Summary
Philip A. Fisher's "Common Stocks and Uncommon Profits" argues for a disciplined approach to buying and selling stocks by focusing on specific, qualitative factors of companies. The book offers concrete guidelines on identifying what to buy, providing sound reasons for selling, and understanding profit margins and dividends. Fisher emphasizes critical information over superficial metrics, cautioning against common investor pitfalls.
Fisher presents a set of ten "Don'ts" for investors, warning against promotional companies, excessive diversification, herd mentality, and purchasing stock based solely on the tone of an annual report. His investment principles, first articulated in 1958, form the genesis of many modern investment philosophies studied by finance professionals.
Key concepts
- Top-Ten "Don'ts" for investors — A list of ten specific warnings against common and detrimental investment practices.
- Buying into promotional companies — A specific pitfall to avoid, focusing on the nature of the company's marketing.
- Over-stressing diversification — A warning against an excessive focus on spreading investments too thinly.
- Following the crowd — A caution against adopting investment strategies based on popular opinion rather than individual analysis.
- Buying stock for the "tone" of its annual report — A warning against making investment decisions based on the superficial impression of a company's financial document.
From the book
Description: In Common Stocks and Uncommon Profits, Fisher shares his philosophy, offering valuable insights into the most fundamental and important aspects of buying and selling stock. Here are solid guidelines on when and what to buy, sound reasons for selling common stock, as well as critical information on profit margins and dividends.
There is also Fisher's famous list of Top-Ten "Don'ts" for investors, complete with warnings against buying into promotional companies, over-stressing diversification, following the crowd, and buying stock just for the "tone" of its annual report.
Description: First published in 1958, this book allows investors to trace some of today's most popular investment philosophies back to their genesis. Philip A. Fisher's investment principles are studied and applied by today's finance professionals, including Warren Buf