Wednesday, 6 March 2013

The investment advice as given by Fisher

Fisher was a very successful American investor. I would highly advice that you take a look at my book list and read the book to understand the points. I like everything Fisher is saying and doing and I understand that he was highly successful I also realise that I have no chance of following up what he did and I therefore need to go a different approach.

Everything below is according to Philip A. Fisher in "Common Stocks and Uncommon Profits and Other Writings":

Scuttlebutt: Ask in one branch what competitors have for advantage/disadvantage, ask salespeople of how things are, ask people that left the company, ask university people of favoured products etc. Tie it all together.

  1. Does the company have a sufficient market for making products or service sales that are increasing for several years to come?
  2. Is management interested in developing new products and processes for increasing the future sales?
  3. How effective is the companies research and development in comparison to its size?
  4. Does the company have an above average sales organization?
  5. Does the company have a worth while profit margin?
  6. What is the company doing to maintain or improve profit margin?
  7. Does the company have outstanding labour and personnel relations?
  8. Does the company have outstanding executive relations?
  9. Does the company have depth to its management?
  10. How good are the companies cost analysis and accounting control?
  11. Are there other aspects of the company, somewhat peculiar to the industry involved, which will give the investor important clues as to how outstanding the company is compared to its competitors.
  12. Does the company have short range or long range in regards to profits?
  13. In the foreseeable future will the growth in the company require equity funding so that the large number of shares then outstanding will largely cancel the stockholders benefit from this anticipated growth?
  14. Does the management talk freely when things are going well but clam up when troubles and disappointments occur?
  15. Does the company have a management of unquestionable integrity?

  1. Don´t buy into promotional companies.
  2. Don´t ignore a good stock just because it is handled over the counter.
  3. Don´t buy stocks just because you like the tone in the annual report.
  4. Don´t assume that the high price at which a stock is selling in relations to earnings is necessary an indication of that further growth in those earnings are included in the price.
  5. Don´t quibble of eights and quarters. 

  1. Don´t overstress diversification.
  2. Don´t be afraid of buying on a war scare.
  3. Don´t be influenced by what does not matter.
  4. Don´t fail to consider time as well as price for buying a true growth stock.
  5. Don´t follow the crowd.

  1. The company must realise that in the world where it operates is changing at an ever increasing rate.
  2. Employees at every level must feel that they are working for a good company.
  3. Management must be willing to submit itself to the disciplines required for sound growth.

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