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Philip A Fisher

The success of an investment does not depend on what is generally known about a company at the time the investment is made. Rather it depends on what gets to be known about it … Therefore it is not the profit margins of the past but those of the future that are important to the investor.

That’s a quote from  Philip Fisher, an investor with a long term perspective and a fondness for buying stocks in high technology companies. That was a very uncommon approach to take, given that he was active from 1928. He wrote Common Stocks and Uncommon Profits in 1958, a book which is still well worth reading today.

While his “15 points to look for in a Common Stock” are well known, he also had a strong emphasis on getting out of the norm of just looking at the financials, and reaching out through whatever means to find out more about a company.

Let’s just marvel at the relevance of the first of the 15 points today:

1. Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years? A company seeking a sustained period of spectacular growth must have products that address large and expanding markets.

Doesn’t that sound like Xero or Vend?