Wednesday, April 16, 2008

Common Stocks and Uncommon Profits and Other Philip A. Fisher

Philip Fisher was one of the most influential investors, whose investing philosophy till date has great importance and value for every investor. Born in San Francisco, California in 1907, he began his 1928 as a security analyst with the Anglo-London Bank. He was a dropout of Stanford Business School. His career spanned for 74 years and he died in 2004.
Common Stocks and Uncommon Profits, the first book that he wrote, was published in 1958.
It will teach you the true basics of fundamentals of investing.
This book has been a part of the curriculum in the investment class at the Stanford Graduate School of Business.
Philip A. Fisher, has suggested fifteen points on the basis of which your decision on making investments in common stocks should be based.
  1. Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years?
  2. Does the management have a determination to continue to develop products or processes that will still further increase total sales potentials when the growth potentials of currently attractive product lines have largely been exploited?
  3. How effective are the company's research and development efforts in relation to its size?
  4. Does the company have an above-average sales organization?
  5. Does the company have a worthwhile profit margin?
  6. What is the company doing to maintain or improve profit margins?
  7. Does the company have outstanding labor 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 company's cost analysis and accounting controls?
  11. Are there other aspects of the business, somewhat peculiar to the industry involved, which will give the investor important clues as to how outstanding the company may be in relation to its competition?
  12. Does the company have a short-range or long-range outlook in regard to profits?
  13. In the foreseeable future will the growth of the company require sufficient equity financing so that the larger number of shares then outstanding will largely cancel the existing stockholder's benefit from this anticipated growth?
  14. Does the management talk freely to investors about its affairs when things are going well but "clam up" when troubles and disappointments occur?
  15. Does the company have a management of unquestionable integrity?

In the words of Kenneth L. Fisher (son of Philip Fisher) "It is a little investing bible- a book that is meant to be read multiple times & whose usefulness does not end with the last page."

Almost every leading investment practitioner and financial expert swear by this book.

A must have for anyone who wants to make money in the stock market.

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