On a question about price vs quality (which factor to put more weight on when deciding which stock to buy), Fisher makes an important point. Fisher's advice is thus quite unsurprising - an investor should act when key fundamentals are in place. You are encouraged to read the original, of course.įisher discusses five major top-down drivers that can impact a company's performance and its stock price, but most often, they pull the business and the stock in opposite directions and also depend on other people's reactions and expectations making it very difficult for an individual investor to make use of them. I have slightly rephrased them to make them sound simpler, I apologise if my version makes them worse. Unfortunately, these points are almost all quantitative and, thus, require judgement rather than arithmetics, but perhaps this is why they can still be applied (anything easily quantifiable could be quickly calculated by computers). He notes that a company does not have to score on all the points.

Here are 15 points to look for in a common stock which Fisher considers as attributes of a company that can be a successful investment. The book is well structured as there are 15 criteria to use for analysing opportunities as well as 10 practical pieces of advice and mistakes to be avoided as well as useful messages on when is best to buy or sell stocks. It reminds me of advice that Peter Lynch makes as well. Opportunities to find such exceptional companies are rare.Īccording to Fisher, the key to successfully identifying such companies is the 'Scuttlebutt' approach which is active discussion with the company's former employees, its vendors, customers, competitors. The problem often has to do not that the price paid was high, but the quality of the company was not high enough to justify the price. Clearly, from a math perspective, this statement is correct as long as the price is not unreasonable and growth is real and sustainable. Amazon, Netflix, Costco), Fisher advocates that the actual price paid for a great business is secondary to earnings growth. Just like recently investors who have held big winners of the past two decades with all their ups and downs (e.g. The quality of the company measured in the quality of its products, processes, management and personnel, as well as the market it operates in, determines the long-term growth potential of the company, which in turn is key for generating long-term investment results.

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