📚 "The Uncommon Profits of Common Stock" — Philip A. Fisher's Comprehensive Explanation

Hello everyone! Today, I'd like to share with you a classic work that holds a crucial place in the investment world: Philip A. Fisher's Common Stocks and Uncommon Profits. This book has not only influenced countless investors, but even Warren Buffett has publicly stated that his investment philosophy was deeply inspired by Fisher's work.

This book is considered one of the investment bibles because it reveals the core concept of "growth investing" and proposes the famous "15-point stock selection principle" to help investors select companies with long-term growth potential. Below, the editor will use the most detailed text to give you a comprehensive analysis of this investment classic. 💡

👤 About the Author: Who is Philip A. Fisher?

Philip A. Fisher (1907–2004) can be said to be one of the founders of modern investment theory.

• 🎓 Studied at Stanford University's Graduate School of Business (later dropped out to study investment on his own)
• 📊 Founded his own investment advisory firm, Fisher & Co., in 1931, focusing on growth stock investments
• 📈 His long-term investment philosophy has a profound impact, and Buffett calls him the "Father of Growth Stock Investing"
• ✍️ In 1958, he published "Uncommon Profits on Common Stocks," which became a classic in the investment world.

👉 Editor's Note: Unlike Graham, Fisher focused on undervaluation, instead prioritizing a company's "future growth potential." This mindset aligns with the investment logic behind today's rising tech stocks.

📖 The core essence of this book

The focus of this book can be summarized in three main themes:

1. How to select companies with long-term growth potential🏢
2. How to understand the essence of a business through in-depth research 🔍
3. How to hold for the long term and reap extraordinary returns⏳

Simply put: choose the right company ➡️ understand it in depth ➡️ hold it for the long term.

📌 A comprehensive analysis of the "15-point stock selection principle"

Fisher is best known for his 15 key stock selection questions, which help investors determine whether a company is worth investing in for the long term.

🏢 Company Business and Market

1. Does the company have sufficient market potential to sustain growth in the coming years?
2. Does the company have the ability to innovate and continuously launch new products or improve existing products?

👉 Editor’s comment: Companies cannot rely solely on temporary hits; they must have a continuous source of innovative momentum.

⚙️ Management capabilities

3. Is management driving R&D effectively?
4. Does the company have a strong sales organization?
5. Is management focused on long-term growth rather than just short-term profits?
6. Does the company have excellent financial control capabilities?

👉 Editor's comment: An investment company is an investment management team. Their vision and ability will directly determine whether the company can survive in the long run.

👥 Corporate culture and talent

7. Can the company attract and retain top talent?
8. Does the company have good employee relations and corporate culture?
9. Does management have integrity and transparency?

👉 Editor's comment: People are the most important assets of an enterprise, and culture and integrity are the key to whether an enterprise can achieve long-term success.

💰 Profitability and Competitive Advantage

10. Does the company have the ability to maintain high profit margins over the long term?
11. Does the company have a unique competitive advantage (moat)?
12. Is the company good at controlling costs and maintaining efficiency?

👉 Editor's comment: Fisher emphasized that "quality" is more important than "price". Good companies can maintain profit margins over the long term, which is the foundation of investment.

🔍 The research attitude that investors should have

13. Can investors obtain enough information to gain an in-depth understanding of the company through the "Scuttlebutt Method"?
14. Does the company have good accounting and financial reporting transparency?
15. Can the company remain competitive during market downturns?

👉 Editor's comment: The most unique thing about Fisher is his emphasis on "inquiry" - obtaining first-hand information through interviews with employees, suppliers, and customers, rather than just relying on financial report figures.

🔍 "Inquiry" - Fisher's secret weapon

Fisher advocates that investors must step outside their desks and investigate the company's internal and external environment :

• Check with suppliers whether the company pays on time
• Find out from customers whether the product is competitive
• Find out from former employees whether management is trustworthy

👉 Editor's Take: This method requires time and patience, but it can help investors gain a deeper understanding than the market itself, and avoid blindly investing based solely on numbers.

⏳ The wisdom of long-term holding

Fisher emphasized:

• Excellent companies should be held for the long term, not bought and sold short-term
• Once you have confirmed that the company meets high quality standards, you should be patient and wait for the compounding effect
• The return on long-term investment comes from "time x growth of high-quality companies"

👉 Editor’s opinion: This kind of thinking is exactly the same as Buffett’s “buy a good company and hold it forever”.

💡 Editor's Summary

Uncommon Profits on Common Stocks is a classic book that changed the world of investment. Its value lies in:

• Teach you how to judge the quality of a company instead of just looking at its stock price fluctuations
• Propose "15-point principles" to make investment more systematic
• Emphasize research, integrity, and patience, which are the cornerstones of investment success

📌 Editor's summary in one sentence: This book tells us that investing is not about buying cheap stocks, but about buying high-quality companies and growing with them .

If Graham is the founder of value investing, then Fisher is the pioneer of growth investing. The combination of the two is the secret to Buffett's success.