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August 16, 2018

Don’t be afraid of buying on a war scare: Philip Fisher


In Philip Fisher’s “Five More Don’ts For Investors”, one of those don’ts is titled “Don’t be afraid of buying on a war scare”.

American stock investor Philip Arthur Fisher (September 8, 1907 – March 11, 2004) was best known as the author of the investment guide book known as Common Stocks and Uncommon Profits. The book has the reputation of staying in print since it first published in 1958.

Here is what he said in “Don’t be afraid of buying on a war scare”

“War is always bearish on money. To sell stock at the threatened or actual outbreak of hostilities so as to get into cash is extreme financial lunacy. Actually just the opposite should be done.

“If an investor as about decided to buy a particular common stock and the arrival of a full-blown war scare starts knocking down the price, he should ignore the scare psychology of the moment and definitely begin buying. This is the time when having surplus cash for investment becomes least, not most, desirable…

“If war actually breaks out, the price would undoubtedly go still lower, perhaps a lot lower. Therefore the thing to do is to buy but buy slowly and at a scale down on just a threat of war. If war occurs, then increase the tempo of buying significantly. Just be sure to buy into companies with products or services the demand for which will continue in wartime, or which can convert their facilities to wartime operations.”

In the present context, we are talking about a potential trade war between the United States and China.

Related post: Two things to remember amid panic over possible US-China trade war

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