Common Stocks and Uncommon Profits and Other Writings Book Summary

Common Stocks and Uncommon Profits and Other Writings Book Summary Preview

Key Insights

Though Philip A. Fisher’s book was published in 1958, it remains an invaluable text on personal finance and investment, influencing prominent businessmen like Warren Buffet. Fisher’s principles for investment revolve around extensive research and long-term, conservative investing practices. Fisher provides fifteen principles for choosing the best stock options, and basic guidelines on buying and selling to ensure maximum profit. He also shares a list of common investing practices that investors should not follow, despite popular opinion. He concludes his book with eight concise best practices to develop an investment portfolio that will lead to long-term financial gains. Common Stocks and Uncommon Profits was the first investment book in history to make it on the New York Times best-seller list, and despite some dated references to color TV, Fisher’s advice withstands the test of time.

It’s not as simple as buying low and selling high.

Despite the mantra of investors and advisors, Fisher makes it clear at the beginning of this book that a solid investment plan is about much more than just buying low and selling high. Most investors purchase common stock to make money, but they often make the mistake of selling too soon or choosing the wrong places to invest. Fisher’s principles of investment focus on conducting extensive research using a fifteen-point questionnaire and holding on to common stocks for at least ten years to guarantee maximum returns on your investment. The basis of Fisher’s investment strategy is to find good firms, ask good questions, and as the saying goes in poker, “know when to hold ‘em.”

A good investor can identify promising stocks by asking the right questions. 

While relying on ratios and investment reports is an important part of financial research, the best research comes from the business grapevine -- Fisher calls this word-of-mouth research “scuttlebutt.” With scuttlebutt, investors can discover promising rising talent, a company’s mission or ideals, potential management downfalls, and what sets them apart from the competition. Fisher suggests a handful of sources to determine what a company is like on the inside; researchers should chat with customers, suppliers, competitors, ex-employees, trade association leaders, and company management. Asking questions from a wide variety of sources - and guaranteeing confidentiality - will allow you to get a clearer picture of what a company is like day-to-day and their long-term outlook. 

What kinds of questions should you ask? Fisher provides a sample questionnaire of the kinds of probing questions he uses to gather information on promising companies. 

“The 15 Points to Look for in a Common Stock”

• What is the potential for long-term sales growth?

It’s best to buy stocks when a company’s growth is on the rise and to focus on its long-term potential for growth. Avoid flash-burn companies that quickly rise and fall in value and lack longevity.

• Do the company’s executives have an innovative and forward-thinking approach?

Employees are the heart of a companies success, and understanding their leadership is vital. Ideally, you want to invest in companies with innovative and forward-thinking leadership who will adapt to changes in the market.

• What...

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