How Philip Fisher's Laser Focus Turned Glass into Gold

Back in the 1960s, when most investors were spreading their bets across a wide range of industries, Fisher zeroed in on Corning with laser-like precision. At the time, Corning was primarily known for its kitchenware and laboratory glassware. But Fisher, with his keen eye for long-term potential, saw something that others missed - a company with an unparalleled commitment to research and development in the field of specialty glass and ceramics.

Fisher's approach to Corning wasn't based on a hunch or a hot tip. It was the result of his meticulous "scuttlebutt" method - a term he coined for his approach of gathering information from various sources, including competitors, suppliers, and customers. Through this process, Fisher became convinced that Corning's R&D capabilities were second to none in the industry.

What Fisher discovered was a company that wasn't content with being just another glassmaker. Corning was investing heavily in developing new types of glass with unique properties - glass that could withstand extreme temperatures, glass with exceptional optical clarity, and glass that could transmit light over long distances. These weren't just incremental improvements; they were potentially revolutionary innovations.

Fisher's analysis went beyond just the technology. He studied Corning's management culture, its approach to innovation, and its relationships with key customers. He found a company that was willing to invest in long-term research projects with no immediate payoff, a rarity in the corporate world of the 1960s.

One particular area of research caught Fisher's attention - fiber optics. Corning was in the early stages of developing optical fibers that could transmit light signals over long distances. While the immediate applications weren't clear, Fisher recognized the potential for this technology to revolutionize telecommunications.

Armed with this deep understanding of Corning's capabilities and potential, Fisher made a significant investment in the company. This wasn't a small, speculative bet - it was a major position in his portfolio, reflecting his conviction in Corning's long-term prospects.

Fisher's investment thesis was simple yet powerful. He believed that Corning's superior R&D capabilities would allow it to develop products that no other company could match. This, in turn, would give Corning a sustainable competitive advantage, allowing it to command premium prices and enjoy high profit margins.

The numbers tell the story of Fisher's success. From 1960 to 1975, Corning's stock price increased by over 1,000%, far outpacing the broader market. But the real payoff came in the decades that followed, as Corning's innovations in fiber optics, display glass, and other specialty materials drove the company's growth to new heights.

Fisher's approach to Corning illustrates the profound wisdom in his quote about doing things better than others. By focusing on a company that was truly exceptional in its field, Fisher was able to achieve returns that far exceeded what he could have gotten from a more diversified portfolio.

Think of it this way: If you're in a race, would you rather have a collection of average runners or one world-class sprinter? Fisher chose the sprinter, betting that excellence in one area would outperform mediocrity in many.

But Fisher's success with Corning wasn't just about picking a winning stock. It was about having the conviction to hold onto that stock for the long term, even when the market didn't recognize its value. There were undoubtedly times when Corning's stock price stagnated or even declined. But Fisher's deep understanding of the company's fundamental strengths gave him the confidence to stay the course.

This long-term perspective allowed Fisher to benefit from the full arc of Corning's innovations. When he first invested, fiber optics were little more than a laboratory curiosity. By the time he sold his last shares decades later, Corning had become a dominant player in the global telecommunications industry.

Fisher's Corning investment also highlights another key aspect of his philosophy - the importance of intangible assets. While many investors focused on tangible metrics like current earnings or book value, Fisher recognized the immense value in Corning's R&D capabilities and corporate culture. These intangible assets, while difficult to quantify, were the true source of Corning's long-term value creation.

In the end, Fisher's success with Corning teaches us a profound lesson about the nature of successful investing. It's not about trying to be good at everything or spreading your bets too thin. It's about identifying truly exceptional companies - those that do things better than anyone else - and having the courage to make significant investments in them.

Ask yourself: Am I investing in companies that are truly exceptional in their field? Or am I settling for mediocrity in the name of diversification? The answer to that question might just be the key to achieving Fisher-like returns in your own investment journey.

After all, as Fisher's Corning investment proves, when it comes to investing, excellence isn't just an advantage - it's everything. And that, perhaps, is the most valuable lesson we can learn from Philip Fisher's laser focus on investing in companies that do things better than anyone else.