Philip Fisher
Growth investor and author of Common Stocks and Uncommon Profits
Born 1907 • Passed away 2004
Argued that investors should study a company’s management, research culture and competitive position, not just its financial statements.
Biography
Philip Fisher, born in San Francisco in 1907, was an American investor whose work pushed security analysis beyond the balance sheet. He studied at the newly founded Stanford Graduate School of Business, worked briefly as a securities analyst, and in 1931 started his own firm, Fisher and Company, which he ran for most of the next seven decades.
His argument was that the numbers in a financial report describe what a business has already done, while the things that decide what it will do next are mostly qualitative: the quality of its management, whether it keeps developing genuinely new products, how it treats the people who work there, and whether its advantages can be copied. Assessing those things requires legwork rather than arithmetic.
He set out that case in Common Stocks and Uncommon Profits in 1958, a book built around fifteen specific questions to ask about a company and a research method he called scuttlebutt: talking to a business's customers, suppliers, former employees and competitors to build a picture the published accounts do not contain.
Fisher held a small number of positions for very long periods. He bought Motorola in 1955 and held it for the rest of his life, a position often cited as an illustration of what he meant by owning an outstanding company rather than trading a cheap one. He was born in 1907 and passed away in 2004. His son, Ken Fisher, went on to found his own investment firm.
Career timeline
- 1907Born in San Francisco.
- 1928Attends the newly founded Stanford Graduate School of Business.
- 1931Founds Fisher and Company, the firm he would run for most of seven decades.
- 1955Buys Motorola, a position he holds for the rest of his life.
- 1958Publishes Common Stocks and Uncommon Profits, introducing the scuttlebutt method.
- 1975Publishes Conservative Investors Sleep Well.
- 1980Publishes Developing an Investment Philosophy, a short account of his own thinking.
- 2004Passes away at the age of 96.
Investment philosophy
Fisher looked for a small number of unusually good businesses and then tried to do as little as possible with them. His reasoning was that outstanding companies are rare, so finding one is hard work that should not be wasted by selling it for a modest gain, and that the compounding available from a genuinely superior business over twenty years dwarfs anything available from trading in and out of ordinary ones.
That made his research qualitative by necessity. If the question is whether a company can keep producing new products and defending its position for another decade, no ratio answers it. So he studied the research culture, the depth of the management team below the chief executive, the relationship with the sales organisation, and whether profit margins were being defended by something durable or by luck.
He was not indifferent to price, but he ranked it below quality. His view was that overpaying slightly for an exceptional business costs you far less over a long holding period than paying a fair price for a mediocre one, and that the most expensive mistake available to an investor is selling an outstanding company because it looked temporarily expensive.
Key ideas
Tap any idea to expand a plain-English explanation, why it matters, and where to learn more.
The scuttlebutt method
Building a view of a company by talking to the people around it: customers, suppliers, competitors, former employees and industry researchers.
Published accounts are backward looking and identical for everyone. What people close to a business say about its products and its management is where a different view comes from.
Asking a company's competitors which rival they most respect often produces a more honest answer than the company's own investor presentation.
Judge the business, not just the numbers
Weighing management quality, research culture, sales organisation and competitive position alongside the financial statements.
Financial statements record what already happened. The qualities that decide the next decade rarely appear in them until it is too late to act on.
Two companies can report identical margins while one is defending them with genuine advantages and the other by cutting research spending.
A few outstanding holdings, held for years
Owning a small number of exceptional businesses for very long periods rather than spreading capital thinly across many average ones.
Genuinely superior businesses are rare. If you find one, the arithmetic of compounding rewards patience far more than it rewards activity.
Fisher bought Motorola in 1955 and never sold it, holding through decades of change in the electronics industry.
Three reasons to sell, and only three
Selling when the original analysis turns out to be wrong, when the business deteriorates against its own standards, or when a clearly better opportunity is available.
A short, explicit list of selling reasons removes price movement itself as a trigger, which is the most common reason people abandon good holdings early.
A share that has risen sharply is not on the list. A company whose research pipeline has quietly emptied is.
Growth at a price worth paying
Accepting a higher valuation for a business whose earning power is genuinely growing, while refusing to ignore price altogether.
It sits between deep-value buying and paying anything for a story, and it explains why Fisher and Graham are usually read together rather than as opposites.
Warren Buffett has described his own approach as a blend of Graham's thinking and Fisher's, drawing on both rather than choosing between them.
Major contributions
- Made qualitative research a formal part of security analysis rather than an informal supplement to the numbers.
- Introduced the scuttlebutt method, a repeatable way to gather information about a company from the people who deal with it.
- Published fifteen specific questions to ask about a business, giving investors a structured checklist rather than general advice.
- Set out a narrow, explicit list of reasons to sell, which shifted attention away from price movement as a trigger.
- Helped establish long-horizon growth investing as a discipline distinct from both deep-value buying and speculation.
Major successes
- Ran Fisher and Company from 1931 into the 1990s, an unusually long span for a single investor managing money continuously.
- Bought Motorola in 1955 and held the position for the rest of his life, through decades of change in the electronics industry.
- Wrote Common Stocks and Uncommon Profits, one of the first investment books to reach a wide general readership and still in print today.
- Shaped how later investors describe business quality, including Warren Buffett, who has credited Fisher as one of the two main influences on his approach.
Important books
- Common Stocks and Uncommon Profits1958
The book that introduced scuttlebutt research and the fifteen points to look for in a company.
- Conservative Investors Sleep Well1975
On what actually makes an investment conservative, which in his view had little to do with how quiet a share price is.
- Developing an Investment Philosophy1980
A short account of how his own thinking formed, usually published together with Common Stocks and Uncommon Profits.
Influence on investors
Fisher moved the centre of gravity in stock analysis. Before him, serious research meant statistics; after him, questions about management depth, research spending and competitive durability became a normal part of the work, and they remain the language investors use when discussing business quality.
His fingerprints are clearest on investors who buy quality rather than cheapness. Warren Buffett has described his own method as a combination of Benjamin Graham's discipline and Philip Fisher's attention to the business itself, and that combination is now the default framing for long-term equity investing.
Criticisms and debates
A balanced view includes the main criticisms and open debates, presented neutrally.
- Scuttlebutt research is far easier for a professional with industry contacts than for an individual investor, and its conclusions cannot be checked by anyone else.
- Qualitative judgments about management quality are difficult to falsify, which makes it easy to keep believing an assessment long after the evidence has turned.
- Holding only a handful of positions concentrates risk in a small number of outcomes, and one permanent mistake in a concentrated portfolio is expensive to recover from.
- Ranking quality above price can lead to overpaying, and a great business bought at a very high multiple can still be a poor investment for many years.
- Long holding periods make results hard to attribute: a position held for forty years passes through so many conditions that skill and luck become almost impossible to separate.
Lessons for investors
Plain-English takeaways. Context for learning, not advice to buy or sell anything.
- 1The numbers tell you what a company has done; the people around it tell you what it may do next.
- 2A small number of holdings you understand well beats a long list you do not.
- 3Decide in advance what would make you sell, and keep price movement off that list.
- 4Paying a fair price for an outstanding business usually beats paying a low price for a mediocre one.
Notable quotes
“The stock market is filled with individuals who know the price of everything, but the value of nothing.”
“I do not want a lot of good investments; I want a few outstanding ones.”
Context: Fisher ran a deliberately concentrated portfolio backed by years of research on every holding. Standing alone the line argues against diversification, which is the opposite of what most investors need.
Frequently asked questions
Who was Philip Fisher?
Philip Fisher was an American investor, born in 1907, who founded Fisher and Company in 1931 and wrote Common Stocks and Uncommon Profits. He is associated with long-term growth investing based on the quality of the business.
What is the scuttlebutt method?
It is Fisher's name for researching a company by talking to the people around it, including customers, suppliers, competitors and former employees, to learn things the published financial statements do not show.
What are Fisher's fifteen points?
They are the fifteen questions he set out in Common Stocks and Uncommon Profits, covering areas such as research and development, sales organisation, profit margins, management depth and the honesty of management.
How was Fisher different from Benjamin Graham?
Graham focused on statistical cheapness and a margin of safety in the numbers. Fisher focused on the quality and durability of the business itself, and was willing to pay more for an exceptional company.
When did Philip Fisher say to sell?
He gave three reasons: the original analysis was mistaken, the business has deteriorated against its own standards, or a clearly better opportunity has appeared. A rising price was not on the list.
What can investors learn from Philip Fisher?
Common takeaways include studying the business rather than only the statement, keeping the number of holdings small enough to understand well, and having explicit reasons to sell rather than reacting to price.
How is Philip Fisher related to Ken Fisher?
Ken Fisher is his son. They are separate investors with separate firms and separate approaches, and the two are often confused because both wrote widely read investment books under the Fisher name.
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