “What to Buy”: Fisher lays out criteria for selecting promising growth stocks.
- “When to Buy and Sell”: Offers insights into optimal timing for stock transactions, highlighting the importance of patience and timing in the growth investing strategy.
Author’s Background
Philip Fisher was a highly respected investor and a pioneer in growth investing. His philosophies and methodologies have had a profound impact on the field of investing, influencing countless investors, including Warren Buffett.
Impact and Legacy
Fisher’s approach to investing, particularly his emphasis on the qualitative aspects of company evaluation and his long-term growth perspective, revolutionized the way investors approached the stock market. His book remains a vital read for those interested in understanding and applying growth investing principles.
Strengths and Weaknesses
Strengths: Fisher’s insights into identifying growth stocks and his detailed methodology for evaluating companies are the book’s main strengths. His qualitative approach offers a comprehensive framework for understanding a company’s potential.
Weaknesses: Some critics argue that Fisher’s methods may be less applicable in today’s fast-paced, technology-driven market, where quantitative data often plays a more significant role in investment decisions.
Comparative Analysis
Fisher’s book is often compared to Benjamin Graham’s “The Intelligent Investor.” While Graham’s book focuses more on value investing and market psychology, Fisher’s work emphasizes growth investing and a qualitative approach to stock selection.
Who Should Read This?
“Common Stocks and Uncommon Profits” is essential reading for investors who are interested in the growth investing approach and those who want to understand how to evaluate companies beyond their financials. It is particularly useful for investors who are willing to take a long-term view on their investments.
Similar Books
- “The Intelligent Investor” by Benjamin Graham: Focuses on value investing and provides a foundation for understanding market psychology.
- “One Up On Wall Street” by Peter Lynch: Shares strategies for individual investors to identify potential stock picks in their everyday lives.
- “The Essays of Warren Buffett” by Warren Buffett: Offers insights into the thoughts of one of the most successful investors, influenced by both Graham and Fisher.
Final Thoughts
“Common Stocks and Uncommon Profits” remains a cornerstone in the library of any serious investor. Fisher’s in-depth analysis of growth investing and his unique “scuttlebutt” method provide valuable insights for evaluating potential investment opportunities. His emphasis on a thorough understanding of a company’s operations, management, and competitive landscape is as relevant today as it was when first published.
