If you spend enough time scrolling through the various value investing blogs, you are bound to come across a few lists time and time again; one of those lists is Phil Fisher’s “Fifteen Points to Look for in a Common Stock” (they’re even outlined on Wikipedia here). However, Fisher has also supplied investors with another list that I’ve never seen profiled on these blogs.
1. Buy into companies that have disciplined plans for achieving dramatic long-range growth in profits and that have inherent qualities making it difficult for newcomers to share in that growth.
2. Focus on buying these companies when they are out of favor;
that is, when, either because of general market conditions or because
the financial community at the moment has misconceptions of its true
worth, the stock is selling at prices well under what it will be when
its true merit is better understood.
3. Hold the
stock until either (a) there has been a fundamental change in its
nature (such as a weakening of management through changed personal), or
(b) it has grown to a point where it no longer will be growing faster
than the economy as a whole. Only in the most exceptional circumstances,
if ever, sell because of forecasts as to what the economy or the stock
market is going to do, because these changes are too difficult to
predict. Never sell the most attractive stocks you own for short-term reasons.