--- name: common-stocks-uncommon-profits description: > Apply Philip Fisher growth stock investing methodology from Common Stocks and Uncommon Profits. Use this skill whenever a user asks about evaluating whether a company is a growth stock, analyzing a company investment quality, when to buy or sell a stock, how to research a company using the scuttlebutt method, diversification strategy, or any question involving long-term growth investing. Trigger on phrases like is X a growth stock, should I buy or sell X, analyze X using Fisher, evaluate X as an investment, growth stock criteria, scuttlebutt research, or any company analysis request. Always use this skill for stock evaluation questions. --- # 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: 1. **Identify the question type** (see routing below) 2. **Load the relevant reference file** for detailed criteria 3. **Apply Fisher's framework systematically** 4. **Give a structured verdict** with reasoning **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`) --- ## 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 1. **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. 2. **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. 3. **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. 4. **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. 5. **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]** 1. **Business Overview** (what it does, industry dynamics) 2. **15-Point Assessment** (score each point based on available information) 3. **Key Strengths** (what clearly qualifies) 4. **Key Concerns** (what is weak or unknown) 5. **Scuttlebutt Gaps** (what needs further research to determine) 6. **Verdict** (Outstanding / Solid Candidate / Not a Fisher Stock / Insufficient Data) 7. **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.