This is the fourth book that I had set out to read in my 2021 personal finance goals. If you haven’t heard of him, he is all about growth investing and has influenced Warren Buffett’s investing style along with Benjamin Graham. Here is my Common Stocks and Uncommon Profits and other Writings book review.
This review will go over who Philip A. Fisher is, review a summary of the book Common Stocks and Uncommon Profits and Other Writings, and share what I liked and didn’t like about the book.
Table of Contents
Who is Philip A. Fisher?
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Philip A. Fisher is considered one of the most influential American investors of all time. He favoured evaluating a business for the fundamentals and favouring a total return or growth investing approach.
He is famous for saying that the best time to sell a stock is ‘almost never’ and was a proponent of long term investing.
He retired at the age of 91 from his money management company Fisher and Company, which he started in 1931!
His son Kenneth Fisher tried to work with him but to preserve the father son relationship, Kenneth Fisher branched off, and on his own and he started his own investment management company, and is a billionaire. Kenneth Fisher’s company is one of the largest independent money managers in the world and has over $135 billion assets under management.
Common Stocks and Uncommon Profits by Philip A. Fisher Summary
Philip A. Fisher wrote a book about the investment philosophies and theories of great businesses called Common Stocks and Uncommon Profits.
In the first few chapters, he talks about the Scuttlebutt Method, which involves gathering information from a company that you wouldn’t be able to get from press releases or financial statements. It involves speaking to those ‘in the know’ such as competitors, or vendors, or customers.
A few key points about investing is focusing on the long term time period and not short term. For example, think at least five years of owning the company. In addition, his comments on evaluating what makes a good business is that management and integrity of management is of utmost importance.
Interestingly Philip Fisher prefers growth stocks that pay little or no dividends but he does acknowledge that some investors may need dividend income. He does say that you should be wary of companies paying a high dividend yield.
In addition, I liked that he talked about now worrying about pennies or dollars when buying or selling. Focus on the big picture. He had a client who was firm he didn’t want to buy until it hit a certain dollar amount (it was something like $1 off) and he missed the opportunity and it never presented itself again at that price point.
This can be extrapolated to not focusing on the losses you have in your portfolio. More people lose money because they can’t let go of a terribly performing stock. Recently I have been better at this and have been cutting my losses more easily.
What I Liked About common Stocks and Uncommon Profits
I was quite amazed that it was originally published in 1958 because it seems like he is writing it now in this day and age (minus the references to what a great innovative businesses Motorola is, which Philip A. Fisher kept until his death). All the lessons, the ideas, and fundamentals of how good businesses work are classic and can be applied to current businesses.
For example, he mentioned about finding management and executive leaders of companies who have “vivid spirit”- I like that term!
“”You need the greatest possible number of vivid spirits in an organization – exceptional entrepreneurs with the determination not just to leave things at their present state but to drive improvement.”
I also liked that it was not very dry to read, it was somewhat of an easy read (well, at least compared to something like The Intelligent Investor or Security Analysis).
Finally, I like learning about people, and I enjoyed reading Kenneth Fisher’s introduction about his father and his description about his father. Kenneth Fisher described his father as a quiet, stoic man. Unfortunately in his later years he suffered from Alzheimer’s dementia.
I found it quite amazing that Philip Fisher was able to obtain so much Scuttlebutt about companies to invest in, working just regular ‘business’ hours and spending time with his family after work, telling bedtime stories to his sons. Usually people who are great at something have a focus that is unbalanced and they are more withdrawn in other areas of their life (e.g. like family).
What I Did Not Like About Common Stocks and Uncommon Profits
It was a good read, lots of great quotes and nuggets of wisdom.
This is a little silly but I didn’t really like the introduction written by his son Kenneth Fisher. There seemed to be a sense of arrogance from his son’s writing.
PHILIP FISHER Quotes
Here are some great quotes that I found especially profound from Philip Fisher from his book Common Stocks and Uncommon Profits and other Writings.
“If the job has been correctly done when a common stock is purchased, the time to sell it is— almost never”
“The only true test of whether a stock is “cheap” or “high” is not its current price in relation to some former price, no matter how accustomed we may have become to that former price, but whether the company’s fundamentals are significantly more or less favourable than the current financial-community appraisal of that stock.”
“Investors have been so oversold on diversification that fear of having too many eggs in one basket has caused them to put far too little into companies they thoroughly know and far too much in others they know nothing about”
I would definitely recommend reading this book if you’re interested in investing in individual companies as a long term buy and hold investor.
He has an ability to narrow concepts down and explain what you need to know as an investor easily.
Philip Fisher is so wise!!
Every investor is different. Although he proposes that an investor have no more than 20 individual stocks in a portfolio, there are many dividend investors and Canadian dividend investors who have done really well holding more than 20 individual companies in their portfolio.
You could easily find a Common Stocks and Uncommon Profits PDF online if you’re interested in reading it. You can also get the book here from Amazon or the public library.
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GYM is a 30 something millennial interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for blog updates, a free dividend yield spreadsheet, and the free Young Money Bootcamp eCourse.