Common Stocks and Uncommon Profits
November 13, 2024
5 min read
📚 arvy's Book Club
arvy's Teaser: Warren Buffett says his investing approach is "85% Graham, 15% Fisher." But here's the thing: that 15% — the Fisher part — is what turned Buffett from a cigar-butt value investor into the greatest compounder in history. Philip Fisher's 1958 classic taught a generation to stop hunting for cheap stocks and start looking for great companies they could hold for decades. It's the intellectual foundation of quality investing — and it's the book that most influenced how arvy invests your money.
The Book in 60 Seconds
Common Stocks and Uncommon Profits (1958) by Philip A. Fisher introduced the world to growth investing. While Benjamin Graham taught investors to buy cheap, Fisher taught them to buy excellent — and hold forever. His 15-point checklist for evaluating companies, his "scuttlebutt" research method (talking to customers, competitors, and suppliers), and his insistence on management quality over financial metrics alone made this the most important growth investing book ever written.
Philip A. Fisher · 1958 · Growth Investing & Quality Analysis
Direct influence on Buffett, Munger, and arvy's investment process
Idea 1: Buy Great Companies, Not Cheap Stocks — The Birth of Quality Investing
Before Fisher, investing meant buying what was cheap. Graham's value approach looked for stocks trading below their net asset value — "cigar butts" with one last puff of value. Fisher flipped the script: don't look for cheap companies. Look for great ones — and pay a fair price.
Fisher's insight: a truly great company — one with strong management, high R&D spending, expanding margins, and a durable competitive position — will compound in value far longer than any cheap stock will recover. The "expensive" stock that grows 15% per year for 20 years crushes the "cheap" stock that recovers 50% once and then stagnates.
If the job has been correctly done when a common stock is purchased, the time to sell it is — almost never.
The Investor Lesson
This is the core of arvy's investment philosophy. We don't look for the cheapest stocks — we look for the highest-quality companies with the widest moats and the longest compounding runways. Fisher proved that paying a fair price for excellence beats paying a bargain price for mediocrity — every time, over decades. (→ Quality Investing)
Idea 2: The "Scuttlebutt" Method — Research Beyond the Balance Sheet
Fisher's most original contribution: the scuttlebutt method. Before investing, Fisher would talk to a company's customers, suppliers, competitors, former employees, and industry experts. He wanted to understand things no financial statement could tell him: Is the management honest? Do customers love the product? Are competitors worried?
This qualitative research was revolutionary. In 1958, investing meant reading annual reports and calculating ratios. Fisher added a human dimension — understanding the culture, reputation, and competitive dynamics that drive long-term performance.
The Investor Lesson
For individual investors, modern scuttlebutt means: use the products, read Glassdoor reviews, listen to earnings calls, follow industry experts on Twitter, talk to people who work there. For arvy, it means our investment team conducts deep qualitative research alongside quantitative analysis — because numbers tell you what happened, but culture tells you what will happen next.
Idea 3: Fisher's 15-Point Checklist — The Quality Investing Blueprint
Fisher published a 15-point checklist for evaluating companies. It reads like a quality investing manifesto: Does the company have products with sufficient market potential? Does management have a determination to develop products that will keep expanding? How effective is the company's R&D relative to its size? Does the company have above-average profit margins? Is management honest with shareholders when things go wrong?
The checklist is remarkable for what it doesn't include: no PE ratios, no price-to-book calculations, no dividend yields. Fisher evaluates the quality of the business, not the price of the stock. His assumption: if the business is exceptional, the stock price will follow — eventually, inevitably.
The Investor Lesson
Fisher's checklist is the DNA of quality investing — and it's embedded in how arvy selects companies. Strong R&D, expanding margins, honest management, and durable competitive advantages aren't just nice-to-haves. They're the filters that separate companies that compound for decades from companies that don't.
What This Means for Swiss Investors
| Fisher Principle | Swiss Investor Application |
|---|---|
| Buy quality, hold forever | Switzerland's tax-free capital gains are the perfect Fisher environment: the longer you hold quality companies, the more the system rewards you. No capital gains tax means compounding works at full power. |
| Scuttlebutt research | Swiss companies like Nestlé, Roche, Sika, and Partners Group can be researched from your backyard. Use the products, read the reports, attend the AGMs. Proximity is an advantage. |
| Focus on the business, not the price | A CHF 500/month savings plan into quality companies is Fisher's approach automated. The system buys quality consistently — regardless of whether the market thinks it's "cheap" or "expensive" today. (→ Savings Plan) |
arvy's Take
What holds up: This is the book that shaped arvy's investment philosophy. Fisher's insight — that business quality, not stock price, determines long-term returns — is more relevant today than in 1958. In an era of passive indexing and algorithmic trading, the qualitative edge Fisher describes (understanding management, culture, and competitive dynamics) is one of the few durable advantages left.
What's missing: Fisher wrote for professional stock pickers with time to conduct hundreds of hours of research per company. Most individual investors can't do that — which is why delegating to a quality-focused asset manager makes sense. The book is also dated in style (1958 prose is dense) and lacks modern examples.
What we'd add: Fisher is the foundation. But for the full picture, combine him with: Housel (behaviour), Sun Tzu (patience), and Nvidia Way (what a quality company looks like from the inside). Fisher tells you what to look for. The others tell you how to hold once you've found it.
3 Sentences to Remember
1. Buy quality, not cheap. A great company at a fair price beats a mediocre company at a bargain — every time, over decades.
2. Research the business, not just the numbers. Culture, management, and competitive dynamics determine long-term returns.
3. If the job has been correctly done when you bought, the time to sell is almost never. Let quality compound.
Buy the book
English (Amazon) · Deutsch (Amazon)
Also in Book Club: Quality Investing → · Investing from Darwin →
Invest the Fisher way. Quality that compounds.
arvy's portfolio is built on Fisher's principles: great companies, wide moats, long holding periods. From CHF 1/month.
This article was written by Thierry Borgeat, Co-Founder of arvy, and reviewed by Patrick Rissi, CFA, and Florian Jauch, CFA.
Disclaimer: This article is for general informational purposes only and does not constitute personal investment advice. Amazon links are affiliate links. arvy is a FINMA-supervised asset manager.
