“The real fortunes in this country have been made by the people who put their capital into a business that had a future, worked hard, invested more capital, and stayed with their investment throughout the years — depression and boom
Legendary investor Philip A. Fisher was a great believer in the utility of the “business grapevine” when it comes to researching candidates for investment. In Common Stocks and Uncommon Profits, which was reviewed here in April, Mr. Fisher lays out a step by step approach that can be used to identify businesses that are not merely “cheap” but have excellent future prospects. Scuttlebutt is an approach that attempts to gain valuable insights into businesses through multiple channels. Read this article for some ideas on how Twitter can be used as a form of “online scuttlebutt”.
In recent weeks, I have written about a number of different investment approaches along with my attempt to leverage the best ideas that have already been put into practice. This is precisely what Berkshire Hathaway Vice Chairman Charlie Munger recommended when he was quoted in Robert Hagstrom’s Investing: The Last Liberal Art. Essentially, Munger is recommending that investors take the best that leading experts in many fields have come up with in an attempt to increase your overall level of “worldly wisdom”. Let’s examine this concept as it related to building economic moats.
I have been reading the updated sixth edition of Security Analysis from cover to cover and on more than one occasion, I have stopped to consider the major advantages modern day investors have compared to Graham andDodd . Investors today have access to a wealth of information that Benjamin Graham lacked during his career. However, more widespread information also would theoretically lead to more market efficiency and reduce opportunities to findmispriced securities. Is it true that the market is more efficient due to the widespread dissemination of information made possible by the Internet and other technologies that have emerged in recent years?
If Graham is known as the father of value investing, Fisher is equally well recognized as the father of growth investing. I believe that the combination of both approaches has been responsible for the amazing growth of Berkshire Hathaway over the past four decades. Read this book review for more on Warren Buffett’s application of Fisher’s approach and the results achieved for Berkshire Hathaway.