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Philip Fisher was an American stock investor and famous money manager, best known as the author of “Common Stocks and Uncommon Profits,” a book and guide to investing that has remained in print since it was first published in 1958.
Philip A. Fisher was born in 1907 in San Francisco, California. His magnificent career lasted for 74 years, most of which was in his money management company.
He studied at Stanford Business School, which was newly founded then, but he quit school in 1928 to work as a securities analyst at Anglo-London Bank, San Francisco. After three years working for the bank, he started his own business. So, in 1931, he founded Fisher & Company. He stayed ahead of the company for 69 years, after which he finally retired at 91. Allegedly, during that period, he made his clients very rich.
Even though he was famous among investing clientele, he rarely talked about his private life. He rarely gave interviews, and the public finally met him after publishing his first book in 1958 called “Common Stocks and Uncommon Profits.” The book was a collection of Fisher’s investing philosophies, making it the first investment book to get to the New York Times bestsellers list.
Early Life and Education
- Born: 1907, San Francisco, California.
- Fisher was interested in the stock market from a young age, often discussing stocks at the dinner table with his father, an investor.
- Education: He attended Stanford Business School, where he developed a keen interest in the workings of financial markets.
Career
- Early Career: Fisher started his investment career in 1928, working as a securities analyst for a San Francisco-based bank.
- Fisher & Company: In 1931, during the Great Depression, Fisher founded his investment firm, Fisher & Company, focusing on investment counseling.
- Investment Philosophy: Fisher was known for his long-term investment perspective, focusing on well-managed, high-quality growth companies. He was a proponent of thorough research and analysis, particularly the concept of “scuttlebutt,” or seeking information from various sources to gauge the potential of investments.
- Influential Clients: Fisher’s firm attracted high-profile clients, including large institutional investors and wealthy individuals, due to his reputation for in-depth analysis and consistent returns.
Key Contributions and Influence
- Books: Fisher authored several influential books, including “Common Stocks and Uncommon Profits” (1958), considered a seminal work in investment. This book introduced investing in companies with solid growth prospects and management teams, a strategy ahead of time.
- Investment Principles: He emphasized the importance of management quality, competitive advantages, and long-term growth potential in investment decisions. His principles influenced subsequent generations of investors, including Warren Buffett.
- Teaching and Mentoring: Fisher was also dedicated to teaching and sharing his investment knowledge with others throughout his career.
Personal Life and Legacy
- Personal Life: Fisher was known for being private and shunning public attention. He preferred to keep his focus on his investment work and his clients.
- Death: Philip Fisher passed away in 2004 at the age of 96.
- Legacy: His investment philosophies remain highly regarded in the investment community. Fisher’s focus on qualitative factors, such as management quality, company culture, and his long-term investment horizon, remain influential among investors and are considered foundational to modern investing principles.
Philip Fisher’s legacy as an investor is marked by his forward-thinking approach to stock market investing, emphasizing quality, growth, and long-term potential. His works and investment philosophies continue to be studied and followed by investors worldwide.
Trading Style:
As for the investment style, Fisher founded his interest in long-term investing in innovative companies that had investments mainly in research and development.
His tactic was buying great and promising companies at a reasonable price and not reselling them until they got an excellent price. A good example was his investment in Motorola stock, which he bought in 1955 and did not want to sell during his life.
His other publication, “Fifteen Points to look for in a common stock,” was consistent with two parts. The first was about the business’s characteristics, and the second was about the management’s quality. According to Fisher, the essential characteristic of the business is growth orientation. Profit margin and return on capital should be high. Particular attention should be given to research and development, products or services should be leading in their industry, and sales organization should be high. He also described important management qualities like conservative accounting, good personal policies, integrity, sound financial controls, openness to different experiences and changes, and a long-term outlook.
In the video below, learn essential tips from Philip Fisher:
Fisher used techniques called “scuttlebutt” or the “business grapevine,” which seemed like simple tools but very helpful in reality. He would research the company he was planning to invest in. The research consistently gathered information from every source possible, from contacting people to learning about companies’ history through files he could gather.
He was a role model and mentored many investors. Even Warren Buffett said, “I am 85% Graham and 15% Fisher”. Philip Fisher died in 2004.
Books
Common Stocks and Uncommon Profits (ISBN 047111927X), Harper & Bros., 1958
Paths to Wealth through Common Stocks, Prentice-Hall, Inc., 1960
Conservative Investors Sleep Well, Harper & Row, 1975
Developing an Investment Philosophy (Monograph), The Financial Analysts Research Foundation, 1980
Philip Arthur Fisher quotes
1- Don’t buy into promotional companies.
2- Don’t ignore a good stock just because it is traded “over the counter.”
3- Don’t buy a stock just because you like the “tone” of its annual report.
4- Don’t assume that the high price at which a stock may be selling in relation to earnings is necessarily an indication that further growth in those earnings has largely been already discounted in the price.
5- Don’t quibble over eighths and quarters.
6- Don’t over-stress diversification.
7- Don’t be afraid of buying on a war scare.
8- Don’t forget your Gilbert and Sullivan (There are certain superficial financial statistics which are frequently given an undeserved degree of attention by many investors).
9- Don’t fail to consider time as well as price in buying a true growth stock.
10- Don’t follow the crowd.
The wise investor can profit if he can think independently of the crowd and reach the rich answer when the majority of financial opinion is leaning the other way.
Go to five companies in an industry, ask each of them intelligent questions about the points of strength and weakness of the other four, and nine times out of ten a surprisingly detailed and accurate picture of all five will emerge.
The wise investor can profit if he can think independently of the crowd and reach the rich answer when the majority of financial opinion is leaning the other way.
If an investor had bought at the absolute lows, it would have been more a matter of luck than anything else.
Be extra careful when buying into companies and industries that are the current darlings of the financial community…
If the right stocks are bought and held long enough they will always produce some profit. However to produce close to the maximum profit… some consideration must be given to timing.
An investor should never sell out of an outstanding situation because of the possibility that an ordinary bear market may be about to occur. If the company is really the right one, the next bull market should see the stock making a new peak well above those so far attained. How is the investor to know when to buyback?
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