Buffett & Munger

Lessons from the Masters of Value Investing

  • Increase font size
  • Default font size
  • Decrease font size
Home

Phil Fisher's 15 Rules for Evaluating Companies

E-mail Print PDF
Warren Buffett has said he is 85% Ben Graham and 15% Phil Fisher.  Phil Fisher, in his watershed book Common Stocks and Uncommon Profits and Other Writings (Wiley Investment Classics) laid out 15 rules for investing in companies:
  1. Does the company have products or services with sufficient market potential to make possible a sizeable increase in sales for at least several years?
  2. Does the management have a determination to continue to develop products or processes that will still further increase total sales potential when the growth potential of currently attractive product lines have largely been exploited?
  3. How effective are the company’s research and development efforts in relation to its size?
  4. Does the company have an above-average sales organization?
  5. Does the company have a worthwhile profit margin?
  6. What is the company doing to maintain or improve profit margins?
  7. Does the company have outstanding labor and personnel relations?
  8. Does the company have outstanding executive relations?
  9. Does the company have depth to its management?
  10. How good are the company’s cost analysis and accounting controls?
  11. Are there other aspects of the business somewhat peculiar to the industry involved that will give the investor important clues as to how the company will be in relation to its competition?
  12. Does the company have a short-range or long-range outlook in regard to profits?
  13. In the foreseeable future, will the growth of the company require sufficient financing so that the large number of shares then outstanding will largely cancel existing shareholders’ benefit from this anticipated growth?
  14. Does the management talk freely to investors about its affairs when things are going well and “clam up” when troubles or disappointments occur?
  15. Does the company have a management of unquestioned integrity?

More detail is available on an article on the Old School Value website.

 

Last Updated on Friday, 26 December 2008 10:33  

Main Menu


" The most important quality for an investor is temperament, not intellect... You need a temperament that neither derives great pleasure from being with the crowd or against the crowd. "

Warren Buffett



Home