Common Stocks and Uncommon Profits – Book Review | Episode 2

Friends, like me even you would have a very big problem About how to choose a good company And if you have chosen it, then when should you buy And after buying, when should you sell it So, today we such a book’s review Which will tell you How an investor’s journey should be And will answer all these questions With me, I have Lalit Keshre CEO and Co-founder of Groww Today our book review is going to be on ‘Common stocks and uncommon profits’ So, Lalit, a few days ago we did a book review on ‘Intelligent investor’ So, how is this book different from that one? So, firstly, both the books are very different among themselves In ‘Intelligent investor’ we spoke about value investing Now, ‘Common stocks and uncommon profits’ This book was written by Phil Fisher in 1956 And it’s completely different, it’s about growth investing and understanding the companies that are investing So, there is nothing right or wrong, both approaches are different So, Lalit, the first question that might come into mine and my viewer’s mind is what is the crux of this book? What do we get to learn from this book? Sure! So, there are two ways of investing, there are many but one of the two are It is to buy low, Sell high. And the second way is To buy outstanding companies And hold them forever So this book talks about the second way Identify the right companies And hold them forever because they can make you rich Warren Buffett also uses this methodology So the first question I can think of is how can we choose these companies? How as a retail investor can I choose a growth company? Sure! So, in this, there are many ways but Phil fisher, the author Calls this the Scuttlebutt method What happens in Scuttlebutt method is that You know the company in a very firsthand way For example, you got to know about a company called Asian Paints So you will find out about What do their employees do? What is its production system? Where does it source products from? Who buys their products, you speak to their customers about whether their customers like the products In one way, imagine that you have buy the entire business So what all will you think about in that business? You should know all its firsthand information This is different from researching that you’re looking on Google That whatever information you get there you’re investing on that basis But if you ever want you find an outstanding company Then you will have to find companies You have to understand companies in and out And that is the firsthand interaction that he talks about So, Lalit, as you told us that if you want to invest in a company then you have to act like an owner For example, if I think about investing in Maruti Suzuki Then I have to see as an owner how the employees of that company act I have to meet them and find out what they think How do all the other customers think? Apart from this, how do their distributors act? And when I understand it as a whole Only then should I invest in that company And there is another important thing here If you’re investing in the company then you should know about the industry as well That in the car industry It is possible that EV’s were introduced, Electric Vehicles, so what will the company do? So you have think that you’re investing in the company forever and you will never sell it So, what are the market situations in which they can face a problem So, until now what you have told me is I chose a good company And I thought about investing in that company as well Now a big question that comes to mind and many retail investors’ mind Is when should I buy it, is it today, tomorrow, day after, how can I decide this? So, it is that the stock market Is a very interesting place where the price changes everyday The value of the company doesn’t change everyday So the stock market is very moody, Mr. Market like we spoke about in the previous book review So it’s very moody, one day it will decide that all the companies are very cheap For example, one day Maruti Suzuki will be very cheap and another day it will be very expensive An important thing here is that the market gives you a lot of opportunites You get tons of opportunities if you have patience So, there will be a time when, This is based on the book What we’re talking about, that sometimes A company faces problems, temporary problems And at that time the market feels that they won’t perform well For example, like we discussed the last time about Nestle, Nestle is a very Solid company, its stock price is quite expensive But there were some temporary problems with Maggi And the price fell And Phil Fisher says that you should not leave such chances And what happens at this time is that crowd gets afraid, the price of the stock falls down And at that time we should have the courage to buy that stock Now I chose an outstanding company, after that I bought it Now another question comes into the picture, that when should I sell it? Very good! That is a very good question, so again what Phil Fisher said What is mentioned in this book is that, it is best You’re very lucky that you have identified an outstanding company And you’ve bought at a good price, which was not very expensive Now, ideally you should never sell it But Phil Fisher mentions there are three conditions when you should sell the company Number one If what you thought and assumed What you thought and bought the company And your understanding was wrong Then you should sell it, for example I, myself had thought and bought a company But there was some fraud in the company, so I immediately sold it The second example is The second reason when you should sell is That the industry situation has changed You must’ve assumed something and invested in the company but suddenly, the industry situation has changed There are many examples for this, like there was a very nice company called Blockbuster in the US Netflix came about and the entire industry changed Then you should sell the company At that time Third is If you can find a better opportunity That you found a company better than the outstanding company and you don’t have that much money to deploy Then you can sell that and invest in a better opportunity Lalit, normally in investing, two strategies are considered to be very famous First, value investing Second, investing in growth stocks Can you tell us the difference between the two Value investing and growth investing are two sides of the same coin Which means that you can consider a company a value company or a growth company But if you look at it traditionally in a bookish manner, then value investing Was looked at on the basis of numbers, that that company’s Past experience like profit loss and Balance sheet etc. the net worth, intrinsic value like we spoke about in ‘Intelligent investor’ What is the value of that and if you’re buying for something lower than that, buy low and sell high like I said And when it becomes overvalued then you sell it So that is the first part Second is, the growth that we are talking about It’s not necessary that you’re buying it cheap, you’re buying it at a fair price But you’re not buying into any company, you’re buying into outstanding companies, the best companies that You can figure out and understand And then you’re going with them and so on The best thing is to join both strategies, like Warren Buffett Warren Buffett was the student of Ben Graham So, he came from the value investing camp But when he came into Charlie Munger’s contact and started working with him, Then he started to understand the business more and more And investing in outstanding businesses So, when both of these combine, you get the magic and you make more money So, as Lalit told us It is best for retail investors like you and I That you should choose value investing and growth stocks and combine them and maybe we can get the best returns It is very well written in this book about how an investor’s journey should be How a good company can be chosen When you should buy it and when you should sell it So Lalit explained everything very well So, friends, we put up 3-4 videos on this channel every week on financial knowledge If you haven’t yet subscribed to this channel, then please subscribe Comment down below and let us know which book we should review in the coming videos If you liked this video, press that like button and share it with your friends Happy investing! Thank you, happy investing!

50 thoughts on “Common Stocks and Uncommon Profits – Book Review | Episode 2

  1. Make a video on how to submit Income tax return
    And how to calculate everything about stock market taxes
    I want to only do investing and trading not any other job or business so how to apply for ITR

  2. Make a video on how to submit Income tax return
    And how to calculate everything about stock market taxes
    I want to only do investing and trading not any other job or business so how to apply for ITR

  3. Great video, sir how about starting blogs as well, because Groww does not have blogs, it would be great if you could talk about various financial and investing concepts through written blogs as well.

  4. Also it would be great if you could make a video on the book – The Five Rules For Successful Stock Investing by Pat Dorsey

  5. Sir…maine account create karte time nominee add nahi kiya.and maine mutual fund me invest bhi kar chuka hu.ab nominee kaise add hoga…please give me solution

  6. Thank you for this video for letting us know about this book and valuable information, i would like to get a review of a book on intraday by Ashwini Gujral or any other renowned author, please suggest and do the review.

  7. Sir book to read karne ka bohot mann karta hai lekin jyadatar books to English me hoti iss par aap ak video banaye. stock market k liye Hindi me Kon konsi book available hai.

  8. Hi I appreciate your efforts but couldn't find the meaning behind doing such videos… Reviews of these books are available everywhere… And everyone knows that… Almost every educated investor has read these books

  9. Sir can groww app be used by NRIs in UAE. I would like my relatives to use the app and keep track of investment and directly invest through the app. Also wanted to switch all Regular funds to Direct!

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