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Common Stocks and Uncommon Profits and Other Writings

1 rating: 5.0

A book by Philip A. Fisher

"...written by American Investment genius.... We are delighted to have the opportunity to reproduce an extract from this classic, recently reissued..." (Financial Director, November 2003) "...these updated classics are packed with investment … see full wiki

Tags: Books, Finance, Investing, Philip A Fisher

Author: Philip A. Fisher

Genre: Business & Investing

Publisher: Wiley

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A must read for Fundamental Investors.

Sep 30, 2006

by Sidarta
posted in Cafe Libri: Reviewing Books & More

Rating:

Philip Fisher's thoughts and experience are invaluable and timeless. Not as boring (to read) as the intelligent investors (though both are equally important reading). I particularly like the chapters about "Fifteen points to look in a common stocks","when to buy", "when to sell", "Five don't", and "Developing your investment philosophies". One particular topic that I like best is about "Don't follow the crowd". Also on "How I go about finding a growth stock"

Some of the area that the a company/stock (to buy) should have a lot of these criteria:
1. Product and service with potential increase in sales for seveal years
2. Management who commited to develop products to continue growth
3. Size of company's research versus its size (enough research needed)
4. Good sales organization
5. Worthwhile profit margin
6. Activity to improve profit margin
7. Good labor and personal relation
8. Outstanding executove relations
9. Depth in management
10. Good accounting controls and cost analysis
11. favorable (degree of skills) compare to the competition
12. Long range outlook on profit
13. Equity financing in the next couple years should ot cancel the existing shareholder benefit from the anticipated growth
14. Management talk freely to investor about tings that goes well and also when things doesn't go well
15. Management needs to have unquestionable integrity

Five don'ts for investor:
1. Don't buy into promotional companies (development companies)
2. Don't ignore stocks just becuase it is traded over the counter
3. Don't buy stocks because you like the tone of annual report
4. Don't assume the high price is an indication of future growth
5. Dont quibble over small fraction (when you buy a stock)

Five additional don'ts for Investor
1. Don't overstress diversification
2. Don't be afraid buying in a war scare
3. Don't forget your Gilbert and Sullivan
4. Don't fail to consider time as well as price in buying a true growth stock
5. Don't follow the crowd

This book also covers what a good business should have (it recaps of what they teach you in business school). I have 10 years of investing experience before I read this book (I know I should have read this book earlier), and in my opinion this book should work as a guideline to develop our own investing philosophies (and not our philosophy itself). There are no one size fits all strategy in the investing world. This book will also help to open your eyes (especially for beginner) that investing (the right way) is not easy and is a complex process, however the result from a patient and diligent investor could be great.

There are 3 important aspects of a business (apart from the stock price) which this book will cover most of them:
1. The Business (and the Industry)
2. The Financials
3. The People (Management, Personnel)

I also recommend you all to read Ben Graham's "The Intelligent Investors" (with commentary by Jason Zweig who will give more recent and relevant example), and Peter Lynch's "One up on Wall Street". Once you read them all (coupled with some real experience), then you are ready to be an investing pro...

Happy Investing!

Sidarta Tanu

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