Common Stocks and Uncommon Profits and Other Writings (Wiley Investment Classics)

by Philip A. Fisher

Companies with truly unusual prospects for appreciation are quite hard to find for there are not too many of them.

neither the stock market as a whole nor the course of any particular stock tends to move in close parallel with the business climate.

I believe that it is hard to be correct in forecasting the short-term movement of stocks more than 60 percent of the time no matter how diligently the skill is cultivated.

if you sell and don't buy back you will have missed long-term profits many times the short-term gains from having sold the stock in anticipation at a short-term reversal.

I began paying too much attention to what I was hearing from top management and not doing sufficient checking with people at lower levels and with customers.

simply because they have realized a good gain and the stock appears temporarily overpriced.

These investors seldom buy back at higher prices when they are wrong and lose further gains of dramatic proportions.

Yet in the weeks immediately following this meeting, there was no particular effect on the stock whatsoever. Some of those present were obviously impressed by the picture being presented. Too many, however, were still under the influence of the double shock that they had experienced a year or two before. They obviously mistrusted what was being told them then. So much for the theory of an efficient market.

those who have accepted and been influenced by this theory of the “efficient market” fall into two groups. One is students, who have had a minimum of practical experience. The other, strangely enough, seems to be many managers of large institutional funds. The individual private investor, by and large, has paid relatively little attention to this theory.

I would conclude that in my field of technological stocks, as the decade of the 1970's comes to an end, there would therefore be more attractive opportunities among the larger companies, the market for which is dominated by the institutions, than among the small technological companies where the individual private investor plays a considerably bigger role.

Focus on buying these companies when they are out of favor;

Hold the stock until either (a) there has been a fundamental change in its nature (such as a weakening of management through changed personnel), or (b) it has grown to a point where it no longer will be growing faster than the economy as a whole.

Never sell the most attractive stocks you own for short-term reasons.

For those primarily seeking major appreciation of their capital, de-emphasize the importance of dividends.

The important thing is to recognize them as soon as possible, to understand their causes, and to learn how to keep from repeating the mistakes.

neither to accept blindly whatever may be the dominant opinion in the financial community at the moment nor to reject the prevailing view just to be contrary for the sake of being contrary. Rather, it is to have more knowledge and to apply better judgment, in thorough evaluation of specific situations, and the moral courage to act “in opposition to the crowd” when your judgment tells you you are right.