Fisher — the man who taught the market to own few, and to own the right ones
Chapter 1 of 15 · 11 min
San Mateo, California, 1958. A retiring adviser with a handful of clients publishes a book that will become the foundational text of growth investing. Since 1931 Philip A. Fisher had made money by getting to know a few companies at a depth nobody on Wall Street could match — and now he wrote the method down.
Philip A. Fisher (1907–2004) founded his advisory firm Fisher & Company as early as 1931, in the middle of the Depression, on the American West Coast — far from the statisticians of the New York banks. He deliberately took on only a small number of clients and turned away most of those who sought him out: his method required weeks of research per company, and he wanted to spend that time on the right companies.
When Common Stocks and Uncommon Profits came out in 1958 Fisher was hardly a known name outside California — but the book has stayed in print for over sixty years and is counted today as one of the most influential investment books ever written.
What made Fisher different? Benjamin Graham, his contemporary colleague on the other coast, looked for the margin of safety in the balance sheet: statistics, net-nets, price in relation to documented assets. Fisher turned his gaze toward the future: an outstanding company is recognized by the market potential of its products, the quality of its research and sales organization, the durability of its margins and — most important of all — the character of its people.
In 1969 Warren Buffett summed up his own heritage with the words: “I am 85 percent Graham and 15 percent Fisher.” It is that Fisherian fifteenth that explains Buffett's later move toward quality companies with strong brands and capital tied up permanently.
Fisher practiced what he preached. He bought Motorola in 1955, when the company was a radio manufacturer on its way into the era of transistors, and held the stock until his death in 2004 — almost fifty years. He bought Texas Instruments in 1956. The portfolio he ran was extremely concentrated, often three to four core holdings, and his most quoted maxim sums up the whole philosophy: “I don't want a lot of good investments.
I want a few outstanding ones.” In a world of diversification it was a rebellion — but Fisher held that whoever truly understands a company is carried by that understanding, and that whoever does not understand it should not own it at all.
The son Kenneth Fisher writes the foreword to the later editions and describes how his father worked: notebooks full of interviews, trips to factories and trade fairs, long conversations with engineers far down in the organization. Kenneth himself founded Fisher Investments in 1979 and coined the financial ratio price-to-revenue (price/sales) — but his most important contribution to the book is the testimony that the method worked: the clients who followed the father became wealthy, not through the swings of the stocks but by learning to leave alone what had been rightly bought.
Later editions also include Fisher's two follow-ups: Conservative Investors Sleep Well and Developing an Investment Philosophy.