Hello friends, in today’s article we see the chapter 1, clues from the past of common stock and uncommon profits book. In this book Philip A. Fisher explain the how we can learn form the history, and how people are makes money in history, in chapter 1, clues from the past of common stocks and uncommon profits book.
Previous introduction part
Common stocks and uncommon profits Chapter 1: Clues form the past
Philip A. Fisher say’s by seeing the past of stock market, they get
People are comes stock market for only one reason is that they want to make money in the market. So in past they use the two methods to make money in the market.
- By predicting business cycle, and betting on that prediction, they buy the stock at the bad time and sell stock at the good time. So they collect the information from there connection and know the when the bad time is come and when to buy that bad stocks. Those people have the more connection that prediction is goes more accurate and they make the money.
- Finding outstanding company and hold them on good and bad time of business economy. So this method helpful to get the low risk and maximum profits. (Common Stocks and Uncommon Profits: chapter 1)
So comparing both method, you get the good result of second way than the first one.
And this second method is more profitable for more people, But you have to identify the out standing company.
So outstanding companies opportunities also available in past and they are also available in present, and they are maximum in number as compare to the present. Because in past there are only the family business present, and they only run by the family member, whatever the person is they deserve or not the company, but they run the company.
But in now time, if in any family business they are not capable to run the business, they hire the most eligible management.(Common Stocks and Uncommon Profits: chapter 1)
Other things is that now business are spend more money on the research or R&D department. This is start form the Hitler time, in Hitler army, there are so many research are going on the weapons, so that’s why they become very famous, so every country they know about the power of R&D. So there from each and every country start developing research and spend money on R& D. (Common Stocks and Uncommon Profits: chapter 1)
So people make the R&D of commercial products also. Now the companies revenue about 20% is come from the those product that are actually not even present or develop.
So doing research is good, if you don’t do the R&D, is more expensive than doing R&D.
Bond is very bad investment for long term, because the simple one is infection.
This inflation is more than the bond interest. Your money is going negative while you choose the bond as a long term investment.
So bond is only profitable when you have to know how to time the interest rate of inflation in short term.
So get the whatever the coupons on the bonds they are very less in value as you give them and buy bonds.
Author say’s from past we have to learn five things, (Common Stocks and Uncommon Profits: chapter 1)
- those people makes the maximum return by identifying outstanding company, those company that sales and profits grow fast than the there industry.
- When you have found such a company and hold for long period of time, get the maximum results.
- this is not necessary to this type of company is small cap, but company management is intelligent enough to handle the problem of company, and identify the new opportunity for the company to grow, and make the company profitable.
- Growth is comes from research that, those product which is develop from the existing product.( Growth is associated with knowing how to manage research to bring to market economically worthwhile and usually interrelated product lines.
- Opportunities that present before 25-50 year that are now present also and more than.
So this is know us form the history stock market, money making stategy.
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