Common Stocks and Uncommon Profits and Other Writings: 40 (Wiley Investment Classics)

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It is critical for an investor to understand which industry factors determine the success of a company and how that company stacks up in relation to its rivals.

The 15 Point Checklist For Identifying Worthwhile Investments

He was a very private person, giving few interviews, and was very selective about the clients he took on. Fisher warned investors to avoid companies where top management is reluctant to delegate significant authority to lower-level managers.This is where the moat framework we've spoken about throughout the Investing Classroom series can be a big help. Fisher stated that getting a precise handle on a company's cost analysis is difficult, but an investor can discern which companies are exceptionally deficient--these are the companies to avoid. The skill with which a retailer, like Wal-Mart WMT or Costco COST, handles its merchandising and inventory is of paramount importance. Just as having good employee relations is important, a company must also cultivate the right atmosphere in its executive suite. According to Fisher, a company with good labor relations tends to be more profitable than one with mediocre relations because happy employees are likely to be more productive.

Philip A. Fisher Collected Works, Foreword by Ken Fisher

In addition, companies focused on meeting Wall Street's quarterly earnings estimates may forgo beneficial long-term actions if they cause a short-term hit to earnings. Investors will be well-served by following Fisher's warning that regardless of how highly a company rates on the other 14 points, "If there is a serious question of the lack of a strong management sense of trusteeship for shareholders, the investor should never seriously consider participating in such an enterprise. Because inflation increases a company's expenses and competitors will pressure profit margins, you should pay attention to a company's strategy for reducing costs and improving profit margins over the long haul.While his father, Philip Fisher, emphasized growth investing and offered his investment services to a select group of investors, Ken Fisher established his company with a belief in mass marketing. These include white papers, government data, original reporting, and interviews with industry experts.