{"id":"2d8c394b-2530-4e38-95ea-cd7893dcfc24","shortId":"qpn82a","kind":"skill","title":"common-stocks-uncommon-profits","tagline":"Apply Philip Fisher growth stock investing methodology from Common Stocks and Uncommon Profits. Use this skill whenever a user asks about evaluating whether a company is a growth stock, analyzing a company investment quality, when to buy or sell a stock, how to research a company","description":"# Philip Fisher Growth Stock Investing Framework\n\nThis skill encodes the complete methodology from Philip Fisher's *Common Stocks and Uncommon Profits* (1958, revised 1960). Fisher is one of history's greatest investors — Warren Buffett credits him as a major influence alongside Benjamin Graham.\n\n**Core Philosophy**: Buy exceptional companies at reasonable prices and hold them almost forever. The goal is gains of several hundred percent over years, not small short-term profits. Most great gains come from a very small number of outstanding companies — finding them requires deep research, not superficial statistics.\n\n---\n\n## HOW TO USE THIS SKILL\n\nWhen the user asks about a company or stock:\n1. **Identify the question type** (see routing below)\n2. **Load the relevant reference file** for detailed criteria\n3. **Apply Fisher's framework systematically**\n4. **Give a structured verdict** with reasoning\n5. **Cite Fisher's original words** for every key claim (see Citation Rules below)\n\n**Question routing:**\n- \"Is X a growth stock?\" or \"Evaluate X\" → Apply **The 15 Points** (see `references/fifteen-points.md`)\n- \"How do I research X?\" → Apply **Scuttlebutt Method** (see `references/scuttlebutt.md`)\n- \"When should I buy X?\" → Apply **Buying Timing** (see `references/when-to-buy-sell.md`)\n- \"Should I sell X?\" → Apply **Selling Rules** (see `references/when-to-buy-sell.md`)\n- \"How many stocks should I own?\" → Apply **Diversification** (see `references/donts.md`)\n- General pitfalls / mistakes → Apply **Don'ts** (see `references/donts.md`)\n\n---\n\n## CITATION RULES\n\nEvery substantive claim based on Fisher's methodology must include a citation to the original text.\n\n**Quote files (load the relevant one):**\n- Points 1–15 → `quotes/fifteen-points-quotes.md`\n- Scuttlebutt research → `quotes/scuttlebutt-quotes.md`\n- When to buy / sell → `quotes/when-to-buy-sell-quotes.md`\n- Philosophy / general principles → `quotes/philosophy-quotes.md`\n\n**Citation format — always use this exact structure:**\n\n> \"Fisher's exact words here.\"\n>\n> — [*Common Stocks and Uncommon Profits*, Part X · Ch. Y](https://github.com/simbajigege/book2skills/blob/main/skills/common-stocks-uncommon-profits-stock-pickup-phisher/quotes/FILENAME.md#ANCHOR)\n\n**Anchor mapping (filename → anchor):**\n- fifteen-points-quotes.md: `#point-1-market-potential`, `#point-2-new-products-determination`, `#point-3-rd-effectiveness`, `#point-4-sales-organization`, `#point-5-profit-margin`, `#point-6-improving-margins`, `#point-7-labor-relations`, `#point-8-executive-relations`, `#point-9-management-depth`, `#point-10-cost-controls`, `#point-11-industry-specific-factors`, `#point-12-long-range-outlook`, `#point-13-equity-dilution`, `#point-14-transparency-in-adversity`, `#point-15-integrity`\n- scuttlebutt-quotes.md: `#scuttlebutt-core-principle`, `#scuttlebutt-sources`, `#scuttlebutt-competitors`, `#scuttlebutt-customers`, `#scuttlebutt-before-management`\n- when-to-buy-sell-quotes.md: `#when-to-buy-temporary-adversity`, `#when-to-buy-company-misfortune`, `#when-to-sell-only-three-reasons`, `#when-not-to-sell-price-alone`, `#when-not-to-sell-market-fear`, `#three-year-rule`, `#in-and-out-trap`\n- philosophy-quotes.md: `#concentration-not-diversification`, `#compounding-hold-forever`, `#market-not-efficient`, `#appraisal-drives-price`, `#low-pe-trap`, `#vivid-spirit-leadership`, `#honey-jar-margins`, `#scuttlebutt-vs-annual-reports`, `#mistakes-take-small-losses`, `#patience-under-adversity`\n\n**Rules:**\n- Include at least one citation per major section of your response\n- Match the anchor to the closest relevant principle\n- If no exact quote matches, cite the closest chapter and note it is a paraphrase\n\n---\n\n## QUICK FRAMEWORK SUMMARY\n\n### What Makes a True Growth Stock (The Core Test)\n\nA true Fisher growth stock must score well on most of the 15 Points. There are two essential categories — **no exceptions**:\n\n**Category A — Business Quality (Must be present):**\n- Large, expandable market for its products (not a one-time surge)\n- Determined R&D pipeline for future growth after current products mature\n- Above-average profit margins, OR deliberately thin margins to fuel faster growth\n- Outstanding sales organization (production + research are useless without sales)\n- Active program to maintain/improve profit margins (not just price increases)\n\n**Category B — Management Quality (Must be present):**\n- Unquestionable integrity — this is the one non-negotiable point. If integrity is in doubt, never invest regardless of other scores.\n- Long-range outlook on profits (not maximizing current quarter)\n- Openly communicates with investors in bad times as well as good\n- Depth of management — not dependent on one key person\n- Good labor AND executive relations\n\n**Category C — Financial Health (Important but more flexible):**\n- Equity financing plans, if needed, won't severely dilute existing shareholders\n- Effective cost analysis and accounting controls\n- Industry-specific factors considered\n\n### Two Types of Great Growth Companies\n\nFisher identified two archetypes — both can be outstanding investments:\n- **\"Fortunate and Able\"**: Companies in great industries that grew even bigger than founders imagined (e.g., Alcoa in aluminum)\n- **\"Fortunate Because They Are Able\"**: Companies that *created* their own luck through brilliant management (e.g., Du Pont — started making blasting powder, built an empire through skill and research)\n\nThe key insight: **Management quality is the common denominator.** No company grows for decades on luck alone.\n\n---\n\n## SCORING & VERDICT FRAMEWORK\n\nWhen evaluating a company, score each of the 15 Points as:\n- ✅ **Strong** — clearly qualifies\n- ⚠️ **Adequate** — passes but with reservations\n- ❌ **Weak** — fails to qualify\n- ❓ **Unknown** — requires scuttlebutt research to determine\n\n**Verdict guide:**\n- 13–15 ✅ → **Outstanding growth stock candidate** — investigate deeply\n- 10–12 ✅ with no ❌ on integrity/management → **Solid candidate** — worth further research\n- Any ❌ on integrity → **Reject immediately** — no exceptions\n- Multiple ❌ on management points → **Not a Fisher growth stock**\n- Strong on business but weak on management → **Dangerous — avoid**\n\n---\n\n## KEY PRINCIPLES TO APPLY IN EVERY ANALYSIS\n\n1. **Qualitative over quantitative**: The most important factors (management integrity, R&D effectiveness, sales culture) cannot be captured by ratios. Numbers are a starting point, not a conclusion.\n\n2. **Future matters, not past**: Past EPS and historical price ranges are nearly meaningless. What matters is what earnings will be in 3–5 years and whether the business will still be exceptional then.\n\n3. **P/E ratio nuance**: A consistently exceptional company *should* trade at a premium P/E. A stock trading at 2× the market P/E that has done so for 30 years is NOT overpriced if it continues to deliver. Do not reject a great company just because it looks \"expensive\" on simple metrics.\n\n4. **Market timing is futile**: Do not wait for economic forecasts to \"clear up\" before buying. Nobody can reliably predict business cycles. A better approach: buy great companies during temporary troubles they will overcome.\n\n5. **Scuttlebutt before management**: Never approach management first. Build your picture from customers, competitors, suppliers, and ex-employees first. Only visit management when you already have ~50% of what you need to know.\n\n---\n\n## WHEN TO READ THE REFERENCE FILES\n\n- For a **full company evaluation**: read `references/fifteen-points.md` — contains all 15 criteria with detailed application guidance\n- For **how to research a company**: read `references/scuttlebutt.md` — Fisher's intelligence-gathering methodology\n- For **buy/sell timing**: read `references/when-to-buy-sell.md` — specific entry and exit rules\n- For **portfolio construction or investor mistakes**: read `references/donts.md` — 10 common errors and diversification rules\n\n---\n\n## EXAMPLE ANALYSIS STRUCTURE\n\nWhen asked \"Is [Company X] a growth stock?\", structure your response as:\n\n**Fisher Growth Stock Analysis: [Company X]**\n\n1. **Business Overview** (what it does, industry dynamics)\n2. **15-Point Assessment** (score each point based on available information)\n3. **Key Strengths** (what clearly qualifies)\n4. **Key Concerns** (what is weak or unknown)\n5. **Scuttlebutt Gaps** (what needs further research to determine)\n6. **Verdict** (Outstanding / Solid Candidate / Not a Fisher Stock / Insufficient Data)\n7. **If buying**: Timing considerations from `references/when-to-buy-sell.md`\n\nAlways note what information is unknown and requires scuttlebutt research. 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best skills based on best books","skill_md_sha":"32811e1041384a86e1530c23c808d91bf7a09ea6","skill_md_path":"skills/picking-stock-common-stocks-uncommon-profits-phisher-v0-archived/SKILL.md","default_branch":"main","skill_tree_url":"https://github.com/simbajigege/book2skills/tree/main/skills/picking-stock-common-stocks-uncommon-profits-phisher-v0-archived"},"layout":"multi","source":"github","category":"book2skills","frontmatter":{"name":"common-stocks-uncommon-profits","description":"Apply Philip Fisher growth stock investing methodology from Common Stocks and Uncommon Profits. Use this skill whenever a user asks about evaluating whether a company is a growth stock, analyzing a company investment quality, when to buy or sell a stock, how to research a company using the scuttlebutt method, diversification strategy, or any question involving long-term growth investing. Trigger on phrases like is X a growth stock, should I buy or sell X, analyze X using Fisher, evaluate X as an investment, growth stock criteria, scuttlebutt research, or any company analysis request. Always use this skill for stock evaluation questions."},"skills_sh_url":"https://skills.sh/simbajigege/book2skills/picking-stock-common-stocks-uncommon-profits-phisher-v0-archived"},"updatedAt":"2026-04-21T01:39:54.845Z"}}