Compounders & Quality
Philip Fisher
Use scuttlebutt to judge quality growth, buy the exceptional, and almost never sell.
Philip Fisher was an American investor from long ago, one of the first to look closely at how good a business really was instead of just how cheap its shares looked. He liked to find a few truly excellent, growing companies and hold them for many years, sometimes for decades. He wrote a famous, plain-spoken book explaining his ideas. The great investor Warren Buffett read it and learned from him, and said his own way of investing was part Fisher and part Benjamin Graham.
The method
Fisher’s method was to find a small number of wonderful, long-growing businesses and hold them patiently. He judged a company by asking around its customers, workers, suppliers and rivals (he called this ‘scuttlebutt’), by checking a long list of questions about the business and its people, and by trusting only honest, able, fair bosses. He preferred quality over cheapness, invested only in businesses he understood deeply, and sold almost never.
The record
Fisher’s ideas came from the American market of long ago, so the examples are old and from another country. His record was built over a very long time - he held some companies for many decades and let them slowly compound. It is best used not as a set of stocks to copy but as a lasting way of reading a business.
Where they were wrong
His approach is genuinely hard to follow. Truly excellent, long-growing companies are very rare and difficult to find. The ‘asking around’ takes huge effort, and even then you can be fooled by polished stories or your own false confidence. Judging bosses from a distance is one of the hardest things of all. And holding forever only works while a business stays wonderful - if it truly breaks, patience becomes a costly mistake.
Studies
8- Study 01Scuttlebutt: asking aroundBefore you trust a business, ask around - one clue is a rumour, but many clues that agree are the truth.Read this study →
- Study 02Buy quality, not cheapOne strong growing business, held for years, usually beats a whole tray of cheap weak ones.Read this study →
- Study 03The fifteen pointsBefore you trust a company, run it through honest questions about its future, its profit, and its people - not just its shine.Read this study →
- Study 04Judging the bossesA great business with dishonest drivers can still be driven off a cliff - judge the people before you trust the business.Read this study →
- Study 05The growth runwayDon’t just ask how fast a business is growing - ask how long the road ahead really is.Read this study →
- Study 06When to sellDon’t dig up a mango tree that is still bearing fruit - sell only for a real reason about the business, never because the price moved.Read this study →
- Study 07Stay in your fieldDig one deep well in ground you understand, and calmly walk past the loud stories in fields you do not know.Read this study →
- Study 08Patience and few stocksPlant a few good seeds, hold them patiently for years, and let time - not busy trading - grow the trees.Read this study →
Primary sources
full register →Read Philip Fisher in their own words. We reproduce none of it - these are the real things to go to.
Common Stocks and Uncommon Profitsbook
Fisher's classic on judging business quality through 'scuttlebutt' and holding exceptional growth companies for the long run. - available wherever books are sold - please buy the book