Philip Fisher’s 5 Donts for Investors
Fisher’s Five Donts for Investors
Philip Fisher’s Five Donts provide another template for investors in their quest to learning How to Invest. His book Common Stocks Uncommon Profits is an excellent read and takes you from the world of pure Benjamin Graham value investment to a calculated growth investment strategy.
Italics commentary by investcorrectly.com
- Don’t buy into promotional companies There are many companies that are much better at promoting to investors and telling stories then what they do. Watch out for them. Watch out for companies that over promise and under deliver.
- Don’t ignore a good stock just because it is traded over-the-counter Warren Buffett once said if he had a million dollars or less he could earn 50% a year and the reason is buying some of these more undiscovered over the counter stocks.
- Don’t buy a stock just because you like the tone of its annual report. This is similar to promotional companies and don’t be suckered in by a great presentation which is all an annual report is. Read things criticially and ask questions in your head and see if they answer them or hide the answer to them. If you don’t understand something move on!
- Don’t assume that the high price at which a stock may be selling in relation to its earnings is necessarily an indication that further growth in those earnings has largely been already discounted in the price? Google and Apple were “expensive” P/E stocks greater then 25 in 2004 and they went up 1200% and 600% respectively since.
- Don’t quibble over eighths and quarters If an eighth or a quarter matters so much then your analysis on a stock was wrong. If you buy a stock at $11.50 or $12, if you think it will be worth many times that in the future does the 50 cents in the long run matter?