Philip Fisher’s background

Philip Fisher was a good student and most likely had Aspberger’s. He had no friends until he was in his late teens, and probably had a rather rough childhood.

According to his son Kenneth, in his father’s famous book, Common Stocks Uncommon Profits, Philip was a difficult person to deal with. However, he was far smarter than average, and had a way of thinking that was very different from other people. Philip Fisher also had an extremely good memory and memorized all the US Congressmen and Senators every year.

Philip Fisher’s strategies for value investing

Thomas Rowe Price may have come up with the concept of growth stocks, but Philip Fisher did it best.

Some of Philip Fisher’s value investing tips and strategies:

• Look for quality, rather than cheapness. As an analogy: Buy a good pair of leather shoes that will last you 10 years for $4000, rather than the cheapest ones you see that will break within 1-2 years for $1000.
• What is a quality stock? It’s a company that gets better over the years, for years to come.
  So even if the stock price looks expensive, it may be worth more in 2-5 years.
• “Scuttlebutt”: Be prepared to do extra research and company visits. Contact a salesperson from a competitor, a former employee of a competitor, and someone who is an industry expert. Don’t make company visits until you’ve done your homework, like Peter Lynch.
• Be willing to pay more for quality stocks, than stocks you buy at a discount (as Benjamin Graham used to do, and Walter Schloss continued to do for decades).
• How to find quality stocks? Philip Fisher suggested focusing on: (1) a market that is growing, (2) a company that is better than its competitors, (3) with a product that is good, and (4) a research and exploration team that is historically good at coming up with new products.
• This reasoning is fundamentally sound, but times are different now than when Philip Fisher was looking at companies. Fisher was exceptionally tech-savvy (think a mix of a good scientist and Frederick Taylor). Two of Philip Fisher’s best investments were in Dow Chemicals and Texas Instruments, both were high-tech companies that few contemporary investors understood at the time. Both companies went on to become leaders in their industries.
• Invest in companies that are not yet, but are becoming, leaders in their industries.
• And ideally, these industries should be big.
• Philip Fisher compared “Truly Outstanding Businesses” with “Average Businesses”. Some differences: (1) the best businesses improve out of recessions, (2) don’t focus on the market as a whole, especially during a downturn, (3) focus only on the decline of the best companies’ stocks.
• It’s a good tip, but it requires a lot of effort and detective work; nothing you do in a week. But if you have a keen interest and have been doing it for many years, it’s a very good tip.
• Perhaps Philip Fisher’s greatest insight was  to focus on growth stocks during a period of rising inflation, when no one else did.

One more thing about Philip Fisher:

According to his son Kenneth:

Stop making investment decisions when you are old, 70-80+.

Philip Fisher made very poorly timed decisions and lost lots of money unnecessarily because of this. And then, a few years after that, Philip Fisher visibly suffered from dementia. These decisions were likely made during the early on-set of his brain’s degeneration.

Read on: About the strategies of other famous value investors.