Phil Fisher Developing An Investment Philosophy

Question 0

What does fisher and co. Expect of management

Answer 0

Implement long range policy with superior day to day tasks

Of business operation

Question 1

Characteristics that Fisher and Company Invests in

Answer 1

1) management fosters increasing sales and profits

2 invest in very small number of companies (mainly manufacturing companies)

3 companies should have small risk relative to growth involved

Question 2

What is the most important aspect for a business to have over excellent manufacturing and sales force .

Answer 2

The ability to appraise the changing needs and desires of

customers

Question 3

Reading the printed financial records of a financial company

Answer 3

Is never enough to justify an investment

You must also gain familiarity with the company’s affairs

Question 4

When you go contrary to the general trend of thought of investment thinking

Answer 4

You must be very sure you are right

Question 5

3 year rule

Answer 5

Clients shouldn’t judge your investments for 3 years

If you have not produced worthwhile investments for them in 3
Years they should fire you

Question 6

What is the most important long range problem facing your company?

Answer 6

Great question to ask company management

Question 7

Wise executives statement: never promote someone who hasn’t made some bade mistakes

Answer 7

Because if you do, you are promoting someone who has never

done anything

Question 8

If you can’t do a thing better than others are doing it…

Answer 8

Don’t do it at all

Question 9

Good fortune can breed laxness

Answer 9

Mistakes allow you to learn more

Question 10

Realize the limitations of your knowledge

Answer 10

Best to stick to the sectors and experience you know well

Question 11

Long term vs. short term changes

Answer 11

Much higher probability in being wrong predicting short term
changes compared to Longterm changes in stock price

Question 12

Pensions funds and profit sharing funds: dividends, growth companies

Answer 12

Won’t invest unless company pays dividends, because dividends
Are tax free for them

As a result growth companies issue small dividends to attract
Investment

Question 13

What does phil fisher characterize as the greatest opportunities for investment?

Answer 13

Situations that were extremely attractive but undervalued

Because the financial community had misjudged the situation

Question 14

Phil fisher on efficient market theory

Answer 14

Prices aren’t efficient for the diligent, knowledgeable, long
Term investor

Question 15

Summary of fishers philosophy: 8 points

Answer 15

1 buy companies with disciplined plans of long term growth
2 buy companies when they’re out of favor
3 hold stock until management weakens, it can’t grow faster
Than the averages
4 deemphasize dividends
5 making mistakes and learning how to not repeat them is
Essential
6 relatively small numbers of truly outstanding companies
Can be bought at attractive prices, must buy when prices
Are attractive
7 essential for management to have moral courage to act
Opposite to financial crows when their judgement tells them
They are right
8 handling stocks depends on intelligence, hard work and honesty

Question 16

Willingness to take small losses in some stocks and let profits grow bigger and bigger in more promising stocks is a sign of what?

Answer 16

Sign of good investment management

Question 17

Taking small profits in good investments and letting losses grow in bad ones is…

Answer 17

A sign of abominable investment judgement

Question 18

Profits should never be taken for…

Answer 18

Satisfaction of taking it

Question 19

How many stocks does phil fisher recommend owning for the competent individual investor?

Answer 19

10 to 12

Question 20

Contrarians

Answer 20

You should never be contrary for the sake of being contrary

Must have a fundamental reason

Question 21

What does sustained success require?

Answer 21

Skill and consistent application of sound principles

Question 22

Comparatively low break even

Answer 22

Essential for a firm to survive a depressed market and increase
Position when weaker competitors are driven out

Question 23

Management and participatory programs

Answer 23

Work well and are good source of ideas for company management

Question 24

Business characteristic: Important for investor safety

Answer 24

Favorable profit to sales ratios and turnover rates

Question 25

High margins

Answer 25

Attract competition which erodes profit opportunities

Best way to mute competition is operate so efficiently
No incentives are left to the potential entrant

Question 26

What are two avenues for industry leadership, why?

Answer 26

1 technology

2 developing a consumer franchise

Sound investment if they have strong ability to defend established
Markets against new competitors