Philip Fisher

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Biography

Philip A. Fisher (1907–2004) was the dean of growth-stock investing and the author of Common Stocks and Uncommon Profits (1958), the book Warren Buffett has called one of the best investment books ever written. Fisher began his San Francisco investment counsel practice in 1931 and ran it for nearly seven decades, building a record on a small number of intensely researched, very long-held positions in companies like Motorola and Texas Instruments.

Fisher's method inverted the Grahamite sequence. Where Benjamin Graham started with the balance sheet and asked whether the price was below liquidating value, Fisher started with the business and asked whether it could grow for decades. His famous checklist covered management quality, research and development strength, sales organization, profit margins, and above all the integrity of the people running the company. His "scuttlebutt" method — learning a business by interviewing its customers, suppliers, competitors, and former employees — treated the financial statements as the last stop of research rather than the first. Buffett has said that when he started out he used Fisher's scuttlebutt method heavily and "I don't think you can do too much of it."

Fisher was also the great theorist of not selling. His rule — sell only when the original analysis was wrong or the business has fundamentally deteriorated, never merely because the price has caught up to value — became the holding discipline that distinguished Berkshire's approach from the turnover implicit in classic Graham investing.

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Key Stories

The doctrine Munger was already preaching. At the 2004 Berkshire annual meeting, Buffett recalled that when he met Munger in 1959, "Charlie was sort of preaching the Fisher doctrine, also, to me. Little different form, but his ideas paralleled those of Phil." Munger's reply is the most personal statement about Fisher anywhere in the corpus: "Well, I always like it when somebody who's attractive to me, agrees with me. And therefore, I've got very fond memories of Phil Fisher." He then distilled Fisher's core idea exactly as he had applied it himself: good investments are rare and hard to find, so "you just find a few of them that you knew a lot about, and concentrate on those, it seemed to me such an obviously good idea. And indeed, it's proved to be an obviously good idea. Yet, 98 percent of the investing world doesn't follow it."

In the playbook. At the 2003 Wesco annual meeting, Munger stated the inheritance plainly: "Phil Fisher believed in concentrated investing and knowing a lot about your companies — it's in our playbook, which is partly because we learned from him." Concentration and deep knowledge — the two pillars of the Munger-Buffett method — are explicitly credited to Fisher's influence.

The qualification nobody quotes. Munger was never an uncritical disciple. At the 1995 Berkshire meeting, during a discussion comparing Graham and Fisher styles, he offered the caution that rounds out his view: "What was interesting to me about the Phil Fisher businesses is that a very great many of them didn't last as wonderful businesses." Fisher's own portfolio contained companies whose wonderfulness faded — Title Insurance and Trust, which dominated California title insurance with a hand-maintained title plant, being Buffett's example from the same exchange. The lesson, for Munger, was that buying quality is not enough; the quality must be durable, and durability must be re-examined.

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Impact on Munger's Work

Fisher's impact on Munger predates Munger's impact on Buffett. By the time the two men met in 1959, Munger had already absorbed Fisher's qualitative frame and was, in Buffett's words, preaching it. Munger's famous contribution to the Berkshire philosophy — "a great business at a fair price is superior to a fair business at a great price" — is Fisher's doctrine compressed into a sentence.

The synthesis Munger built used Graham and Fisher as complements, not alternatives. Graham supplied the discipline of price and the margin of safety; Fisher supplied the theory of what to own — businesses with management integrity, research depth, and long runways. Asked in 1995 whether he was 85 percent Graham and 15 percent Fisher, Buffett answered that he preferred to think of himself as "a hundred percent Ben Graham and a hundred percent Phil Fisher in the points where they don't — and they really don't — contradict each other." That answer is Munger's synthesis, adopted.

Fisher's scuttlebutt method also shaped Munger's investigative instinct: the conviction that the decisive facts about a business live outside its financial statements — in customer behavior, competitive culture, and management character. And Fisher's holding discipline became the Berkshire default: in Munger's framework, the big money is not in the buying or the selling but in the waiting, and you only get the waiting right if, as Fisher taught, you bought something worth waiting for. The Munger check on Fisher — many of his businesses didn't stay wonderful — is precisely the circle of competence discipline applied to Fisher's optimism.

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Key Passages From Munger's Speeches and Letters

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Referenced In

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Source: Charlie Munger Knowledge Base — Munger speeches, Wesco Financial annual letters, DJCO annual meeting transcripts