Can you recall the woody, nostalgic scent of an old book? Those well-worn, dog-eared pages may instil a sense of trust, as opposed to the crisp, sterile pages of a new book freshly plucked off the bookshelf at the store, many of which are not worth your time and have led aspiring investors astray. But when it comes to the classic investing books, is the content still relevant today?

Common Stocks and Uncommon Profits by Philip Fisher is unique because its insights have truly stood the test of time. We have distilled the five key concepts of this hallmark investing novel below.

About the Author

If you bumped into Fisher on the street in the 1950s, you would see a slight, timid man standing before you. Yet this fretful man was one of the most impactful investors of the 20th century.

Fisher had a profound influence on modern investment theory. His legacy has introduced investors to the buy-and-hold method of long-term growth investing.

Fisher wrote Common Stocks and Uncommon Profits in 1958 and it became the first investment book to make the New York Times bestseller list. The aim of writing this book was to help people get started on the right path to successful investing.

Over 60 years later, Fisher’s knowledge still holds today, with investors like the great Warren Buffett drawing heavily from it.

Key Insights

1. Look for healthy margins

As with many value investors, Fisher believed that companies with long-term profit strategies are more likely to deliver sustainable results. He cautioned investors to look for healthy margins across extended timeframes, such as a series of years. Ideally, these companies would also have the best margins in their industry.

Fisher mentioned that the exceptions to his rule are healthy young companies that are foregoing profits today for accelerated growth in the hope it will pay off tomorrow. These companies might allocate spending to research, sales, or other activities to improve their future by investing in themselves. This approach is still in line with Fisher’s overall long-term strategy rule.

2. Use available data

Fisher lived in a period when financial data was not as accessible, but he was ahead of his time because he knew even then that data was king. Fisher was aware that current good growth or a good P/E (price-to-earnings ratio) multiple was not an accurate indicator of future growth of a particular stock. More data points are necessary to help investors fully analyze the stock and its potential. You should then reevaluate its dynamics over a longer timeframe to determine whether it is worth investing in.

3. Have a manageable number of stocks

Another key insight from Fisher is not to overestimate diversification. Although it is a time-tested strategy for mitigating risk and realizing the highest returns, he advocates balancing diversification and over-diversification – not having too many stocks in your portfolio. Fisher’s rule of thumb is to aim for 7 to 12 stocks. Each of these stocks should be well-researched and manageable. Aim for an overall level of diversification to allow room for error, but not so much as to indicate the insecurity of its owner. Find the right balance.

4. Know your stocks

Should you focus more on trends in the stock market or on your stocks? According to Fisher, the latter is more important for two primary reasons. Firstly, invest based on your knowledge. Secondly, if there's a market plunge, but you have strategically selected your stocks, the price decline will be less severe. This means mitigating risk by limiting the unknown factors. If you truly understand your stocks and have more data points, you will be better able to make informed decisions.

5. Do not sell in times of crisis

Fisher would say the worst thing you can do is to sell your securities in times of crisis. Instead, buy cheaper shares and add reliable securities to your portfolio based on your research. It’s a simple rule that will stay with you throughout your investing journey.


Common Stocks and Uncommon Profits is an actionable book covering the stock market, investment analysis, and principles for long-term success. It’s as much for first-time investors as it is for seasoned pros, as any investor at any stage of their investing journey can always learn more and hone their strategy.

To recap:

  • Focus on companies with long-term strategies.
  • Accumulate as much data as possible.
  • Diversify but know the stocks in your portfolio.
  • Truly understand your stocks.
  • Do not sell in a panic during economic downturns.

Applying these timeless key insights will take you far and enable you to join the upper echelon of successful investors who took Fisher’s methods to heart and in turn found great success.

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