Philip Fisher: The Pioneer of Growth Investing

Philip Fisher is widely regarded as one of the most influential investors of all time. Known as the pioneer of growth investing, Fisher’s investment philosophies and techniques have profoundly impacted modern investment strategies. His seminal work, “Common Stocks and Uncommon Profits,” is a must-read for investors seeking to understand the art of investing in growth stocks.

Early Life and Education

Born on September 8, 1907, in San Francisco, California, Philip Arthur Fisher showed an early interest in finance and economics. He attended Stanford University, where he studied business administration. After leaving Stanford in 1928, Fisher began his career as a securities analyst, eventually founding his own money management firm, Fisher & Company, in 1931.

Investment Philosophy

Philip Fisher’s investment philosophy centers on investing in outstanding companies with significant growth potential. Unlike value investors who focus on undervalued stocks, Fisher sought companies that could deliver exceptional returns over the long term due to their innovation, management quality, and market position.

Fisher believed in holding investments for the long haul, famously stating, “The best time to sell a stock is almost never.” His approach involves thorough qualitative analysis, often referred to as “scuttlebutt,” which includes gathering information from a company’s customers, suppliers, competitors, and employees to gain a comprehensive understanding of its operations and prospects.

Fisher’s 15 Points to Look for in a Common Stock

In “Common Stocks and Uncommon Profits,” Fisher outlines 15 key points to consider when evaluating a company for investment. These points are divided into two categories: management’s characteristics and the characteristics of the business itself.

1. Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years?
2. Does the management have a determination to continue to develop products or processes that will still further increase total sales when the growth potentials of currently attractive product lines have largely been exploited?
3. How effective are the company’s research and development efforts in relation to its size?
4. Does the company have an above-average sales organization?
5. Does the company have a worthwhile profit margin?
6. What is the company doing to maintain or improve profit margins?
7. Does the company have outstanding labor and personnel relations?
8. Does the company have outstanding executive relations?
9. Does the company have depth to its management?
10. How good are the company’s cost analysis and accounting controls?
11. Are there other aspects of the business, somewhat peculiar to the industry involved, which will give the investor important clues as to how outstanding the company may be in relation to its competition?
12. Does the company have a short-range or long-range outlook in regard to profits?
13. In the foreseeable future will the growth of the company require sufficient equity financing so that the larger number of shares then outstanding will largely cancel the existing stockholders’ benefit from this anticipated growth?
14. Does the management talk freely to investors about its affairs when things are going well but “clam up” when troubles and disappointments occur?
15. Does the company have a management of unquestionable integrity?

Notable Investments

One of Fisher’s most famous investments was in Motorola, a company he identified early on as having significant growth potential. He invested in Motorola in 1955 and held the stock until his death in 2004. This long-term investment exemplifies his philosophy of holding high-quality growth stocks indefinitely.

Legacy and Influence

Philip Fisher’s influence extends to some of the most successful investors in history, including Warren Buffett. Buffett has cited Fisher’s works as instrumental in shaping his own investment strategy, blending Fisher’s growth investing principles with Benjamin Graham’s value investing concepts.

Fisher’s emphasis on qualitative analysis and understanding a company’s management and operations deeply has become a standard practice among successful investors. His methods encourage investors to look beyond financial statements and consider the intangible factors that contribute to a company’s long-term success.

Books and Publications

Philip Fisher authored several influential books that remain relevant to investors today:

• Common Stocks and Uncommon Profits (1958)
• Paths to Wealth Through Common Stocks (1960)
• Conservative Investors Sleep Well (1975)
• Developing an Investment Philosophy (1980)

Famous Quotes by Philip Fisher

“The stock market is filled with individuals who know the price of everything, but the value of nothing.”

“I don’t want a lot of good investments; I want a few outstanding ones.”

“The greatest investment reward comes to those who research the best companies, invest in them early, and hold onto them for the long term.”

Conclusion

Philip Fisher’s contributions to the field of investing are invaluable. His pioneering work in growth investing and his emphasis on qualitative analysis have left an enduring legacy. For investors looking to adopt a long-term, growth-oriented approach, studying Fisher’s principles offers profound insights into selecting outstanding companies poised for significant growth.

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