Summary of Common Stocks and Uncommon Profits and Other Writings

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Rating

8 Overall

8 Applicability

8 Innovation

8 Style


Recommendation

In 1958, for the first time, an investment guide made The New York Times’ bestseller list. Since then, that book, Philip A. Fisher’s Common Stocks and Uncommon Profits has become a classic of the personal finance genre, educating students and influencing top investors such as Warren Buffett. More than half a century after its publication, Fisher’s advice on doing your homework so you can select long-term growth stocks still resonates. While some of the companies he refers to are long gone, many are still thriving, and though some of his examples evoke nostalgia (in 1958, for instance, color TV was new), he presciently calls for the coming of flat screen television. The book, which also includes Fisher’s later writings, shows how he teased out great insights by asking companies “What are you doing that your competitors aren’t doing yet?” getAbstract recommends this seminal classic on investing to business students, rookie securities analysts and private investors.

In this summary, you will learn

  • Why long-term holdings in common stock can generate substantial returns,
  • How “scuttlebutt” can help you uncover almost everything you need to know about a company,
  • What “15 points” and 10 don’ts to use when judging a stock, and
  • Why “conservative investors sleep well.”
 

About the Author

The late Philip A. Fisher started his investment firm, Fisher & Co., in 1931 and managed investments for no more than a dozen select clients at any time for five decades. He also wrote Paths to Wealth Through Common Stocks and Conservative Investors Sleep Well.

 

Summary

Know When to Hold ’Em

Investors buy common stock in the hope of making money, but they should not fall prey to the typical practice of buying low and selling high. The best way to ensure solid returns is to find winning companies, or those poised to become successful, and to hold their shares for the long term – at least 10 years or even more. Identifying those firms isn’t easy, but it’s certainly possible if you’re willing to work hard, ask good questions and use all the resources available to you.

“Scuttlebutt”

To invest wisely for the long term, identify companies that will grow faster than their competitors or faster than the market in general. Seek firms with visionary, capable managers who will drive and guide that growth. You won’t find them by analyzing statistics or ratios. Instead, use “scuttlebutt,” the information you garner by talking to a firm’s competitors, suppliers and customers. Most of the time, a consistent view will emerge from these discussions.

Further exploit this business “grapevine” by interviewing researchers in the company’s area of expertise and talking to its trade association leaders. You can even interview former staffers...


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