Finance
by Philip Fisher
How do you find a great company?
Philip Fisher ran an investment firm in San Francisco for decades, hunting for a few companies that could keep growing for years. His 1958 book explains how to find them, how to check them, and when, if ever, to sell.
Hear a sample · read by Laura
Fisher's word for gathering gossip about a business. Talk to its customers, suppliers, competitors and former employees. Put enough of those conversations together and you'll know things about the company that its annual report will never tell you.
Fisher lists fifteen points to check. Most of them look ahead: products that can keep sales growing for years, research that pays off, a strong sales force, healthy profit margins, and managers who think in decades.
Two of Fisher's points are about honesty. One is whether managers talk openly to shareholders when things go wrong, or go quiet. The other is whether their integrity is beyond question. Fail that one, he says, and nothing else about the company should tempt you.
Fisher gives three reasons to sell. You misjudged the company in the first place, it no longer passes his tests, or you've found something much better. A share price that has risen a lot is not on the list.
Fisher thought owning too many shares was its own kind of risk. An investor spread across dozens of companies can't know any of them well. He preferred a small number of businesses he understood thoroughly.
Scuttlebutt
Before buying, talk to a firm's customers, rivals and suppliers. Fisher called this gathering of gossip scuttlebutt.
Growth
Look for companies whose sales can keep growing for years, backed by serious spending on research.
Margins
Healthy profit margins matter. Growing sales are little use if the company earns almost nothing on them.
Honest bosses
Avoid bosses who hide bad news or bend the truth, however clever they seem.
Holding
Once you've found a great company, hold it for years. Selling to grab a small gain is usually a mistake.
One thing to try
Pick a company you use or invest in. This week, ask one person who deals with it, like a customer, a supplier or someone who used to work there, what it's really like. Write down one thing the annual report didn't tell you.
Knotd has the key ideas from 250+ non-fiction books, each in a few minutes, in plain words. Common Stocks and Uncommon Profits comes with a Spot the Trap case to make it stick.
Get the whole book on KnotdOpen in the appHow do you find a great company? Philip Fisher ran an investment firm in San Francisco for decades, hunting for a few companies that could keep growing for years. His 1958 book explains how to find them, how to check them, and when, if ever, to sell.
Scuttlebutt; Fifteen points; Character counts; Almost never sell; Don't overdo diversification.
Pick a company you use or invest in. This week, ask one person who deals with it, like a customer, a supplier or someone who used to work there, what it's really like. Write down one thing the annual report didn't tell you.
Yes. Knotd has the key ideas from Common Stocks and Uncommon Profits in a few minutes, in plain words, plus a Spot the Trap case to test them. It's one of 250+ non-fiction books in the app.
