Recommend reading: Common Stock and Uncommon Profit

This is one of the best investment book in the world.

It can be found in most MPH bookstore in Malaysia. I bought it and finished reading it last year, and it change my investment thought and strategy.

The book is about how achieve great investment result by buying into some great companies' stocks and hold them for long period. A company that worth holding for long period must be one that will keep growing for decades. So, we can say that this book is about how to pick a "long-term growth stock".

In the books, Fisher list out some attributes that may concern an investor when he is trying search for a good company.

Fifteen points tolook for in a common stock

1. Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years?
2. Does the management have a determination to continue to develop products or processes that will still further increase total sales potentials when the growth potentials of currently 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 a worthwhile profit margin?
6. What is the company doing to maintain or improve profit margins?
7. Does the company have outstanding labor and personnel relations?
8. Does the company have outstanding executive relations?
9. Does the company have depth to its management?
10. How good are the company’s cost analysis and accounting control?
11. Are there other aspects of the business, somewhat peculiar to the industry involved, which will give the investor important clues as to how outstanding the company may be in relation to its competition?
12. Does the company have a short-rage or long-range outlook in regard to profits?
13. In the foreseeable future will the growth of the company require sufficient equity financing to that the larger number of shares then outstanding will largely cancel the existing stockholders’ benefit from this anticipated growth?
14. Does the management talk freely to investors about it affairs when things are going well but “clam up” when troubles and disappointments occur?
15. Does the company have a management of unquestionable integrity?

x x x

What so special about these points is, most of them are not directly reflected in the financial statements of a company.

Instead of judging a company from financial view, Fisher pay more attention on "human factors". In other words, the growth company that we should look for is the one with great management, great teams and great culture. These are the factors that makes the company's growth sustained years after years.

If you could identify some companies that meet most of these 15 points, and buy their stocks with sufficient low price, then you'll probably enjoy some great returns in the next twenty or thirty years, by doing almost nothing -- just holding them.