Begin: 7/16/2023
Finished: 7/18/2023
Title: Common Stocks and Uncommon Profits
Author: Philip A Fisher
Why I chose to read this book:
To learn more about the equity market, understand the nuance of investing in the stock market. How to buy stocks? When to buy and when to sell and when not to. The don’ts for investors and how to find a growth stock.
What I learn from this book:
How to use the “scuttlebutt” method to research stocks instead of relying on local rumor mills and Wall Street noise. Scuttlebutt seeks information from competitors, customers, and suppliers. Also, talking to research and management people of competitors too. If all these folks see reality and strength in the Targets’ operations and respect it and even fear it, Then it is a good company instead of a Bogus company. The fifteen points to look for in a Common stock:
1) Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years?
2) Does the management have the determination to continue to deliver products or processes that will still further increase total sales potential when the growth potentials of currently attractive product lines have largely been exploited?
3) How effective are the company’s research and development efforts in reaction to its size?
4) Does the company have an above-average sales organization?
5) Does the company have a worthwhile profit margin?
6) What is the company doing to maintain or improve profit margins?
7) Does the company have outstanding labor and personnel relations?
8) Does the company have outstanding executive relations?
9) Does the company have depth in its management?
10) How good are the company’s cost analysis and accounting controls?
11) Are there other aspects of the business, somewhat peculiar to the industry involved, which will give the investor important clues as to how outstanding the company may be in relation to its competition?
12) Does the company have a short-range or long-range outlook in regard to profits?
13) In the foreseeable future will the growth of the company require sufficient equity financing so that the large number of shares then outstanding will largely cancel the existing shareholder’s benefit from this anticipated growth?
14) Does the management talk freely to investors about its affairs when things are going well but “clam up” when troubles and disappointments occur?
15) Does the company have a management of unquestionable integrity?
Don’t for investors:
1) Don’t buy into promotional companies.
2) Don’t ignore a good stock just because it is traded “over the counter”.
3) Don’t buy a stock just because you like the Tone of its annual report.
4) Don’t assume that the high price at which a stock may be seeking in relation to earnings is necessarily an indication that further growth in the earnings has largely been already discounted in the price.
5) Don’t quibble over eighths and quarters.
Also, Don’t:
1) Don’t overstress diversifications.
2) Don’t be afraid of buying on war scare.
3) Don’t forget about Gilbert and Sullivan ( Seasonal timing buying).
4) Don’t fail to consider time as well as price in buying a true growth stock.
5) Don’t follow the crowd.
These are the 15 rules and don’ts when buying stocks.
How will this book contribute to my success upon release:
Information on how to buy, sell stocks will help me better manage my retirement portfolio upon my release. It will provide additional funds for my retirement.
