December 2013

What we can learn from Phil Fisher. (interview)

Forbes, Oct 19, 1987 v140 p40(5)

Warren Buffett once said his investment philosophy was 85% Ben Graham, 15% Phil Fisher. What's the difference between Giahamism and Fisherism?
There are two fundamental approaches to investment. There's the approach Ben Graham pioneered, which is to find something intrinsically so cheap that there is little chance of it having a big decline. He's got financial safeguards to that. It isn't going to go down much, and sooner or later value will come into it.
Then there is my approach, which is to find something so good--if you don't pay too much for it--that it will have very, very large growth. The advantage is that a bigger percentage of my stocks is apt to perform in a smaller period of time--although it has taken several years for some of these to even start, and you're bound to make some mistakes at it. [But] when a stock is really unusual, it makes the bulk of its moves in a relatively short period of time.
The disadvantage of Ben Graham's approach, as he preached it, is it is such a good method that practically everybody knows it and has picked up the things that meet his formula.
I don't want to say that mine is the only formula for success. But I think, and I may be conceited about this, that I started my business before the term growth stock was thought of.
2. How many clients do you have? The Grim Reaper has cut into my client list. I've actually got only nine at the present time.
I wondered as I turned 80 if some of my clients would begin to worry, well, should we leave our investments with a man whose life expectancy is obviously shorter than it was some years back? I was amazed to find the majority are not at all concerned. The reason is rather basic. The stocks I have put their funds in have certain common characteristics that I referred to earlier. If they're going to start going downhill, which many companies do sooner or later, that might be a minimum five years off.

If I were to pass out of this world tomorrow, my people would have plenty of time before they'd have to worry about these stocks and would still benefit from them as the present momentum carries on. 3. Doesn't sound like you're about to retire.

I could wax for a half-hour on the utter folly of people being forced to retire at the age of 65. I think I have produced better results in the last five years than in any other five-year period. The refinement that comes from contemplating your own mistakes and improving yourself has continued.
I have seen enough people start to go senile as they get older that if it should happen to me, with my responsibilities, I would cut myself off. But unless that happens, I think it's ridiculous to stop the work I enjoy.
For our readers who won't have the benefit of having you run their money, how about some advice on choosing a portfolio manager?
The only way that I've suggested is get them to give you a transcript of what they actually have done. And if they take losses, and small losses, quickly and let their profits run, give them a gold star. If they take their profits quickly and let their losses run, don't go near them.

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