3 Memorable Quotes From a Legendary Investor
Phillip Arthur Fisher, esteemed investor and author of the book, “Common Stocks, Uncommon Profits”, was one of the founders of growth investing. In 70 years of money management, he maintained an astounding record based on his long-term approach and focus on growth stocks.
As with many of the great investors of his time, he was kind enough to write down his experiences and to share the wealth of knowledge through his books and interviews he had conducted.
Here are three of his more memorable quotes that investors of all stripes can learn a thing or two from.
“Practical investors usually learn their problem is finding enough outstanding investments, rather than choosing among too many”
Fisher believed that we need to be extremely selective with the stocks we are willing to buy. As a money manager and a conservative investor, Fisher knew the importance of being patient and careful with his investments.
With over 700 stocks listed on the Singapore exchange and more than 3,000 trading on the US markets, it is easy to be fooled (with a small “f”) into thinking that great investments are easy to find. Yet, on the contrary, outstanding stocks that investors can hold for the long-term are rare and difficult to find. If you find yourself thinking that there are “too many” stocks that meet your investment criteria, you may wish to narrow your criteria and be more selective with your investments.
“It is my observation that those who sell such stocks to wait for a more suitable time to buy back these same shares seldom attain their objective. They usually wait for a decline to be bigger than it actually turns out to be.”
Fisher had the view that investors should hold their investments for the long term.
However, some investors still think that they could somehow beat the market by moving in and out of their investments. There are two fundamental flaws to this strategy.
First, is the frictional cost involved with buying and selling stocks. Second, and the main reason why Fisher felt this strategy could not work was the inability for investors to time the bottom of the market. As most investors know, the stock market is volatile and unpredictable. Investors who sell their shares, hoping to re-enter at a better price usually fail to do so, due to greed and the inability to accurately predict short-term stock prices.
“For the great majority of transactions, being stubborn about a tiny fractional difference in the price can prove extremely costly.”
After hours scrutinizing annual reports and research articles, you have finally made up your mind that the stock is a solid buy. However, you go back to your online brokerage screen and realise that the stock you wish to purchase has risen by 1% from the day before.
You stubbornly decide to wait for the stock to decline so that you feel that you got the stock at a discount. Unfortunately, the stock continues to appreciate and never returns to your target price. Sounds familiar?
As always, Fisher was one step ahead and realised that a small difference in stock price actually made very little difference to our long-term investment results.
For instance, buying a stock that is one percent more expensive would have little impact if it appreciated 10% a year for the next ten years. Knowing this, investors need not stinge over minute differences in share price, as it may prove extremely costly in the long-term.
The Foolish bottom line
Phillip Arthur Fisher was a legendary investor who famously held some of his shares until his death. He truly believed in long-term investing and popularised the theory of concentrating on growth stocks that had a focus on research and development. Investors of all walks of life can definitely learn a thing or two from this remarkable man.