Just as important as having your own checklist of things to look for, you need to have a checklist of things to avoidįisher has his own list of ten major things to look out for when investing, a couple of which really stuck out to me including not overstressing diversification. There are ways to evaluate qualitative metrics without being a professional investorįor instance, I always would see people say that you should evaluate the culture of the company but how the heck am I supposed to do that?!?!įisher says that you can take a look at turnover, promoting from within, and look at the backgrounds of the management – are they all external hires or are they from within? In other words, just because a metric isn’t reported on an annual basis like revenues, profits or costs, doesn’t mean that you can’t evaluate it without being a professional – you just need to be creative!
There’s a never-ending amount of metrics that you can use to evaluate a company, but the important thing is for you to find out what is the most important in your own evaluations. Some will prefer revenue growth while some will focus more on earnings growth. Some people will lean much more on the financials while some will lean on the qualitative, cultural aspects of the company. Only you can determine what is important enough to be included in that checklist, but you need to decide that for yourself. You need to create your own checklist and stick to it.įisher has 15 key points that he evaluates when deciding to purchase stock of a company that range from all different types of evaluating metrics such as quantitative metrics like wide profits or sales growth to qualitative metrics such as the management having a high-level of integrity or having depth to their management. You also will know that we’re now at the end of the book, so it only makes sense for me to go through and highlight some of the key takeaways that I have had from reading, and summarizing, the book! If you have been following my recent posts then you know that I’ve recently been putting together some chapter summaries with key highlights for the book Common Stocks and Uncommon Profits by Phil Fisher.
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