Philip A. Fisher was the first High-Quality investor.
That's the strategy that later made Warren Buffett one of the wealthiest people in the world.
In his book, Fisher gave a 15-point list of what stocks to buy.
Here are the Key Points (+PDF of the whole List):
That's the strategy that later made Warren Buffett one of the wealthiest people in the world.
In his book, Fisher gave a 15-point list of what stocks to buy.
Here are the Key Points (+PDF of the whole List):
1. Enough Runway
Buy companies that can market their products into sizable and profitable markets.
There are two ways to do that:
a) You sell a product that already has a huge market
b) You sell a product in a currently small but rapidly growing market
Buy companies that can market their products into sizable and profitable markets.
There are two ways to do that:
a) You sell a product that already has a huge market
b) You sell a product in a currently small but rapidly growing market
2. Product Innovation
Every product's life cycle eventually ends.
Companies that have been successful over decades are product innovators.
They constantly explore new markets and product opportunities.
Every product's life cycle eventually ends.
Companies that have been successful over decades are product innovators.
They constantly explore new markets and product opportunities.
3. Sales Organization
Even the best products don't sell themselves.
Especially when introducing new products, you need a capable sales organization.
Assessing the sales strength of a company can be tricky since it's not easily quantifiable.
A good start is brand strength.
Even the best products don't sell themselves.
Especially when introducing new products, you need a capable sales organization.
Assessing the sales strength of a company can be tricky since it's not easily quantifiable.
A good start is brand strength.
4. Profit Margins
To figure out brand strength and the general competitiveness of the company, look at margins.
Strong brands increase the willingness to pay, which increases profit margins.
Other competitive advantages also boost margins. For example, high switching costs.
To figure out brand strength and the general competitiveness of the company, look at margins.
Strong brands increase the willingness to pay, which increases profit margins.
Other competitive advantages also boost margins. For example, high switching costs.
5. Moat
Besides the mentioned ones, look for other aspects of the business that give them an advantage over the competition.
Generally, sustainable, structural advantages are necessary for a company to outperform its peers or the market.
Besides the mentioned ones, look for other aspects of the business that give them an advantage over the competition.
Generally, sustainable, structural advantages are necessary for a company to outperform its peers or the market.
6. Long-Term Outlook
As an investor, you want the management to be aligned with your investing outlook.
If you focus on long-term performance, find managements that do the same.
Founder-led companies, for example.
If they aren't founder-led, look at the incentive structure.
As an investor, you want the management to be aligned with your investing outlook.
If you focus on long-term performance, find managements that do the same.
Founder-led companies, for example.
If they aren't founder-led, look at the incentive structure.
7. Management Integrity
Is the management keeping its promises?
Is it communicating clearly with investors, customers, and suppliers?
You do not want to invest alongside a management prioritizing their interest above all else.
Is the management keeping its promises?
Is it communicating clearly with investors, customers, and suppliers?
You do not want to invest alongside a management prioritizing their interest above all else.
And in case you want more details on the above-mentioned points, here's the article I based this thread on:
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