Common Stocks and Uncommon Profits and Other Writings

by Philip A. Fisher

Overview

Originally published in 1958 by Harper & Brothers and reissued by Wiley in the Investment Classics series, this book is one of the most influential investment texts ever written. It was the first investment book to make the New York Times bestseller list. Warren Buffett has credited Fisher, alongside Benjamin Graham, as a major influence on his investment philosophy, describing his approach as "85% Graham and 15% Fisher."

Part One: Common Stocks and Uncommon Profits

The core of the book presents Fisher's growth-stock investing philosophy built around qualitative business analysis rather than statistical cheapness.

The Fifteen Points: Fisher's famous checklist for evaluating a company includes: (1) products with sufficient market potential for years of sales growth, (2) management determination to develop new products, (3) effective R&D relative to company size, (4) above-average sales organization, (5) worthwhile profit margins, (6) plans to maintain or improve margins, (7) outstanding labor relations, (8) outstanding executive relations, (9) depth of management, (10) quality of cost analysis and accounting, (11) industry-specific competitive advantages, (12) a long-range outlook on profits, (13) foreseeable equity financing that won't dilute existing shareholders, (14) management that communicates openly with investors, and (15) unquestionable management integrity.

Scuttlebutt Method: Fisher advocates gathering information from competitors, customers, suppliers, former employees, and industry experts to assess a company's true competitive position, rather than relying solely on published financial data or Wall Street research.

When to Buy: Fisher argues for buying during temporary setbacks when the long-term business thesis remains intact, particularly when a company's new product or initiative is misunderstood by the market.

When to Sell: Fisher's key insight is that selling should be rare. The three legitimate reasons to sell are: (1) the original purchase was a mistake, (2) the company no longer meets the fifteen points, or (3) a clearly better opportunity exists. Selling simply because the price has risen or due to market timing considerations is explicitly rejected.

Part Two: Conservative Investors Sleep Well

This section defines a "conservative investment" through four dimensions: low-cost production, strong management, favorable growth characteristics, and a reasonable price relative to growth prospects.

Part Three: Developing an Investment Philosophy

Fisher's intellectual autobiography traces the evolution of his philosophy from the 1920s through the 1970s, including lessons learned from the Great Depression, the value of patience, and the importance of concentrated portfolios. He argues against excessive diversification, recommending that investors hold a small number of thoroughly researched companies.

Legacy

Fisher's emphasis on qualitative factors, long-term holding periods, and concentrated portfolios directly influenced modern growth investing. His scuttlebutt approach anticipated what is now known as "channel checks" in institutional research.