Of course, scuttlebutt has its limitations - to do it the way Mr Fisher suggested would have taken many man hours of meetings with managers, customers, suppliers and staff, time and access which the average private investor simply doesn't have. Otherwise it's very easy to project your own limited experience onto a group's business as a whole and make the wrong call.
But the practice shouldn't be ignored, especially now that the advent of online social media makes it much easier to corroborate one's gut instinct with the experiences of others. I'm sure Philip Fisher would have made good use of Twitter for this very reason. And for certain industries it can still be a very useful indicator of the direction in which a business is heading. Supermarkets, which have dominated the financial pages over the past week after dreadful figures from all of the major grocers, are a case in point. If I'd let my scuttlebutt lead my investment recommendations, I'd have probably dumped Morrison or Tesco long ago - as I wrote in several pieces, both group's stores seemed under-invested and down at heel, but I didn't want to make that classic scuttling mistake of damning the groups' entire store estates on the basis of the few that I'd visited, and there were still, on paper, compelling reasons for thinking shares in both were cheap.
I am also still kicking myself for not paying more attention to another danger sign that was staring me in the face four years ago. At his first results presentation as chief executive, I asked Morrison's Dalton Philips whether the grocer should introduce a loyalty card like Tesco's Clubcard or Nectar as used by Sainsbury. Did Morrison not, I asked, lack insight into customer behaviour which left them driving blind, as it were? Mr Philips roundly dismissed my suggestion by saying that he didn't need one because he knew what his customers wanted: low prices.
He was right on that score, but unfortunately his customers are now getting those low prices from discounters like Aldi and Lidl - which only cursory scuttlebutt would have revealed were becoming a major force in UK grocery retail. And, four years later, Morrison is introducing that loyalty card after all. Mr Philips says this delay is the result of Morrison's antiquated computer systems, but that's not what he said at the time. Make what you will of that piece of scuttlebutt.
