The quest for quality the Philip Fisher way

There are heaps and heaps of books on the quantitative aspects of stock investing, while far fewer deal with how to evaluate them qualitatively. Philip A. Fisher's Common Stocks and Uncommon Profits is widely acknowledged as the most authoritative work on this aspect of stock investing. No less an investor than Warren Buffett acknowledges his debt to Fisher. It was on account of Fisher's influence that Buffett stopped investing in cheap stocks (something his original mentor Benjamin Graham advocated) and started hunting for quality growth stocks, even if he had to pay a substantial price for them. In his book Fisher suggests 15 qualitative parameters which can enable investors to discover quality growth stocks. Fisher says that investors can hold on to such quality stocks for decades. As these companies grow in size and their market value expands, so will the investor's wealth. Fisher allows a small concession: he admits that not every company is going to fulfil all his 15 criteria, and yet some of them could be worthwhile purchases. Let us now turn to his 15 criteria: 1. Does the company have products or services with sufficient market potential to make possible a sizeable increase in sales for several years? A company that is to enjoy a prolonged period of spectacular growth must have products that address large and expanding markets. 2. Does t

This article was originally published on September 15, 2020.