My Common Stocks and Uncommon Profits review is different than any review I’ve ever done. I’m very harsh in this evaluation, and I explain why at the end.
I’ve seen many recommendations towards this book, Common Stocks and Uncommon Profits and Other Writings (Wiley Investment Classics), and I have to say I was disappointed when finishing it. There wasn’t much evidence to back up Fisher’s claims, and his teachings were wide open to interpretation.
While Fisher might have found success in his own investing career with the techniques he used, I can’t see that type of analysis being successfully duplicated. In fact, many of his success stories come from technology stocks, and he admits that he wasn’t good at analyzing industries other than technology.
With so many more technology companies around today, and with the sheer amount of technology company failures in the past two decades, I can’t in good conscience recommend Fisher’s methods to anyone else investing today.
Don’t get me wrong, the book wasn’t full of boring and useless material. I even adopted his 3 year principle as part of my sell side strategy. But most of the positive insight I gained came from the “other writings” part of the book, and not Common Stocks and Uncommon Profits.
I did gain helpful perspective on the importance of a company’s marketing and research teams. And I did appreciate the boldness to go against the grain by emphasizing the people factor.
Like I’ve said before, the book provides a different view on investments which can be useful to value investors. Think of it as a new and exotic food that can be a nice change up to your routine, but take it with a grain of salt.
Book: Common Stocks and Uncommon Profits Review
Strength of Argument: 6/10
I don’t agree with most growth strategies to begin with, but I tried to take an objective and unbiased view while I was reading. Fisher tried to find stocks that would pay him extraordinary returns, while accepting that most of his investments wouldn’t. In his eyes, he just needed one outstanding company to override the other companies that don’t perform well.
You can’t implement this strategy without taking extraordinary risk, and so many investments will be duds. This type of investing seems similar to gambling, and preys on the same emotions. If you chase this, you probably will despair and become discouraged.
It’s much easier to grow your portfolio slowly than to try and make up for drastic losses. A sound investing strategy should be preserving your capital, not losing it. By chasing big gains, by avoiding dividends, by focusing on people’s perceptions, you are adding a lot of volatility and risk into your portfolio.
I can’t agree with that, and that is the reason for the low score.
Powerful Stories: 6/10
Some of the stories on here are truly great. You really get to see how great of a detective and investigator that Phillip Fisher was. The man really took pride in his work and put a great amount of effort into his analysis.
That being said, he also had many contacts in the industry. He frequently talked about how he would interview managements of various companies and use this as a tool in deciding whether to invest.
The average investor doesn’t have this kind of opportunity to speak to management at the level that Fisher describes in his book. Unfortunately, that leaves a good portion of the book to be irrelevant to the average reader.
I’d say that readability was average for this one. While Fisher has a great vocabulary that at times leaves lengthy sentences and words, I never felt lost during the book. I did get bored a few times, but I think this came from the disagreements on certain investing principles.
The book didn’t excite or challenge me too much, but I can say that “Conservative Investors Sleep Well” was the best part of the reading. If you do pick up a version of this book, make sure you read the “other writings” and read that section. It was written much better because it was more specific.
I think I noticed that Fisher’s writing style was very similar to mine, and that could’ve contributed to why I didn’t like it (slight sarcasm here). While I try to write like I talk, I often instead write in long, laborious and academic prose. I understand I’m being extremely hypocritical right now, feel free to criticize my writing style like I am to his.
Actionable Content: 6/10
Like I mentioned in the powerful stories section, most average investors don’t have the ability to directly interview executives and directors of companies. So, the amount of strategy that readers could take action on is reduced.
Some of the “five don’ts” in chapter 8 proved to be immediately useful when analyzing companies. I also agree with Fisher’s emphasis on management integrity, and I see it as a practical way to avoid risker companies.
The X-factor: 7/10
While this review has been seemingly very harsh, I am glad I read the book. Just because a lot of the pages weren’t useful to me doesn’t mean they won’t be useful to someone else. I am deliberately harsh about certain parts because I don’t want to see fellow investors get hurt by trusting certain strategies too much.
Philip Fisher was obviously a brilliant investor and a great person. He had decades of experience on Wall Street and was willing to share it with the world. Just as it doesn’t hurt to diversify your stock portfolio, it doesn’t hurt to diversify your book portfolio.
Total (out of 100): 64
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**Common Stocks and Uncommon Profits Review**
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