Phil Fisher

Philip Fisher is often described as the founder of modern growth investing, and specifically as the man who showed value-minded investors that a business's qualitative characteristics — the caliber of its management, the durability of its growth, the loyalty of its customers — can matter as much as anything on a balance sheet.

Who He Was

Fisher was born on September 8, 1907, in San Francisco, California. He attended Stanford's Graduate School of Business in its early years, leaving before completing a formal degree to take a job as a securities analyst, and later returned to Stanford as one of the first people to teach its investment course. In 1931, in the depths of the Great Depression, he struck out on his own and founded Fisher & Co., an investment counseling firm that he ran for nearly seven decades, finally retiring in 1999 at the age of 91.

Fisher's reputation outside his own client base grew enormously after he published Common Stocks and Uncommon Profits in 1958. The book laid out, in plain language, his method for identifying exceptional growth companies and argued that patient, long-term ownership of a truly outstanding business would outperform frequent trading in and out of merely adequate ones. It became required reading for a generation of investors, including a young Warren Buffett, and it is often cited as one of the first serious investment books aimed at helping ordinary shareholders think like professional analysts about growth rather than just about balance-sheet bargains. Fisher continued managing money and writing until his retirement at the end of the twentieth century, publishing several further books that extended his original framework, including Conservative Investors Sleep Well and Developing an Investment Philosophy. He died on March 11, 2004, in San Francisco, at the age of 96.

Key Ideas

Fisher's contribution to investing was less a formula than a research discipline built around understanding a business from the inside out.

• The "scuttlebutt" method. Fisher argued that financial statements alone could never tell an investor everything worth knowing about a company. He advocated supplementing that data by talking directly to the people who dealt with a business every day — its customers, competitors, suppliers, former employees, and industry experts — to build a genuine, on-the-ground picture of its products, its management, and its competitive standing.
• Qualitative assessment of management and growth. Where Benjamin Graham's methods leaned heavily on numbers drawn from the income statement and balance sheet, Fisher placed just as much weight on softer factors: whether management was honest and capable, whether the company had a genuine, sustainable pipeline for future growth, and whether its research, sales, and cost controls were being run well. He developed a widely cited checklist of qualitative questions investors should ask before buying any growth stock.
• Buy-and-hold for truly exceptional companies. Fisher believed that once an investor found a genuinely outstanding growth business, the biggest risk was selling it too early. He was famous for holding a small number of carefully chosen stocks for decades rather than diversifying broadly or trading frequently, on the theory that the rare truly great company would keep compounding far longer than most investors expected.

Fisher's qualitative, research-intensive approach became a natural complement to Graham's quantitative discipline. Warren Buffett, who read Fisher's book early in his career and later met him personally, has said that his own investing style ended up as a blend of the two men's methods — Graham's insistence on price and safety combined with Fisher's insistence on business quality and growth. That synthesis, more than either man's approach in isolation, came to define the "buy a wonderful business" philosophy that Buffett and Charlie Munger later built at Berkshire Hathaway. Fisher's influence also runs directly through his son, Kenneth Fisher, who built his own prominent money-management career applying and extending his father's ideas.