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Title: Super Stocks: The Book That's Changing the Way Investors Think by Kenneth L. Fisher ISBN: 1-55623-384-1 Publisher: McGraw-Hill Trade Pub. Date: 01 September, 1990 Format: Paperback Volumes: 1 List Price(USD): $24.95 |
Average Customer Rating: 3.6 (5 reviews)
Rating: 4
Summary: Focuses on PSR as a valuation tool
Comment: I was first introduced to Fisher's concept of Super Stocks about 10 years ago. The idea behind the concept is buying stocks with a low Price-to-Sales Ratio (PSR), typically 1.0 or less. Simply having a low PSR is not sufficient to be a Super Stock. The valuation tool is combined with fundamental analysis (e.g. growth, margin analysis, balance sheet analysis, etc.) of companies to identify stocks with favorable characteristics that will make them Super Stocks. Fisher also introduces a complementery tool Price-to-Research Ratio (PRR) which is a measure of the company's reinvestment rate into growth.
Fisher spends a lot of time discussing how to make money off the "Glitch". Basically, he believes that many Super Stocks are stocks that have been hit by a "Glitch". A "Glitch" is a temporary setback experienced by a company that makes the out of favor (e.g. product life cycle delay, revenue short-fall, etc.) This attitude is indicative of his value-orientation in investing. In other words, his fundamental analysis may find a great stock, but he will wait for a pull-back from a "Glitch" to a more appropriate PSR before investing.
Overall, the concept of PSR is not so different from other valuation measures for "low-priced" stocks such as Price-to-Earnings or Price-to-Book. However, it doesn't hurt to have another tool in the kit.
On a more interesting side-note, Wall Street analysts have definitely not read this book. It is amusing to note that analysts in the hey-day of the Internet boom touted stocks with PSRs in excess of 10x. A careful fundamental analysis would have resulted in concluding that the growth, margins, and balance sheets of these companies did not justify such high valuations. Nothing in the business models indicated superior performance on any dimension. Even if a business model was found to be superior, prudence would have dictated waiting for a "Glitch".
Rating: 5
Summary: A good book that teaches true, disciplined value investing
Comment: If you've read a few of Fisher's regular columns in Forbes, you know that he 1) is primarily a value-oriented investor, 2) applies numerous, diverse tools in formulating his opinions, and 3) is quite self-confident. I think most people would objectively agree that a combination of all three of these qualities is key to being a successful long-term investor. Super Stocks, which I read a decade ago and still refer to today, effectively captures and displays Fisher's approach. Fisher does an admirable job of describing his investment philosophy, then providing a detailed walk-through of how he implements it - that type of focus is lacking in so many other investment books. Beyond that, Super Stocks introduced me to several investment resources that I was not aware of and Fisher even closes the loop by providing advice on selling out of winners. Two primary concepts that have stuck with me over the years and still weigh heavily on my thinking today are the idea of what margins a company with a low PSR SHOULD produce on its sales and the opportunities presented by product/earnings glitches. In both cases, it allows me to look past a company's current difficulties and determine what the magnitude and probability of upside is going forward. Though my core approach is as a buy and hold, small cap growth investor, I can attest to the numerous profitable stocks I have uncovered thanks to the tools this book gave me. So, don't let any preconceived notions of the author get in the way of your enhancement of your investing skills. Buy the book, learn from it, and I honestly believe you'll pay yourself back many times over.
Rating: 4
Summary: Ok but similar to Common Stocks...
Comment: This is a good intro book to this type of investment. It is similar to his father's Common Stocks Uncommon Profits. If you want to do seriously what he is describing then find more detailed books. He righly emphasises the business not the numbers, as they change each quarter and its the mangement within a 'fundamentals context' who will make them change. He currently runs Fisher Investments.
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Title: The Wall Street Waltz: 90 Visual Perspectives: Illustrated Lessons from Financial Cycles and Trends by Kenneth L. Fisher ISBN: 0809247976 Publisher: Contemporary Books Pub. Date: June, 1987 List Price(USD): $39.50 |
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Title: Common Stocks and Uncommon Profits and Other Writings by Philip A. Fisher ISBN: 047111927X Publisher: John Wiley & Sons Pub. Date: 28 May, 1996 List Price(USD): $19.95 |
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Title: 100 Minds That Made the Market by Kenneth L. Fisher ISBN: 0931133017 Publisher: Business Classics Pub. Date: June, 1994 List Price(USD): $24.95 |
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Title: John Neff on Investing by John Neff ISBN: 0471417920 Publisher: John Wiley & Sons Pub. Date: 30 March, 2001 List Price(USD): $16.95 |
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Title: What Works on Wall Street: A Guide to the Best-Performing Investment Strategies of All Time by James P. O'Shaughnessy ISBN: 0070482462 Publisher: McGraw-Hill Trade Pub. Date: 31 May, 1998 List Price(USD): $29.95 |
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