Warren Buffet is renowned as perhaps the greatest investor of our time. To be noted as a mentor, as was Philip Fisher, is indeed being stuck on a pedestal.
Fisher published quite a bit, his seminal work being ‘Common stocks and uncommon profits’ first published in 1958.
In it he outlined 8 principals by which he invested. Buffet credits these 8 principals as being fundamental to his success, along with the quantitative analysis he learnt from Benjamin Graham. These two men, along with Charlie Munger, his intellectual side-kick for 60 years, are credited by Buffet as the foundation of his success.
The Fisher principles in summarised form are:
- Go and see.
- Depth of R&D leads to growth.
- Sales and merchandising are make and break.
- Being a low cost producer, and working to stay there leads to higher margins.
- Generate your finance internally.
- Have only great people. The depth and quality of management, represented by integrity, transparency, willingness to learn from mistakes, and who build working relationships with stakeholders are essential.
- ‘Scuttlebutt’ is a serious business, and should be collected by talking to as many knowledgeable people as possible who may be familiar with any company you were learning about, and analysed in depth.
Like all great advice, this list applies equally today as it did 50 years ago, and the application is much wider than just investing. If you were setting out to construct the framework for the business you wanted to create, that drove the culture you were seeking, then this list would be a great foundation.
I particularly like the dedication in the most recent edition of Fishers book, which reads “This book is dedicated to all investors, large and small, who do NOT adhere to the philosophy “I have already made up my mind, don’t confuse me with facts’. This admonition seems particularly pertinent in these times of an overwhelming volume of opinion posing as fact, being blasted at us, demanding our attention.
