Hello friends, in today’s article we see chapter 1, clues from the past of common stock and uncommon profits book. In this book, Philip A. Fisher explains how we can learn from 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
Philip A. Fisher says by seeing the past of the stock market, they get
People come stock market for only one reason is that they want to make money in the market. So in past, they use two methods to make money in the market.
So comparing both methods, you get a good result for the second way than the first one.
And this second method is more profitable for more people, But you have to identify the outstanding company.
So outstanding companies’ opportunities are also available in past and they are also available in present, and they are maximum in number as compared to the present. Because in past there is only a family business present, and they were only run by a family member, whatever the person is they deserve it or not the company, they run the company.
But in no time, if any family business they are not capable to run the business, they hire the most eligible management. (Common Stocks and Uncommon Profits: Chapter 1)
Another thing is that now businesses are spending more money on research or R&D department. This start form Hitler’s time, in Hitler’s army, there are so many researchers going on weapons, so that’s why they become very famous, so every country knew 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 company’s revenue of about 20% has come from those products that are actually not even present or developed.
So doing research is good, if you don’t do the R&D, is more expensive than doing R&D.
Bond:
A bond is a very bad investment in the long term because the simple one is infection.
This inflation is more than the bond interest. Your money is going negative when you choose the bond as a long-term investment.
So the bond is only profitable when you have to know how to time the interest rate of inflation in short term.
So get the coupons on the bonds they are very less in value as you give them and buy bonds.
The author says in past we have to learn five things, (Common Stocks and Uncommon Profits: Chapter 1)
So this knows us from the historical stock market, and money-making strategy.
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