Philip Fisher's 15 Points for 100% Growth Stock Returns

Imagine you are standing at the edge of a vast, uncharted territory. To your left is the path of the defensive investor, a well-worn road where you look for bargains in the debris of the market. This is the world of Benjamin Graham, focused on buying a dollar for fifty cents.

But to your right is a path less traveled, one that leads to the uncommon profits of companies that change the world. This is the path of Philip A. Fisher, a man whose investment philosophy was so radical and effective that Warren Buffett famously described himself as 85 percent Graham and 15 percent Fisher.

Fisher’s masterpiece, Common Stocks and Uncommon Profits, was the very first investment book ever to make the New York Times bestseller list. It is not a book about math or spreadsheets; it is a book about searching for greatness. This is your guide to becoming an investigative reporter of wealth—moving beyond the ticker symbol and into the heart of the business itself.

The Great Debate: Why Growth Wins

Most investors are obsessed with the business cycle. They spend their days trying to guess when the next recession will hit or when interest rates will rise. Fisher argues that this is a waste of mental effort. Even in the midst of the Great Depression, outstanding companies continued to provide spectacular rewards.

The secret lies in identifying firms with a determination to attain further important growth. Today, a company’s ability to use the natural sciences and R&D to create new product lines is the ultimate engine of long-range profit.

The Fifteen Points: Your Master Checklist

Fisher developed a prescription for what to buy—a series of fifteen points that act as a filter to separate the mediocre from the magnificent.

1. Sales Potential: Does the company have products to allow for a sizable increase in sales for several years?

2. Management Determination: Are leaders determined to develop new products when current potentials are exhausted?

3. Research Effectiveness: How much actual gain does the company get for every R&D dollar spent?

4. Sales Organization: Does the company have an above-average merchandising and sales effort?

5. Profit Margins: Does the company earn more on every dollar of sales than its competitors?

6. Maintaining Margins: Is management using new technology to offset rising costs?

7. Labor Relations: Do they treat employees well to avoid strikes and boost productivity?

8. Executive Relations: Is there a climate of teamwork rather than factionalism?

9. Depth of Management: Is there a reservoir of talent, or is it a one-man show?

10. Accounting Controls: Does management have precise knowledge of their costs?

11. Industry-Specific Skill: Are there unique clues (like lease quality) that show the company is outstanding?

12. Long-Range Profit Outlook: Will the company sacrifice short-term gains to build long-term goodwill?

13. Equity Dilution: Will future growth require financing that cancels out current shareholder benefits?

14. Management Communication: Does leadership talk freely during both good times and bad?

15. Management Integrity: Does the company have a management of unquestionable integrity?

The Art of "Scuttlebutt"

If the fifteen points are the blueprint, Scuttlebutt is the construction work. Most investors rely on Wall Street noise; Fisher teaches you to find information from real Main Street sources.

Scuttlebutt is the process of seeking information from competitors, customers, and suppliers. Ask a competitor’s salesperson: "Who is the most formidable company in your field?" If everyone points to the same firm, you have found a jewel.

When to Buy and When to Sell

Fisher believed timing the market is a fool's errand. If you have found an outstanding company, any time is a good time to buy. The real danger is missing out on a company that will grow several hundred percent over a decade.

The Three-Step Rule for Selling:

1. A Mistake was Made: You misunderstood the company’s fundamental strength.

2. Deterioration: Management loses its ingenuity or integrity.

3. Better Opportunity: A much more attractive situation arises.

The Golden Rule: If the job has been correctly done when a stock is purchased, the time to sell is—almost never.

The Five "Don'ts" for Growth Investors

• Don't buy into promotional "startups" without a track record.

• Don't ignore over-the-counter stocks just because they aren't on a major exchange.

• Don't buy based on the "tone" or pretty pictures in an annual report.

• Don't assume a high P/E ratio means a stock is overpriced.

• Don't quibble over pennies and miss a sensational opportunity.

Conclusion: The Tide to Fortune

The path to uncommon profits is paved with systematic work. By mastering these fifteen points and the Scuttlebutt method, you are no longer a speculator—you are an investor identifying the wealth-generating engines of the future.

Master the blueprint for finding massive wealth in uncommon stocks. Your journey toward financial nirvana starts today. Pick up your magnifying glass and let the miracle of compounding begin.