Common Stocks And Uncommon Profits

This is a book for investors who are interested in learning how to best select equity securities and is reportedly one of the source documents that influenced Warren Buffet’s investment process. Philip Fischer believed that the stock market may be “information-efficient” but not “judgment-efficient.” He believed that while the market may incorporate all of the information that is disseminated broadly to the market for investors to consider and price, the market may not assimilate all of the information that is known by employees, consultants, advisors and business partners of specific companies. Common Stocks and Uncommon Profits is a handbook on how to make informed judgements that can lead to meaningful excess returns in the equity market. Given all of the literature available on equity investing, I did not expect to find this book of much assistance. On the contrary, I found it both instructive and intriguing. Having worked for and served as a board member of publicly-owned companies, I found the insights extraordinarily valuable to those who are committing investment capital in the equity market.

The first section of Fischer’s book was published in 1958 and describes what to do and what not to do in making equity investments. The second section was published in 1975 and describes the qualities of companies that are likely to succeed, which he calls “conservative investments.” And the third section was published in 1980 and describes how he established his investment philosophy. Despite the fact that these sections, and the book as a whole, were published in much different eras than our investment environment today, the insights offered by Fischer are poignant and valuable.

Philip Fischer was an investment manager who passed in 2004 at the age of 96. He was a member of the third class of the Stanford Business School and later taught its class its Investments course. He was a pioneer of the investment philosophy known as “Growth at a Reasonable Price” or “GARP.”