Where to Start with Philip A. Fisher: A Reading Guide
Where to start with Philip A. Fisher — how to approach Common Stocks and Uncommon Profits, the 1958 classic that established qualitative growth investing and influenced Warren Buffett. A complete reading guide.
By Marcus Webb
Philip Arthur Fisher (1907–2004) was an American investment manager who ran a San Francisco investment firm from 1931 until his retirement in 1999 — nearly seven decades of investing. Common Stocks and Uncommon Profits was first published in 1958, became the first investment book to appear on the New York Times bestseller list, and has remained in print and in use ever since. Warren Buffett, upon reading it, sought out Fisher personally and credited the encounter with shaping his thinking about business quality as the foundation of long-term investment returns.
Where to Start: Common Stocks and Uncommon Profits (1958)
The essential Philip A. Fisher — and the foundational text of qualitative growth investing. Common Stocks and Uncommon Profits begins from an insight that sounds simple and has enormous implications: the best investment returns come not from buying assets cheaply but from holding exceptional businesses for very long periods. The investor who buys a mediocre business at a significant discount and sells it when it reaches fair value will make money once. The investor who identifies and holds an exceptional business — one that compounds its competitive advantage, its returns on capital, and its market position for decades — will make money compounded over the entire holding period.
The difference between these two strategies is not just tactical but philosophical: Fisher inverted the orientation of investment analysis from valuation to business quality. His question was not “is this asset cheap?” but “is this a business capable of being substantially more valuable in ten years than it is today?” Answering that question requires qualitative judgment that no financial statement can fully provide.
The fifteen questions Fisher developed for evaluating any company are the book’s central practical contribution. They cover:
Does the company have products or services with sufficient market potential to allow significant growth? (Not current size but capability for growth.) Does management have the determination to continue developing products to further increase sales when the growth potential of current product lines has been exploited? Does the company have outstanding research and development efforts relative to its size?
Does it have an above-average sales organisation? How effective is the company’s cost analysis and accounting controls? Are there aspects of the business that give some indication of an above-average profit margin? Is the company doing the things to maintain or improve profit margins?
Are there good labour and personnel relations? Does the company have outstanding executive relations? What is the depth of management competence — is there a “one-man band” problem, or has management been developed at multiple levels?
These are qualitative questions that require research, judgment, and an assessment of people and culture rather than calculation. They ask about the things that determine whether a business will be more or less valuable ten years from now — precisely the factors that raw financial analysis cannot directly observe.
The scuttlebutt method is Fisher’s most distinctive research tool and the one most frequently cited by investors who have applied his approach. The scuttlebutt method means gathering information about a company not only from the company itself (annual reports, earnings calls, management meetings) but from the people who have direct operational knowledge of it: competitors who have lost business to it, suppliers who have delivered to it, former employees who have worked at it, customers who have bought from it.
Each of these sources provides information that management has a structural incentive to conceal or frame favourably. A competitor who has lost a major account to the company can tell you why — what the company does better. A supplier who has worked with the company for twenty years can tell you about its operational quality and its reliability as a partner. An experienced former employee can tell you about internal culture, management consistency, and the quality of the people at levels the CEO would never describe accurately in a quarterly call.
The holding period is Fisher’s most contrarian prescription. He advised selling stocks only when three conditions were met: the business had fundamentally deteriorated in quality; you had made an analytical error in buying it; or you had identified a clearly superior opportunity. Market price declines, temporary earnings shortfalls, and changing fashion in investment styles were not reasons to sell. Fisher held most of his investments for decades.
Reading Philip A. Fisher
Common Stocks and Uncommon Profits is Fisher’s essential and most influential book. It stands alone and remains as relevant for individual investors today as when it was published in 1958.
For the full Philip A. Fisher bibliography, reviews, and biography, visit the Philip A. Fisher author page on Editors Reads.
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Frequently Asked Questions
Where should I start with Philip A. Fisher?
Common Stocks and Uncommon Profits (1958, with multiple revised editions) is Fisher's essential book — a foundational text of investment literature that established qualitative stock analysis and growth investing as a discipline. Warren Buffett has cited Fisher as one of his two primary intellectual influences (alongside Benjamin Graham), and the fifteen questions framework and scuttlebutt research method remain the most practically useful qualitative tools in fundamental analysis.
What is Common Stocks and Uncommon Profits about?
Common Stocks and Uncommon Profits argues that the best investments are in exceptional businesses that can compound in value over decades, and that identifying these businesses requires qualitative assessment of management quality, research capability, competitive advantages, and growth potential — factors that quantitative analysis alone cannot capture. Fisher provides fifteen specific questions for evaluating any company's long-term investment potential, and describes the scuttlebutt method for gathering intelligence from competitors, suppliers, and customers.
How does Philip Fisher's approach differ from Benjamin Graham's?
Graham focused on quantitative analysis: buying assets at a discount to their intrinsic value, measured through financial statements. Fisher focused on qualitative assessment of business quality: identifying companies with exceptional management, durable competitive advantages, and long-term growth potential, and holding them for decades regardless of current price relative to assets. Buffett's famous description — 85% Graham, 15% Fisher — understates Fisher's influence on Buffett's actual practice, which shifted substantially toward Fisher's quality-focused approach over his career.
What should I read after Common Stocks and Uncommon Profits?
After Common Stocks and Uncommon Profits, Benjamin Graham's The Intelligent Investor provides the quantitative complement to Fisher's qualitative approach — together they form the complete foundation of fundamental analysis. One Up on Wall Street by Peter Lynch extends the qualitative research approach to individual stocks with more accessible prose. William Thorndike's The Outsiders applies Fisher's focus on management quality to a specific set of exceptional capital allocators.
