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Wednesday, 9 November 2011

Philip Fisher's 15 investment secrets and 5 don't rules in a common stocks.

15 Investment Secrets in common stocks
1. Does the company have products or services with sufficient market potential to make a possible a sizeeable increase in sales for at least several years.
2. Does the management have a determination to continue to develop products or processes that will further increase total sales potential when the growth potential of current attractive product lines have largely been exploited.
3.How effective are the company's research and development efforts in relation to its size?
4. Does the company have an above average sales organization?
5. Does the company have worth while profit margin?
6. What is the company doing to maintain or improve profit margins?
7. Does the company have outstanding labor and personal relations?
8. Does the company have depth to its management?
9.Does the company have outstanding executive relations?
10.How good are the company's cost analysis and accounting control's ?
11.Are there other aspects of the business  some what peculiar to the industry involved that will give the investor important clues as to how the company will be in relation to its competition?
12. Does the company have a short range or long range outlook in regard to profits?
13. In the foreseeable future, will the growth of the company require sufficient financing so that the large number of shares then outstanding will largely cancel existing ,share holders benefit from this anticipated growth?
14. Does the management talk freely to investors about its affairs when things are going well and claim up when trouble or disappointments occur
15. Does the company have a management of  unquestioned integrity?

Fisher also had five "don't" rules for investors. 

1. Don't buy into promotional companyies.
2. Don't ignore a good stock just because it is traded over the encounter.
3. Don't buy a stock just because you like the tone of its annual report.
4. Don't assume that the high price at which a stock may be setting in relation to its earning is necessarily an indication that further growth in those earnings has largely been already discounted in the price.
5. Don't quibble over eights and quarters

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