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Common Stocks and Uncommon Profits: chapter 1

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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.

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Common Stocks and Uncommon Profits chapter 1: Clues from the past

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.

  1. 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.
  2. 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:

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)

  1. those people makes the maximum return by identifying outstanding company, those company that sales and profits grow fast than the there industry.
  2. When you have found such a company and hold for long period of time, get the maximum results.
  3. 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.
  4. 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.
  5. 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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Common Stocks & Uncommon Profits

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Hello friends, in today’s article we see COMMON STOCKS AND UNCOMMON PROFITS book introduction. In this introduction Philip A. Fisher son write the three different preface about the COMMON STOCKS AND UNCOMMON PROFITS book. This introduction help you to know about the which parts of this book is very very much important and other parts is most valuable. So let’s start’s with first preface.

COMMON STOCKS AND UNCOMMON PROFITS
Introduction:-Common Stocks & Uncommon Profits

Ken fisher written three preface, let’s starts with first preface

What i learned from my father’s writing:-Common Stocks & Uncommon Profits

Ken fisher says, his first stock is reverse 10 bagger, means if they buy the $100 stocks and that stocks goes to $10. So that lose is 90% means 10 bagger reverse stocks.

So ken fisher say’s , ” he is not the clear or topper of the class in college and school, and not even completed his higher education from famous university like Harvard university or nothing his special accomplishment they has to written in this preface.” (Common Stocks & Uncommon Profits)

But they got the 15 points from in COMMON STOCKS AND UNCOMMON PROFITS book, and now they manage the billions dollar in his funds. So if they do without doing anythings is special so any buddy can be do better in the stock market by applying this 15 points.

Ken say’s, ” In this book 15 points is directly says the how to buy company if you want to maximum profits, and if you compare that stocks with scuttlebutt method then you know company actually what is the business and how it grow and what problem comes in this process.”

Scuttlebutt method:-Common Stocks & Uncommon Profits

In this method, you have to talk companies employee, supplier, competitor and customer and also the management of company. Why this people? because this people know the know what is going in the company and clear image of strength and weakness. Customer tell you about the product and why they people buy again and again, and how they know about the new products means service and marketing department information. Supplier tell, about the raw material side or inventory of company. Competitor say’s how company is strong and his weakness. (Common Stocks & Uncommon Profits)

So this information you get by following the scuttlebutt method, so this information you found on the main street not on the wall street or dalal street, So this information is good and trustworthy.

If you want to collect information form the wall street, then you face the dot com bubble candle sticks  so you get the information form the main street is safe and trust worthy than the wall street candle sticks charts and financial reports of accounting. (Common Stocks & Uncommon Profits)

Read more: The Intelligent investor book summary

If you are ask customer and supplier, you get the truth of company.

Scuttlebutt technique is very helpful to you to stay away from those company that have the good on paper but actually not in real situation, so this types of company stocks get in ponzi sheme, then they lose the 90-95% stocks value.

So this 15 points help you to define which types of company you found, is outstanding company or Ponzi scheme company. (Common Stocks & Uncommon Profits)

Philip A. Fisher believe in hodling stock forever, and ken believe in holding stocks for 5 to 10 years and growth stocks, value stocks, large cap stocks, small cap stocks, all types of stocks you can use this method, because this method help you to find out which is quality company, whatever they company in any industry.

Ken say’s Scuttlebutt chapter is about 3 page but they told this is best part of book and very important parts

One of the best questions of Philip A. Fisher is not in this book, key say, ” What are you doing that your competitors aren’t doing yet. “

So that means if company is not doing anythings means they lead the others company in same industry and other company follow that company. (Common Stocks & Uncommon Profits)

Ken says, 15 points of company quality and scuttlebutt method is the diamond of this book. so and other topic is also very much important, like 10 don’t for investors.

So ken suggest you have to read this book as many as time while you analyze company.

Second preface is all about the Philip A. fisher family, you can read, buying this book, by click on image, so let’s

Starts Preface by Philip A. Fisher :

In this preface author give the shorts story of writing this book. Before writing this book, author run the investment counselling business at the age of 26, they run this for 10 years, and after that

in 1941 he got the job in army air force. They work there for 3.5 years. so in this time period they reviewed there investment actions. So from that review some good points is born that are different from the financial community analysis rules. (Common Stocks & Uncommon Profits)

After end war they use this 15 points and they got the good return for 12-13 years, and they want to keep the printed record, so they write this book.

Author says, beyound that 15 principles other two importance things matter for investment success.

  1. Need patience for making big profit.
  2. Stock market is deceptive and follow the crowd , the results are not good.

so from next article, you get the chapters of this book.

Read more: One up On wall Street book summary