Philip A. Fisher was born in 1907 in San Francisco, California. His magnificent career lasted for 74 years and most of it was in his own money management company.
He studied at Stanford Business School that was at that time newly founded, but he quit school in 1928 in order to work as a securities analyst in Anglo-London Bank, San Francisco. After three years working for the bank, he decided to start his own business. So, in 1931 he founded Fisher & Company. He stayed as a head of the company for 69 years, after what he finally got retired at the age of 91. Allegedly, during that period, he made his clients very rich.
Even though he was famous among investing clientele, he almost never talked about his private life. He rarely gave interviews and public finally got to chance to meet him after publishing his first book in 1958 called “Common Stocks and Uncommon Profits”. The book was a collection of Fishers investing philosophies and made it as the first investment book that got to the list of The New York Times bestsellers.
Trading Style:
As for the investment style, Fisher founded his interest in long-term investing in innovative companies which had investments mainly in research and development.
His tactic was buying great and promising companies at a good price and not resell is until it got a really good price. Good example for that 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” were consistent of two parts. The first one was about the characteristics of the business and the second one was about quality of the management. According to Fisher, important characteristics of business are orientation to growth. Profit margin and return of capital should be high, special attention should be given to research and development, products or services should be leading in its industry and sales organization should be on a high level. He also described important qualities of management like conservative accounting, good personal policies, integrity, good financial controls, openness for different experiences and changes and long term outlook.
Fisher used techniques called “scuttlebutt” or the “business grapevine” which seemed like simple tools, but in reality it was very helpful. He would do detail research of the company he was planning to invest in. The research was consistent of gathering information from every source possible, from contacting people to learning about companies’ history through files he could gather.
He was a role model and mentor for many investors. Evan 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 a 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 buy back?
Reference:
http://en.wikipedia.org/wiki/Philip_Arthur_Fisher
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