Wisdom From Phil Fisher

Wisdom From Phil Fisher

Phil Fisher has been called one of the most important and influential investors of all time.

His book, Common Stocks and Uncommon Profits published in 1958, is still relevant today and is a recommended read for many of Wall Street’s top money managers. Warren Buffett once said his investment philosophy was 85% Ben Graham, 15% Phil Fisher.

Phil Fisher’s strategy was to buy well-managed, high-quality growth companies, which he held for the long term. For example, he bought Motorola stock in 1955 and didn’t sell it until his death in 2004.

Phil Fisher rarely gave interviews during his career, but during October 1987 he sat for a long chat with Forbes magazine.

As a true long-term investor, Phil Fisher wasn’t concerned about short-term movements, and he didn’t like trading in and out of positions. If a stock made it into Fisher’s portfolio, he held for the ultra-long terms resisting the temptation to sell when it hit new highs.

“Some years ago I was the adviser to a profit-sharing trust for a large commodities dealer. I bought for them–I think the stock has been split 15 times since then–a block of Texas Instruments at $14 a share. When the stock got up to $28, the pressure got so strong (‘Well, why don’t we sell half of it, so as to get our bait back?’) I had all I could do to hold them until it got to $35. Then the same argument: ‘Phil, sell some of it; we can buy it back when it gets down again.'”

“That is a totally ridiculous argument. Either this is a better investment than another one or a worse one. Getting your bait back is just a question of psychological comfort. It doesn’t have anything to do with whether it is the right move or not.”

Fisher adopted this approach following an episode with FMC Corp., then called Food Machinery back in the 30s. At the same time, Fisher was trading in and out of California Packing:

“Then in 1940 or 1941 I…found that the effort I had put into the timing of buying and selling California Packing shares considerably exceeded the time I had spent learning about and watching Food Machinery stock. Yet already by 1940 my profits in Food Machinery dwarfed the ins and outs of California Packing.”

That episode, at the beginning of Fisher’s career, helped him decide that the time-consuming policy of buying low and selling high wasn’t the most efficient way to run a portfolio.

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