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Philip Fisher
Pioneer of Growth Investing
1907–2004 · Fisher & Company
Philip Fisher is known as the father of modern growth investing. His 1958 book "Common Stocks and Uncommon Profits" introduced qualitative investment analysis techniques that were new at the time and remain influential. Fisher developed the "scuttlebutt" method of researching companies by talking to customers, suppliers, competitors, and former employees to gain deep insight into a business before investing. He advocated buying outstanding companies with superior management and holding them for extremely long periods, sometimes decades. Warren Buffett has publicly credited Fisher as a major influence, famously stating that his investment approach is "85% Benjamin Graham and 15% Philip Fisher." Fisher ran his own investment counseling firm, Fisher & Company, for nearly seven decades, from 1931 until his retirement in 1999, building one of the longest track records in investment management.
Biography
Philip Arthur Fisher was born on September 8, 1907, in San Francisco, California. He showed an early interest in the stock market, reportedly becoming fascinated with investing after overhearing his grandmother discuss stocks with her broker. Fisher attended Stanford University, where he studied at the newly created Stanford Graduate School of Business. During his time at Stanford, a formative experience came when a professor took the class to visit local companies, exposing Fisher to the idea that understanding a business from the inside was essential to evaluating its stock. This experience planted the seeds for what would become his famous "scuttlebutt" research methodology.
After briefly working as a securities analyst at a bank in San Francisco, Fisher founded his own investment counseling firm, Fisher & Company, in 1931, at the age of 24 and during the depths of the Great Depression. He began managing money for a small group of clients, focusing on innovative companies with strong growth prospects. Over the following decades, Fisher built a strong track record by concentrating his portfolio in a select number of companies he understood deeply, rather than diversifying broadly as was the conventional wisdom of the era.
Fisher developed his investment philosophy through decades of hands-on experience and rigorous study of what made certain companies succeed while others failed. His approach centered on qualitative analysis of a company, its management, its competitive advantages, and its potential for long-term growth. He formalized these ideas in his landmark 1958 book "Common Stocks and Uncommon Profits," which laid out his famous "Fifteen Points to Look for in a Common Stock." These criteria covered everything from a company's research and development efforts to the integrity of its management team. The book became widely read and reportedly was the first investment book to appear on the New York Times bestseller list.
Fisher's most celebrated investment was Motorola, which he purchased in 1955 and held until his death in 2004, a holding period of nearly 50 years. He originally bought the stock when the company was primarily a radio manufacturer, and he watched as it evolved through the semiconductor revolution and into the cellular communications era. This investment showed his philosophy in practice of buying excellent companies and holding them through multiple business cycles and transformations. Fisher also made early, profitable investments in Texas Instruments, Dow Chemical, and several other technology-oriented companies that benefited from post-war American innovation.
Philip Fisher retired from active money management in 1999 at the age of 91, after running Fisher & Company for nearly 68 years. His son, Kenneth Fisher, went on to become a successful investor in his own right, founding Fisher Investments and becoming a Forbes columnist. Philip Fisher passed away on March 11, 2004, at the age of 96. His influence on investment practice goes beyond his own returns. By demonstrating that qualitative research into a company's management, culture, and growth prospects could be systematically applied to stock selection, Fisher created a framework that complemented Benjamin Graham's quantitative value investing approach. Warren Buffett's synthesis of Graham's margin-of-safety principles with Fisher's growth-oriented qualitative analysis became one of the most followed investment approaches, illustrating how broadly Fisher's ideas influenced the field.
Philip Fisher's Investment Principles
1.The Fifteen Points to Look for in a Common Stock
A systematic qualitative framework for evaluating whether a company is an outstanding long-term investment.
Fisher's best-known contribution to investment analysis was his "Fifteen Points to Look for in a Common Stock," published in "Common Stocks and Uncommon Profits." These criteria include questions about whether the company has products or services with sufficient market potential, whether management is determined to develop new products to sustain growth, how effective the company's research and development efforts are relative to its size, whether it has an above-average sales organization, whether it earns a worthwhile profit margin, and what the company is doing to maintain or improve margins. Additional points address labor relations, executive depth, cost analysis and accounting controls, competitive advantages, the company's approach to profits, and the integrity of management. Fisher emphasized that a company need not score perfectly on all fifteen points, but the strongest investments would rate highly on most of them.
Source: Common Stocks and Uncommon Profits (1958), Chapters 2-3
2.The Scuttlebutt Method
Gather intelligence about a company by speaking with people who have direct knowledge of its operations.
Fisher coined the term "scuttlebutt" to describe his distinctive research approach, which involved systematically gathering information about a company from a wide range of sources before investing. Rather than relying solely on financial statements and annual reports, Fisher advocated talking to a company's customers, suppliers, competitors, former employees, and industry experts. He would visit companies, attend trade shows, and seek out anyone who could provide insight into the quality of a company's products, the effectiveness of its sales force, the strength of its research efforts, and the caliber of its management. Fisher believed that this kind of grassroots intelligence gathering could reveal truths about a company that no financial statement could capture, and that the effort invested in such research was a major differentiator in investment outcomes.
Source: Common Stocks and Uncommon Profits (1958), Chapter 4
3.Management Quality Above All
The character and capability of a company's leadership is the single most important factor in long-term investment success.
Fisher placed heavy emphasis on the quality, integrity, and vision of a company's management team. He argued that even the most promising business model would fail under poor leadership, while exceptional management could navigate challenges and capitalize on opportunities that lesser teams would miss. Fisher specifically looked for management teams that communicated honestly with shareholders, maintained strong ethical standards, fostered good labor relations, developed executive talent from within, and demonstrated a genuine long-term orientation rather than chasing short-term earnings targets. He believed that management's willingness to acknowledge mistakes and learn from them was a particularly telling indicator of quality. Fisher would often decline to invest in otherwise attractive companies if he had doubts about the integrity or capability of their leadership.
Source: Common Stocks and Uncommon Profits (1958), Points 10-15; Conservative Investors Sleep Well (1975)
4.Emphasis on Research and Development
Companies that invest meaningfully in R&D create the innovation pipeline necessary for sustained growth.
Fisher was one of the first investors to systematically evaluate a company's research and development capabilities as a key investment criterion. He believed that in competitive and evolving industries, companies that failed to invest in innovation would inevitably fall behind their competitors. Fisher looked not only at how much a company spent on R&D as a percentage of revenue, but more importantly at the effectiveness of those expenditures. He wanted to see a track record of translating research efforts into commercially successful products and services. Fisher was drawn to companies at the leading edge of technology, which is why he gravitated toward firms like Motorola, Texas Instruments, and Dow Chemical, companies that were investing heavily in the scientific and engineering breakthroughs of their era.
Source: Common Stocks and Uncommon Profits (1958), Points 1-3
5.Buy and Hold for the Very Long Term
The greatest profits come from holding outstanding companies for years or even decades, not from frequent trading.
Fisher was a strong advocate of long-term holding. He argued that if an investor had done thorough research and identified a truly outstanding company, the best course of action was to buy shares and hold them for many years, potentially decades. Fisher pointed out that the costs of frequent trading, including transaction fees, taxes on short-term capital gains, and the opportunity cost of missing further appreciation, severely eroded returns over time. More importantly, he observed that truly great companies tend to compound their advantages over long periods, and investors who sold too early almost always regretted it. His nearly 50-year hold on Motorola is the clearest example of this philosophy. Fisher argued that there were only three valid reasons to sell a stock: if the original analysis was wrong, if the company no longer meets the investment criteria, or if a clearly superior opportunity requires freeing up capital.
Source: Common Stocks and Uncommon Profits (1958), Chapter 6; Conservative Investors Sleep Well (1975)
6.When to Sell
There are only three legitimate reasons to sell an outstanding stock, and none of them involve market fluctuations.
Fisher articulated a disciplined framework for selling decisions that was as rigorous as his buying criteria. He identified three, and only three, valid reasons to sell a stock. First, if the investor realizes the original analysis was mistaken and the company does not actually possess the qualities initially attributed to it. Second, if the company has changed over time and no longer meets the investment criteria that justified the original purchase, perhaps due to deteriorating management quality, a loss of competitive advantage, or diminished growth prospects. Third, if the investor discovers a substantially more attractive opportunity and needs to free up capital, though Fisher cautioned that this should be a rare occurrence since truly outstanding companies are scarce. Critically, Fisher explicitly rejected selling based on price alone. He argued that selling simply because a stock's price had risen significantly or because the broader market seemed overvalued was a mistake, as it was nearly impossible to time the market and the tax consequences of selling winners were substantial.
Source: Common Stocks and Uncommon Profits (1958), Chapter 6
Notable Quotes from Philip Fisher
“I don't want a lot of good investments; I want a few outstanding ones.”
Fisher advocated for concentrated portfolios of thoroughly researched companies rather than broad diversification.
“If the job has been correctly done when a common stock is purchased, the time to sell it is almost never.”
Reflecting his belief that great companies should be held indefinitely, as exemplified by his 49-year hold on Motorola.
“Conservative investors sleep well.”
Fisher argued that investing in high-quality growth companies with strong management was actually the most conservative approach over the long run.
“I recall over the years a considerable number of occasions when I, too, sold a stock at a nice profit, only to see it advance far more in the years ahead.”
Fisher candidly shared his own mistakes of selling too early to illustrate the power of long-term holding.
“Is the company making above-average efforts to ensure the profit margin of a product or service is maintained or improved?”
One of Fisher's fifteen criteria for evaluating a company, reflecting his focus on sustainable profitability rather than short-term earnings.
Recommended Reading
Common Stocks and Uncommon Profits
Philip Fisher (1958)
Fisher's most important book and reportedly the first investment book to appear on the New York Times bestseller list. It introduces the "Fifteen Points to Look for in a Common Stock," the scuttlebutt method of research, and the philosophy of buying outstanding growth companies and holding them for the long term. Warren Buffett has called it one of the most important investment books ever written. The book remains in print decades after its original publication and continues to be a standard text in growth investing education.
Conservative Investors Sleep Well
Philip Fisher (1975)
Fisher's second book argues that investing in well-managed, innovative growth companies is actually the most conservative strategy over the long run. He introduces the concept of four dimensions by which to evaluate a company: its production capabilities, its research and engineering strength, its sales organization, and its financial acumen. The book provides a systematic framework for assessing whether a company possesses the characteristics that will protect investor capital while generating strong returns.
Developing an Investment Philosophy
Philip Fisher (1980)
Originally published as the third part of a combined edition with his earlier works, this book traces the evolution of Fisher's own investment thinking over the course of his career. It offers a candid look at how his ideas developed, the mistakes he made along the way, and the lessons he learned. The book provides valuable insight into how an experienced growth investor refined his approach through decades of practical experience in the markets.
The Intelligent Investor
Benjamin Graham (1949)
While Fisher's growth-oriented approach differed significantly from Graham's value investing framework, Fisher respected Graham's emphasis on disciplined analysis and margin of safety. Reading both Graham and Fisher together provides a complete picture of the two major schools of investment thought that Warren Buffett would later synthesize into his own successful approach.
Super Stocks
Kenneth Fisher (1984)
Written by Philip Fisher's son Kenneth Fisher, this book extends and modernizes many of the elder Fisher's principles, particularly the use of the price-to-sales ratio as a valuation tool. Kenneth Fisher built upon his father's qualitative growth investing framework by adding quantitative rigor, and the book provides insight into how the Fisher investment philosophy evolved across generations.
Philip Fisher's Investment Checklist
Superior Research and Development
Does the company invest meaningfully in R&D relative to its size, and does it have a strong track record of converting research into commercially successful products and services? Fisher believed that sustained growth requires a pipeline of innovation that keeps a company ahead of competitors.
Strong Sales Organization
Does the company have an above-average sales organization that can effectively bring products to market? Fisher emphasized that even the best products fail without an effective distribution and sales effort. He looked for companies whose sales capabilities were a genuine competitive advantage.
Adequate Profit Margins
Does the company earn worthwhile profit margins, and is management actively working to maintain or improve them? Fisher wanted companies that could translate revenue growth into profit growth, and he was wary of businesses that grew revenue without corresponding margin expansion or stability.
Check this on Billiver →Management Integrity and Transparency
Does management communicate honestly with shareholders, acknowledge mistakes, and maintain high ethical standards? Fisher considered management integrity non-negotiable. He would walk away from otherwise attractive investments if he detected dishonesty, self-dealing, or a pattern of overpromising and underdelivering.
Long-Term Orientation
Does management prioritize long-term competitive positioning over short-term earnings targets? Fisher sought companies whose leaders were willing to sacrifice near-term profits to invest in future growth, build sustainable advantages, and create lasting shareholder value rather than managing quarter to quarter.
Industry Leadership and Competitive Moat
Does the company occupy a leading position in its industry with advantages that are difficult for competitors to replicate? Fisher looked for companies with proprietary technology, strong brand recognition, scale advantages, or other characteristics that would protect their market position and enable sustained growth over many years.
Check this on Billiver →Philip Fisher's Notable Investments
Motorola
1955-2004Fisher purchased Motorola stock in 1955 when the company was primarily known as a manufacturer of radios and televisions. He was drawn to the company's strong research and development capabilities, its strong management team, and what he saw as significant growth potential in the emerging fields of semiconductors and electronic communications. Over the following decades, Motorola evolved into a leading semiconductor manufacturer and eventually became a pioneer in cellular telephone technology.
Outcome: Fisher held Motorola for nearly 50 years until his death in 2004, one of the longest-held positions by any well-known investor. The investment generated substantial returns as the company grew from a radio manufacturer into a major technology company. The Motorola investment became the best-known example of Fisher's buy-and-hold philosophy and his approach to identifying companies with growth potential.
Texas Instruments
1950s-onwardFisher invested in Texas Instruments during its early years as the company was transitioning from its origins as a geophysical services company into the semiconductor industry. He recognized that TI's investment in transistor and integrated circuit technology, combined with its strong engineering culture and capable management, positioned it to be a major beneficiary of the electronics revolution.
Outcome: Texas Instruments grew to become one of the world's largest semiconductor companies, supporting Fisher's approach of seeking technology-focused companies with strong R&D cultures and management teams committed to sustained investment in innovation.
Dow Chemical
1950s-onwardFisher identified Dow Chemical as a company with outstanding research capabilities and a management team committed to innovation in the chemical industry. He was impressed by Dow's systematic approach to developing new chemical products and processes, its cost discipline, and its ability to maintain strong profit margins through cycles.
Outcome: Dow Chemical became one of the world's leading chemical companies, growing significantly during the post-war industrial expansion. The investment demonstrated Fisher's principle that companies with superior research organizations and skilled management could deliver excellent long-term returns even in seemingly mature industries.
Frequently Asked Questions
What is Philip Fisher's investment philosophy?
Philip Fisher's investment philosophy centers on identifying outstanding growth companies and holding them for very long periods, potentially decades. He developed a qualitative approach focused on evaluating management quality, research and development effectiveness, competitive positioning, and growth potential. His "Fifteen Points to Look for in a Common Stock," published in his 1958 book "Common Stocks and Uncommon Profits," provides a systematic framework for assessing whether a company merits long-term investment. Unlike Benjamin Graham's emphasis on quantitative value metrics, Fisher prioritized understanding the qualitative factors that drive a company's ability to grow earnings over time.
What is the scuttlebutt method of investing?
The scuttlebutt method is a research technique developed by Philip Fisher that involves gathering information about a company from a wide network of sources beyond traditional financial statements. Fisher advocated talking to a company's customers, suppliers, competitors, former employees, and industry experts to develop a comprehensive understanding of its strengths, weaknesses, and prospects. The term "scuttlebutt" refers to informal information gathering, similar to the rumors and gossip shared around a ship's water cask. Fisher believed that this ground-level intelligence could reveal critical truths about a company's competitive position, management quality, and growth potential that no balance sheet or income statement could capture.
How did Philip Fisher influence Warren Buffett?
Warren Buffett has publicly stated that his investment approach is "85% Benjamin Graham and 15% Philip Fisher," though many observers believe Fisher's influence grew over time to be even larger than that fraction suggests. Buffett met Fisher in the late 1950s after reading "Common Stocks and Uncommon Profits" and was impressed by his approach. Fisher's emphasis on buying high-quality growth companies with excellent management and holding them indefinitely complemented Graham's more quantitative, value-oriented framework. Buffett's evolution from a strict Graham-style "cigar butt" investor to someone willing to pay fair prices for outstanding businesses reflects the substantial impact of Fisher's philosophy on his thinking.
What are Philip Fisher's fifteen points to look for in a stock?
Fisher's fifteen points, published in "Common Stocks and Uncommon Profits," form a comprehensive qualitative checklist for evaluating companies. They include: whether the company has products with sufficient market potential; whether management is committed to developing new products; the effectiveness of R&D relative to company size; the quality of the sales organization; the adequacy of profit margins; what is being done to improve margins; the quality of labor relations; the depth of executive relationships; the quality of management; the strength of cost analysis and accounting controls; aspects of the business that give competitive advantages; the company's approach to short-term versus long-term profits; whether growth can be financed without excessive dilution; whether management communicates openly with investors; and the integrity of management.
When does Philip Fisher say you should sell a stock?
Fisher identified only three valid reasons to sell a stock. First, if the investor realizes that the original analysis was fundamentally wrong and the company does not actually possess the qualities that were initially attributed to it. Second, if the company has changed over time and no longer meets the criteria that justified the original purchase, such as deteriorating management, loss of competitive advantage, or diminished growth prospects. Third, if the investor identifies a substantially more attractive investment opportunity and needs to reallocate capital, though Fisher cautioned this should happen rarely. Notably, Fisher explicitly rejected selling simply because a stock's price had risen significantly or because the market seemed overvalued, arguing that timing the market was a futile exercise.
What is the difference between Philip Fisher and Benjamin Graham's investing approaches?
Philip Fisher and Benjamin Graham represent two major schools of modern investment analysis, but their approaches differ significantly. Graham, known as the father of value investing, focused primarily on quantitative analysis: buying stocks trading below their intrinsic value as determined by financial metrics, with a margin of safety to protect against errors. Fisher, by contrast, focused on qualitative analysis: identifying companies with superior growth prospects, outstanding management, and strong competitive advantages, and was willing to pay higher prices for quality. Graham emphasized diversification across many cheap stocks; Fisher advocated concentrated portfolios of a few select companies. Graham typically held positions for shorter periods until value was realized; Fisher advocated holding for decades. Warren Buffett famously combined both approaches, using Graham's discipline on valuation with Fisher's emphasis on business quality.
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