Common Stocks and Uncommon Profits and Other Writings
"I am an eager reader of whatever Phil has to say, and I recommend him to you." Warren Buffett
Fischer tells us that the way the largest wealth is made through investing is one, by buying stocks when the markets crash and reaping the profits when the markets recover; and two, by investing in a small portfolio of growth companies which continue to grow steadily and allows you increasing profits without having to sell any of your shares.
Fisher uses fifteen different points to considering whether he should select stock of a particular company.
Part of his selection process involves "scuttlebutt". It's more or less speaking to employees, former-employees, competitors, research scientists, association executives etc.
1. Is market potential for the company's products/services sufficient to allow significant increases for several years at least?
2. Is the company's management determined to continue developing products/processes that would still further increase total sales when its current lines have been mostly exploited?
3. How effective is the company's research in relation to its size?
4. Does the company have a good sales organization?
5. Is the profit margin good?
6. How is the company maintaining this margin or improving it?
7. Is the company's labour & personnel relations "outstanding"?
8. Is the company's executive relations also outstanding?
9. Is there depth to the company's management?
10. Is the company's cost analysis & accounting controls good?
11. Is there anything about the business that might give the investor important hints about how good the company may be in comparison to its competitors?
12. Is the company focused on short term profits or long term?
13. Will the growth of the company require equity financing such that existing shareholders' benefit will be lost?
14. Is management honest, especially about negative news, to its shareholders?
15. Is the company's management of "unquestionable intergrity?"