Fisher stood out as one of the first money managers to focus on qualitative factors instead of quantitative ones. He examined factors that were difficult to measure through ratios and other mathematical formulations: the quality of management, the potential for future long term sales growth, and the firm's competitive edge.
Although Fisher focused on the qualitative characteristics of a company, he was first and foremost a growth stock investor. He felt the greatest investment returns did not come from the purchase of stocks that were undervalued, since a stock that is undervalued by as much as 50% would only double in price to reach fair market value.
Instead, he sought much higher returns from those companies that could achieve growth in sales and profits greater than the overall market over a long period of time.
Furthermore, Fisher did not seek companies showing promise of short-term growth due to cyclical events or one-time factors. He felt that the timing was too risky and the promised returns too small.
Fisher penned his investment philosophy in his book: "Common Stocks and Uncommon Profits and Other Writings" by Philip A. Fisher.
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3 people like this. Showing 10 of 10 comments
Calvin Tan investing philosophy is always on sound and rock solid fundamental is just that some unkind people always commenting negatively about him ..
2014-05-14 01:15
Calvin, I can see the VALUE mostly generated from land or property, is there anything better than hard asset?
2014-05-14 07:41
But in Stock market there is Only Business Value. Those who don't like it can take the company private ya.
Well capital repayment/special dividend/extraordinary gains is besides the point.
2014-05-14 21:26
Remember land appreciation is because of Business Value as well.
If Not market will continue to Discount all the hard asset on hand that includes Cash as well due to lack of Business Value and inflation Erosion.
2014-05-14 21:57
Everyone loves a growth story. But it's difficult to find. On top of the usual financial matrices, u have to understand the company well, as well as the industry it is in. It takes a whole lot more effort than looking in historical financial results. I spotted agritrade international at hkd 40 cents just when its coal mine started producing and nobody likes coal due to declining price. It made more in half year than the entire preceding year combined. Took me a whole month to study. One needs to be meticulous and study in great detail to find a growth counter that is cheap. When everyone sees it as a growth stock, chances r, it's already reflected in the price.
2014-05-15 00:54
I dont think I can forecast anything as much as I dont understand lots of complicated things. A simple One will do much better.
2014-05-15 14:43
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
calvintaneng
I like both Growth Stock & Value Stock. Best if we can find both Growth & Value together. But given only one choice I prefer Value over Growth Stock.
This is what I have seen in real life examples. Many Growth Stocks Started as Value Stocks in the Very Beginning.
1) SBC Corp was only 50 Cts when its NTA was RM2.00. And Perak Corp was 60 Cts when its NTA was also about RM2.00. It was the Valuable land banks of Perak Corp that hitched on the Growth of Lumut When Vale Invested Heavily There Together with Others like Tong herr resources.
In Johor All Lands Originally belong to Johor Govt. And So All Lands were given to Johor Corp who owned KULIM. The lands were planted with oil palms. And spin offs were Johor Land (privatized) D Bhd, QSR & KFC.
No one else own any lands then. All Johor developers have to buy from KULIM or the Johor Govt. This is how Keck Seng, Daiman, Crescendo, KSL, CView, Tebrau, Mulpha, UEM & Others - Directly or indirectly from KULIM & THE JOHOR GOVT.
2) F&N is in soft drink bottling. It is a good growth company. But F&N has very prime land banks in Sg Besi. VALUE EMERGED SO MUCH THAT F&N LATER DEVELOPED THE FACTORY SITE INTO THRIVING COMMERCIAL SHOPS.
Same in Singapore. Singapore's Yeo Hiap Sing Factories were located along Bukit Timah Main Road. One Day The Underlying Land Value of YHS Factories were MORE VALUABLE THAN THE COMBINED SALES OF YHS CANNED FOOD & BEVERAGES. So YHS Turned The Factories Into High End Condos. They Make More Money From Owning Prime Assets Than The Business Concern
3) In Johor My Friend Andrew is the Boss of King Surf. He bought 3 Shops in Johor Jaya for his Computer Lan Games Shop in Johor Jaya. It also provides internet services for surfing. With the advent of smart phone/ ipad his business has dwindled. He foresees a day that his Computer Internet Shop might have to close.
However, he told me he bought the 3 units of 3 Storey Shops for a total of RM1.7 millions. Since property prices have boomed his shops are now worth RM4.5 millions. So he made more from his shop price rise than his computer business. While growth of his internet gaming shops dwindled his value has increased because of ASSET APPRECIATION.
In Sitiawan PERAK. Mr. Lee bought a 4 acre mainroad frontage land for his Used Car Business in 1991 when land was still cheap. His Used Car Business Did Very Well Until lately when business is facing difficulty.
But Again His Valuable Prime Land Has Been Turned Into A Gold Mine. He has turned the land into 2 Storey Cluster Houses which sell for Half a Million Ringgit each. I think he makes more from VALUE OF LAND BANKING THAN IN HIS USED CAR BUSINESS AFTER ALL THESE YEARS.
I have read Phil's "COMMON STOCKS and UNCOMMON PROFITS". He is the pioneer in scuttlebug - visiting companies which he invested in like Peter Lynch.
But his own son conluded that his father's performance is only so so when Phil cut his share holdings to only 3 stocks in later life.
Even Warren Buffet did less well as you can see Berkshire Hathaway Stock Performance Before & After he met Charlie Munger.
HE DID MUCH BETTER IN EARLY YEARS WHEN HE STICK TO HIS SIFU BENJAMIN GRAHAM IN NET NET VALUE INVESTING THAN BY FOLLOWING CHARLIE MUNGER INTO GROWTH STOCK TERRITORY.
Maybe His Portfolio has grown too Big to achieve the same growth in early days. In any case HIS EARLY EARLY DAYS OF VALUE INVESTING DID VERY WELL. And we can use that as A SAFE BENCH MARK.
Buy VALUE or Buy Earnings? For Benjamin Graham - VALUE COMES FIRST. MARGIN OF SAFETY IS IN HIS BLOOD!
2014-05-14 00:55