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🦉 Excellence is Everything ✨
Philip Fisher made a KILLING by ignoring conventional wisdom. Is it time for YOU to rethink diversification? 🤔
Jeff
October 28, 2024
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Hi there… Today, we're diving into a feast of financial wisdom. We'll explore Philip Fisher's laser focus on Corning, unpack the timeless value of patience in investing, and peek into McDonald's global fast-food empire. Buckle up for insights that might just revolutionize your investment thinking!
— Jeff
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Wisdom of the Day
If you can't do a thing better than others are doing it, don't do it at all.
In the world of investing, where diversification is often touted as the holy grail, Philip Fisher's laser focus on Corning in the 1960s stands out as a masterclass in concentrated investing. While others were spreading their bets across industries, Fisher zeroed in on a company that, at the time, was primarily known for kitchenware and lab glass.
Think of it like being a detective who's stumbled upon a hidden treasure map. Fisher, using his "scuttlebutt" method, uncovered Corning's unparalleled commitment to R&D in specialty glass and ceramics. He saw beyond the Pyrex dishes to the revolutionary potential in fiber optics and display glass.
The result? A 1,000% increase in Corning's stock price from 1960 to 1975, far outpacing the market. But here's the kicker: the real payoff came in the decades that followed, as Corning's innovations drove the company to new heights.
So, next time you're tempted to spread your investments thin, remember Fisher and Corning. Ask yourself: Am I investing in companies that are truly exceptional in their field? After all, as Fisher proved, when it comes to investing, excellence isn't just an advantage - it's everything. — Jeff
MULTIDISCIPLINARY WISDOM
The allure of instant gratification poses a significant challenge to long-term success and fulfillment. While our ancestors relied on immediate rewards for survival, this instinct can now lead us astray from our long-term goals.
To counter this, focus on visualizing your future self and breaking down long-term goals into manageable steps. Understand your triggers for seeking instant rewards and practice mindfulness to create space for better decision-making. Reframe waiting as an investment in your future rather than deprivation.
Surround yourself with supportive people who share your long-term vision and implement a system of delayed rewards to reinforce your objectives. Educate yourself about the psychology behind instant gratification, such as hyperbolic discounting, to consciously counteract these biases.
Practice gratitude to shift focus from what's lacking to what's abundant, reducing the need for quick fixes. Remember, mastering patience enriches both your present and future, allowing you to make decisions aligned with your deepest values and long-term aspirations. The most worthwhile achievements often require time and perseverance, making them all the more rewarding.
THE MOAT
The company's recent financial performance, with Q2 2024 revenues reaching $6.5 billion (a 14% increase) and global comparable sales growing by 3%, underscores its resilience and adaptability in a dynamic market.
McDonald's economic moat is both wide and multifaceted, anchored by iconic brand recognition, strategic real estate ownership, an efficient franchise model, innovative digital platforms, and unparalleled scale. The brand's strength fosters customer loyalty and reduces acquisition costs, while its real estate strategy creates significant barriers to entry. The franchise model, with margins expanding to 84.8% in Q2 2024, showcases operational efficiency and profitability.
However, McDonald's faces challenges including changing consumer preferences, intense competition, labor costs, and regulatory risks. Despite these headwinds, the company's strategic initiatives and adaptability position it well for sustained success.
Currently trading at a premium to its estimated intrinsic value ($292.61 vs. $252.49), McDonald's stock reflects market confidence in its strong brand and growth strategies. For investors seeking a blend of stability and growth, McDonald's offers a compelling proposition, backed by consistent cash flows and a commitment to shareholder value.
Always Invert
How can McDonald's increase its global market share and attract more customers?
Ask this:
What could cause people to stop eating at McDonald's?
Unhealthy ingredients: Using low-quality or overly processed ingredients.
Slow service: Long wait times and inefficient order fulfillment.
Dirty restaurants: Failing to maintain clean and inviting dining areas.
Ask Yourself:
Is McDonald's committed to using fresh, high-quality ingredients and offering healthier menu options? Are they optimizing their operations to ensure fast and efficient service, and are their restaurants consistently clean and well-maintained?
REC
📚 Book: Why Nations Fail" by Acemoglu and Robinson
Dive into this eye-opening exploration of why some countries prosper while others don't. It's like getting a bird's-eye view of global economics. Learn how political and economic institutions shape a nation's destiny, which could inform your investment decisions in emerging markets.
📰 Read: BRICS PAY
Explore the development of BRICS Pay, a move away from SWIFT. It's a reminder that the global financial landscape is always evolving. Consider how this new system might impact international investments and currency markets.
🎥 Video: Phil Fisher's scuttlebutt method
Watch Buffett explain Fisher's approach to research. It's like getting investment advice from two legends at once. Gain insights into how thorough, on-the-ground research can uncover hidden investment gems.
🎓 Course: Behavioral Economics: An Introductory Course
Boost your understanding of human behavior in economic settings. It's like learning to read the market's mind. In today's complex financial world, understanding behavioral biases can give you an edge in making investment decisions.
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