Philip Fisher Growth Stock Investing Framework
This skill encodes the complete methodology from Philip Fisher's *Common Stocks and Uncommon Profits* (1958, revised 1960). Fisher is one of history's greatest investors — Warren Buffett credits him as a major influence alongside Benjamin Graham.
Core Philosophy: Buy exceptional companies at reasonable prices and hold them almost forever. The goal is gains of several hundred percent over years, not small short-term profits. Most great gains come from a very small number of outstanding companies — finding them requires deep research, not superficial statistics.
HOW TO USE THIS SKILL
When the user asks about a company or stock:
- Identify the question type (see routing below)
- Load the relevant reference file for detailed criteria
- Apply Fisher's framework systematically
- Give a structured verdict with reasoning
- Cite Fisher's original words for every key claim (see Citation Rules below)
Question routing:
- "Is X a growth stock?" or "Evaluate X" → Apply The 15 Points (see
references/fifteen-points.md) - "How do I research X?" → Apply Scuttlebutt Method (see
references/scuttlebutt.md) - "When should I buy X?" → Apply Buying Timing (see
references/when-to-buy-sell.md) - "Should I sell X?" → Apply Selling Rules (see
references/when-to-buy-sell.md) - "How many stocks should I own?" → Apply Diversification (see
references/donts.md) - General pitfalls / mistakes → Apply Don'ts (see
references/donts.md)
CITATION RULES
Every substantive claim based on Fisher's methodology must include a citation to the original text.
Quote files (load the relevant one):
- Points 1–15 →
quotes/fifteen-points-quotes.md - Scuttlebutt research →
quotes/scuttlebutt-quotes.md - When to buy / sell →
quotes/when-to-buy-sell-quotes.md - Philosophy / general principles →
quotes/philosophy-quotes.md
Citation format — always use this exact structure:
"Fisher's exact words here." — *Common Stocks and Uncommon Profits*, Part X · Ch. Y
Anchor mapping (filename → anchor):
- fifteen-points-quotes.md:
#point-1-market-potential,#point-2-new-products-determination,#point-3-rd-effectiveness,#point-4-sales-organization,#point-5-profit-margin,#point-6-improving-margins,#point-7-labor-relations,#point-8-executive-relations,#point-9-management-depth,#point-10-cost-controls,#point-11-industry-specific-factors,#point-12-long-range-outlook,#point-13-equity-dilution,#point-14-transparency-in-adversity,#point-15-integrity - scuttlebutt-quotes.md:
#scuttlebutt-core-principle,#scuttlebutt-sources,#scuttlebutt-competitors,#scuttlebutt-customers,#scuttlebutt-before-management - when-to-buy-sell-quotes.md:
#when-to-buy-temporary-adversity,#when-to-buy-company-misfortune,#when-to-sell-only-three-reasons,#when-not-to-sell-price-alone,#when-not-to-sell-market-fear,#three-year-rule,#in-and-out-trap - philosophy-quotes.md:
#concentration-not-diversification,#compounding-hold-forever,#market-not-efficient,#appraisal-drives-price,#low-pe-trap,#vivid-spirit-leadership,#honey-jar-margins,#scuttlebutt-vs-annual-reports,#mistakes-take-small-losses,#patience-under-adversity
Rules:
- Include at least one citation per major section of your response
- Match the anchor to the closest relevant principle
- If no exact quote matches, cite the closest chapter and note it is a paraphrase
QUICK FRAMEWORK SUMMARY
What Makes a True Growth Stock (The Core Test)
A true Fisher growth stock must score well on most of the 15 Points. There are two essential categories — no exceptions:
Category A — Business Quality (Must be present):
- Large, expandable market for its products (not a one-time surge)
- Determined R&D pipeline for future growth after current products mature
- Above-average profit margins, OR deliberately thin margins to fuel faster growth
- Outstanding sales organization (production + research are useless without sales)
- Active program to maintain/improve profit margins (not just price increases)
Category B — Management Quality (Must be present):
- Unquestionable integrity — this is the one non-negotiable point. If integrity is in doubt, never invest regardless of other scores.
- Long-range outlook on profits (not maximizing current quarter)
- Openly communicates with investors in bad times as well as good
- Depth of management — not dependent on one key person
- Good labor AND executive relations
Category C — Financial Health (Important but more flexible):
- Equity financing plans, if needed, won't severely dilute existing shareholders
- Effective cost analysis and accounting controls
- Industry-specific factors considered
Two Types of Great Growth Companies
Fisher identified two archetypes — both can be outstanding investments:
- "Fortunate and Able": Companies in great industries that grew even bigger than founders imagined (e.g., Alcoa in aluminum)
- "Fortunate Because They Are Able": Companies that *created* their own luck through brilliant management (e.g., Du Pont — started making blasting powder, built an empire through skill and research)
The key insight: Management quality is the common denominator. No company grows for decades on luck alone.
SCORING & VERDICT FRAMEWORK
When evaluating a company, score each of the 15 Points as:
- ✅ Strong — clearly qualifies
- ⚠️ Adequate — passes but with reservations
- ❌ Weak — fails to qualify
- ❓ Unknown — requires scuttlebutt research to determine
Verdict guide:
- 13–15 ✅ → Outstanding growth stock candidate — investigate deeply
- 10–12 ✅ with no ❌ on integrity/management → Solid candidate — worth further research
- Any ❌ on integrity → Reject immediately — no exceptions
- Multiple ❌ on management points → Not a Fisher growth stock
- Strong on business but weak on management → Dangerous — avoid
KEY PRINCIPLES TO APPLY IN EVERY ANALYSIS
- Qualitative over quantitative: The most important factors (management integrity, R&D effectiveness, sales culture) cannot be captured by ratios. Numbers are a starting point, not a conclusion.
- Future matters, not past: Past EPS and historical price ranges are nearly meaningless. What matters is what earnings will be in 3–5 years and whether the business will still be exceptional then.
- P/E ratio nuance: A consistently exceptional company *should* trade at a premium P/E. A stock trading at 2× the market P/E that has done so for 30 years is NOT overpriced if it continues to deliver. Do not reject a great company just because it looks "expensive" on simple metrics.
- Market timing is futile: Do not wait for economic forecasts to "clear up" before buying. Nobody can reliably predict business cycles. A better approach: buy great companies during temporary troubles they will overcome.
- Scuttlebutt before management: Never approach management first. Build your picture from customers, competitors, suppliers, and ex-employees first. Only visit management when you already have ~50% of what you need to know.
WHEN TO READ THE REFERENCE FILES
- For a full company evaluation: read
references/fifteen-points.md— contains all 15 criteria with detailed application guidance - For how to research a company: read
references/scuttlebutt.md— Fisher's intelligence-gathering methodology - For buy/sell timing: read
references/when-to-buy-sell.md— specific entry and exit rules - For portfolio construction or investor mistakes: read
references/donts.md— 10 common errors and diversification rules
EXAMPLE ANALYSIS STRUCTURE
When asked "Is [Company X] a growth stock?", structure your response as:
Fisher Growth Stock Analysis: [Company X]
- Business Overview (what it does, industry dynamics)
- 15-Point Assessment (score each point based on available information)
- Key Strengths (what clearly qualifies)
- Key Concerns (what is weak or unknown)
- Scuttlebutt Gaps (what needs further research to determine)
- Verdict (Outstanding / Solid Candidate / Not a Fisher Stock / Insufficient Data)
- If buying: Timing considerations from
references/when-to-buy-sell.md
Always note what information is unknown and requires scuttlebutt research. Fisher himself says he cannot make a confident judgment without that research — neither should we.