In this book, author Philip A. Fischer explains the theory and practice of picking stocks. He starts by explaining that there are two basic types: Common Stock, which you purchase for a small amount but have an enormous upside potential; and Preferred Stock, which is less risky because it gives you dividends from the company’s profits even if they don’t do well financially.
Philip A. Fischer’s “Common Stocks and Uncommon Profits” is a book that discusses the history of the stock market, common stocks, and uncommon profits. The book was published in 1997 by John Wiley & Sons.
Are you seeking for a summary of Philip A. Fischer’s Common Stocks and Uncommon Profits and Other Writings? You’ve arrived to the correct location.
After reading Philip A. Fischer’s book, I jotted down a few significant takeaways.
If you don’t have time, you don’t have to read the whole book. This book synopsis summarizes all you can take away from it.
Let’s get this party started right now.
I’ll go through the following themes in this Common Stocks and Uncommon Profits and Other Writings book summary:
What is the difference between common stocks and uncommon profits?
No matter what your financial style is, Common Stocks and Uncommon Profits will show you how to make sensible investments.
This book may teach you how to succeed whether you’re attempting to make a lot of money or keep what you have.
Who wrote Common Stocks and Uncommon Profits and why?
Fisher & Company, a renowned money management firm, was founded by Phillip A. Fisher, one of the original fathers of investment theory.
Common Stocks and Uncommon Profits, which he published in 1956, is still in print today.
Who are Uncommon Profits and Common Stocks for?
Not everyone will like Common Stocks and Uncommon Profits. If you are one of the following folks, you may like the book:
- Investment consultants and financial advisers
- Students of finance and economics
- Those that want to improve their investing plan
Summary of the book Common Stocks and Uncommon Profits
Introduction
Despite the ups and downs of the stock market, several investing theory principles have stayed consistent throughout time.
Despite the fact that Eisenhower’s book Common Stocks and Uncommon Profits was released in 1956, the counsel he gave to Americans at the time remains applicable today.
We explore what to look for when investing in a business in this book synopsis, as well as how to determine if you’re a conservative or high-risk investor.
Before investing, investors, like detectives, do their research and dig deep to obtain all of the relevant information!
Lesson 1: Invest in firms that have the potential for long-term development.
Many people see investing as frantic and harsh, with investors buying and selling on the spur of the moment in the hopes of making quick money.
Smart investment, on the other hand, involves more thinking and preparation and is best suited to long-term rewards. Instead of looking for rapid rewards, wise investors search for firms that have the potential to expand and quadruple their original investment over time.
It might be tough to find companies with this type of development potential. Stocks are often overpriced or undervalued, making investment difficult.
Investors should seek for inexpensive firms with growth potential, since these companies have the ability to double or even treble their investment when the time comes.
Many firms with high growth potential have similar traits.
These firms’ products and services may maintain strong sales volumes for at least a few years. Regardless of whether its existing product line is still viable, a firm with significant growth potential invests in research and development to continue expanding.
During the 1950s, for example, television makers had a terrific time. By the end of the decade, almost everyone owned a black-and-white television. As a result, until color television was created, television firms had stagnant growth. As a consequence, they had to change their ways.
Motorola, which used to make TVs and radios, now makes mobile phones. Management had the insight to join the two-way communication sector using the firm’s technological expertise and experience, and the company continued to expand sales when other TV makers’ sales declined.
In organizations with great development potential, good employee relations and a strong management team are also essential factors. Be careful of organizations whose workers are too preoccupied with arguing to be productive, and whose CEOs fail to generate staff cohesion or a common goal.
Make Passive Income Online, Recommendation
Lesson 2: Research! Before investing in a firm, think about everything.
An successful investor is similar to a detective in that he or she must do extensive study and examine all available facts.
Before making a final investment choice, it is critical to obtain as much information as possible about a firm.
Obviously, you may contact a trader and ask her to propose some firms to invest in. Because traders are compelled to safeguard their own interests, the information she offers you isn’t guaranteed to be true.
Instead, use the scuttlebutt strategy, which entails gathering as much information as possible.
Make contact with suppliers, customers, past workers, and trade association research scientists or executives. You’ll be astonished by what you learn if you don’t reveal or advertise your informant’s identify.
For more thorough information, you may want to contact any of the company’s rivals.
Contact the firm’s management directly to ask inquiries after you’ve gained a thorough grasp of the organization.
The scuttlebutt approach is correct, but it is time-consuming. To avoid wasting time, be extremely selective when selecting firms to study.
You’ll want to invest in firms that have the growth potential you’re looking for.
Start by questioning friends or other investors, reviewing written materials, and determining which firms seem promising. For instance, if you hear in the press that a firm’s boss is quitting due to some dubious practices, you should avoid doing business with that company.
Lesson 3: Buy a stock at a low price and profit when it rises in value.
Is it time to invest in a firm with strong long-term growth prospects?
Stocks are often overvalued or undervalued, so how can you be sure you’re receiving the best deal?
Stock prices reflect the current impression of a company’s worth, creating a vicious cycle. When a stock is thought to be desirable, such as when the market values it excessively high, people rush to purchase it. After that, stock prices continue to grow, forming a price “bubble.”
Buying and selling do not consider the future. Investors may lower a company’s future estimates if it incurs an unexpected expenditure, such as the cost of a research project.
As a result, the company’s stock price will decline, despite the fact that the research project will be profitable in the future.
Realizing that the stock market is illogical might help you generate huge gains!
Innovative businesses have the potential to flourish, but they will inevitably face challenges. As a consequence, the financial world will undervalue their stocks.
Assume you come upon a widget manufacturing firm with tremendous growth potential. Because of the buzz around the firm, the stock price instantly jumps.
The company’s widgets, however, soon run into a problem: the mold for casting them is too tiny. As everyone feels the product is a failure, the stock price drops.
Now is the best moment to get in at a low price and profit when the firm ultimately resolves its issues.
If you miss an opportunity like this, don’t panic; you could have another chance during the following downturn. The company’s stock, for example, climbs when it resolves mold issues, but it then reports that sales employees suffered unforeseen expenditures in launching the product.
The financial community abandons the firm in disgust, thinking it will never survive. This is your chance to purchase on the cheap once again!
Lesson 4: Don’t be frightened to make decisions on your own. Don’t succumb to peer pressure or self-doubt.
It’s natural to have reservations. When you find a stock you want to purchase, you will be skeptical and hesitate.
On the other hand, successful investors have no reservations. Don’t be hesitant to invest in a firm that has profit potential.
These pauses are often caused by the whims of the audience. Isn’t it feasible that if no one else is buying a stock, it doesn’t have much value?
The financial community has already shown how often it is incorrect regarding stock prices. After all, how can you invest if everyone else is selling? If you are absolutely persuaded of a company’s potential, take a deep breath and make a purchase.
Additionally, you should avoid purchasing what everyone else is purchasing. A stock that is overvalued at that stage is a bad investment.
If you wait too long, the chance may pass you by. To obtain a better bargain, don’t allow the price of a stock decrease any more. This might cost you a large sum of money.
When the author’s friend wished to acquire 100 shares of a company priced for 35 1/2, he had difficulty doing so. In order to save 50 cents each share, he offered just $35 per share. However, the stock price increased!
That additional 50-cent investment he made that day would have paid him $46,500 in 20 years!
Last but not least, if you’ve discovered a decent investment, stick with it. From a business sense, there are only three legitimate reasons to sell a stock.
You miscalculated the company’s growth potential. Two, you made the correct choice, but circumstances changed. Third, you have placed a short-term investment in a mediocre stock while looking for a fantastic one.
You will only harm yourself if you follow the crowd or gain money fast for any other purpose. It is impossible to overvalue a company with significant growth potential.
Make Passive Income Online, Recommendation
Lesson 5: Conservative investors should put their money into well-run businesses with room to develop.
So far, we’ve spoken about how to win big with high-growth investments. Some investors, on the other hand, favor a slow but steady growth approach with modest profit margins.
You should invest in a firm that has the potential to expand as a prudent investor. Startups should not be invested in if you want to play it safe, even if they seem promising. Instead, seek for huge, well-established businesses with a track record of prosperity.
This plan, however, will fail unless the firm can develop and sustain its market position.
Of course, no stratospheric potential is necessary. Rather, the business must be able to expand and grow. Otherwise, it will be surpassed by more inventive competition.
A corporation must demonstrate these four essential characteristics in order to develop and prosper.
First, the corporation may continue to make money even when prices increase, even during inflationary times or market collapses, by using low-cost manufacturing processes.
Second, the business is well-organized and effective in its market, implying that they can supply their goods and services.
Third, the firm has a strong research and development track record, allowing it to continue to innovate and improve its goods and services.
Last but not least, the business must show financial competence. Only lucrative ventures should get resources, and the organization must be capable of recognizing when it’s time to move on.
Lesson 6: Employees are a worthwhile investment and the cornerstone to a solid, expanding firm.
Whether you are a conservative investor or not, it is still critical to consider the company’s workforce base and how it treats its personnel. There are two reasons for this.
To begin with, the people who carry out a company’s plan are fully responsible for its development potential. Employee actions are directly responsible for an organization’s advantages.
For example, devoted, ambitious research and development teams are required for innovative technology advancement. To assure low-cost manufacturing procedures, a firm need a bright management who is continually pursuing efficiency advantages.
Second, how a firm treats its employees might indicate how successful and productive it is.
Employee mistreatment does not provide the greatest outcomes, but organizations that cherish their people prosper. Examining a company’s human resources and management strategies might help you predict its long-term performance.
Consider how the business handles promotions, for example. A corporation that seldom promotes from inside and prefers to recruit from outside is likely not training and developing its staff.
Investing in such a firm is a warning sign that its human resources are poorly managed.
The same may be said regarding management’s capacity to collaborate. How can a company manager expect to operate the firm effectively as the company expands if he approaches it like a one-man show?
Look for organizations with well-organized teams and management who can successfully delegate work.
Make Passive Income Online, Recommendation
Lesson 7: A cautious investor seeks to invest in long-term successful businesses.
When appraising a firm, conservative investors should look to the future. The company must not only be powerful now, but also have the ability to sustain its position in the future.
An investor should calculate a company’s profitability based on the magnitude of its profit margins rather than the total of its returns. The more room for error, the better!
Finding a firm that is long-term successful and continues to develop even during difficult economic times is critical.
A corporation needs spend money in order to expand, whether for research & development, new inventory, or marketing. The corporation should be certain that it will be lucrative enough to fund future costs.
When a company’s profitability suffers, it has a cushion to fall back on; when expenses increase, it needs cash to stay in operation.
What can a company do to secure long-term success? Be superior to your competitors!
To maintain market share, a company’s long-term profitability is dependent on what it can accomplish or produce that its rivals cannot.
Scaling may help you gain market domination. A big manufacturer, for example, can produce more at a cheaper cost than a small rival.
A firm that can create one million pencils per month has cheaper manufacturing costs per pencil than one that can only make 100,000.
Developing technology that cannot be legally reproduced by other firms, such as patents or copyrights, is one strategy to retain a company’s market position.
It is critical to ensure that a company’s plans involve long-term business growth.
Lesson 8: Check a company’s price-earnings ratio to discover whether you’re overpaying.
A corporation might be overvalued based on the whims of the investing crowd. Stock valuations are even more subjective, as you’ll discover. Stocks, in reality, vary in value from person to person.
Risky investors might place a greater value on a firm than cautious ones.
A risky investor may value a company’s stock higher even if it is predicted to rise swiftly, but this information will not assist a cautious investor. Stocks should not be valued solely on expectations.
A cautious investor pays the market price for a stock.
Fundamentally, a conservative investor seeks steady, expanding businesses that are either undervalued or priced at their true worth.
This may be determined using the price-earnings ratio. To calculate earnings per share, multiply the stock price by the company’s profits per share.
A company’s price-earnings ratio is 10/1, or ten, if it earns $1 per share and sells its stock for $10. If the corporation claims to have earned $1.82 per share in its most recent annual report, the ratio is 10/1.82, or 5.
Higher profits would be seen as good expectations, resulting in a rise in stock prices. Assume the stock is now worth $40. The ratio would be 40/1.82, or 22, which is far higher than before.
Conservative investors should consider if the company’s attributes warrant the market’s conviction that its stock will grow over $40.
A prudent investor, who understands what the firm management does, would find a $40 share price a little high if they are seeking for short-term returns.
Make Passive Income Online, Recommendation
Final thoughts
Successful investors are prepared to go to great lengths. The stock price does not convey the complete story regarding a company’s worth! Even a high-risk investor may profit handsomely if he or she is ready to do the legwork.
Additional Reading
If you like Common Stocks and Uncommon Profits, you may be interested in the following book summaries:
Common Stocks and Uncommon Profits is available for purchase.
If you’re interested in purchasing Common Stocks and Uncommon Profits, click on the following links:
Associated Lists
Alternatively, you may view all book summaries.
Make Passive Income Online is a Bonus Recommendation for Common Stocks and Uncommon Profits Book Readers.
If you’re reading this book synopsis, you’re probably eager to study and achieve.
The Internet has brought about numerous changes in the globe. Making money online has never been simpler.
With a digital asset that earns money while you sleep, your wealth can grow the quickest.
Creating passive income is a better way to achieve financial independence than working a 9 to 5 job.
“If you don’t discover a means to create money while you sleep, you will labor until you die,” Warren Buffet stated.
I recommend starting an affiliate marketing company if you really desire a reliable and safe source of passive income.
Affiliate marketing is ideal for those who are fresh to the world of internet business.
Affiliate marketing has been the simplest and most gratifying internet business plan I’ve tried so far.
You can virtually completely free affiliate marketing while generating a consistent and long-term passive income to meet your expenses. It does not need any upfront funding, and it may even be done as a side business.
And if you’re serious about learning affiliate marketing and starting a company from the ground up, I suggest starting with the most recognized affiliate marketing platform available: Wealthy Affiliate.
Wealthy Affiliate is a one-stop shop for starting an affiliate marketing company from the ground up. It provides you with a free account (including a free website) as well as complete SEO (free traffic tactics) training, allowing you to begin affiliate marketing right away without spending any money.
However, how much money can you make with Wealthy Affiliate?
A 21-year-old Wealthy Affiliate student earned $7,395 in only one week, or more than $1,000 per day…all while employing free traffic sources.
Wealthy Affiliate has been around for 15 years and has a long track record of success.
Here are some more inspirational success stories from Wealthy Affiliate members to offer you additional examples.
What is the location of Wealthy Affiliate?
Wealthy Affiliate offers a very straightforward price structure. It offers both free and paid membership options.
You can try Wealthy Affiliate for free by signing up for the free starting membership here (no credit card required). You may choose to be a free member for an indefinite period of time.
As a starting member, you’ll get immediate access to the community, live chat, over 500 training courses, two classrooms, networking, comments, one free website, and the keyword tool.
All of these benefits are available without cost.
So I highly urge you to create a free account and check it out for yourself.
Make Passive Income Online, Recommendation
The “conservative investors sleep well” is a book by Philip A. Fischer that provides an analysis of the stock market from the perspective of investing in common stocks. The book argues that investors should have a long-term focus and avoid short-term speculation.
Related Tags
- common stocks and uncommon profits summary pdf
- philip fisher books
- paths to wealth through common stocks
