Common Stocks and Uncommon Profits and Other Writings

Book summary

Philip A. Fisher is one of the original fathers of investment theory and the founder of the renowned money management company, Fisher & Company. His book, Common Stocks and Uncommon Profits, originally published in 1956, has remained in print ever since.

Hesitation is a common obstacle in investing, often leading to missed opportunities, as seen in the example of a friend who lost significant gains by delaying a purchase over a minor price difference. Successful investors act decisively when identifying companies with profit potential, trusting their analysis even when market trends suggest otherwise. Holding onto investments is equally important, with only three valid reasons to sell: underestimating growth potential, changes in the company’s circumstances, or transitioning to a better opportunity. To ensure long-term profitability, a company must outperform competitors through scale, innovation, or unique capabilities. Research is key, with methods like the scuttlebutt approach offering valuable insights from diverse sources, though time-intensive. Companies with strong growth potential share traits such as effective leadership, harmonious employee relations, and a focus on innovation. Conservative investors, on the other hand, prioritize stable companies with proven profitability and room for gradual growth, emphasizing cost-effective production, efficient management, and financial expertise. Understanding market irrationality and recognizing undervalued stocks during setbacks can lead to substantial gains, as demonstrated by the example of a widget manufacturer whose challenges created opportunities for savvy investors.

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