Investing 102

[GregWeld]

Just to add to the thought process... of which to pick.


I've always only gone on two factors... How I PERSONALLY feel about the company... and if most things are equal -- then the historical TOTAL RETURN. I might love one company - but when I compare the TR -- and the "other" company is higher by a good margin.. I'm buying that company. The reason for this is that a large part of TR is the GROWTH in the share price.... and that's where I must turn into a lemming by following the collective herd. "They" have pushed the share price higher... (more buyers than sellers) and I have to respect that market force.


Just using your three stocks mentioned


KO is 1 year 9% - 3 year is 32% - 5 year is 78%

PEP is 1 year 18% - 3 year is 66% - 5 year is 79%

DPS is 1 year 48% - 3 year is 83% - 5 year is 180%

Now ---- I'm going to go look to see WHY did DPS have such a huge TR --- was there a merger? Acquisition? Big change that skewed the numbers.... or was there a fundamental shift to the products they carry vs the other two? I like to be able to explain any anomaly! So I'll research to see what's up and if I can find something to explain the huge difference. If I can't -- then I might choose the DPS over the others because you can't fight history and momentum. Quadrupling your money is better than only doubling your money. 5K turns into 20K vs only 10K. Big difference.

I own KO for the record. It's a steady eddie for me.

[GregWeld]

And here's where you dig a little and expand your investing knowledge...


Why not also take a look at MONSTER (MNST)?? OR similar brands. I don't like the stuff - don't like what it stands for (getting jacked up) and personally I wouldn't buy it because of that.... but if I was a younger guy and used this product and understood the market for it (all my friends were buying it over KO or PEP) then I MUST pay attention to that kind of info/intel.

It's 1 year TR - 70% - 3 year 112% - 5 year 422%


This is what I was saying earlier --- I want you guys to go out and use the info you learn here - but apply it to your own situations and age and incomes etc. Don't buy stuff or limit yourselves to just the EXAMPLES used in this thread! Put your own thinking cap on and learn and make your own decisions!

[captainofiron]

Hey Greg,

I own KO too, but lately there has been alot of articles on KO because they are seeming to stagnate. Is this noise in your opinion or something we should be watching?

To me it seems more like noise becasue its a large company that has been around forever, and I doubt their board will allow it to stagnate and are probably working to continue its growth. BUT I dont have a fraction of your experience

[GregWeld]

Originally Posted by captainofiron

Hey Greg,

I own KO too, but lately there has been alot of articles on KO because they are seeming to stagnate. Is this noise in your opinion or something we should be watching?

To me it seems more like noise becasue its a large company that has been around forever, and I doubt their board will allow it to stagnate and are probably working to continue its growth. BUT I dont have a fraction of your experience

Coke (KO) is an "institutional" brand... and they own many more products than just soft drinks. Soft drinks have a LOT of competition in the last 5 years or so... I don't even try to keep up with what everyone is drinking these days. The beverage aisles at the grocery store are loaded with brands of stuff... many of which are just subsidiaries of the big boys. But what you have with Coke - is power... and global... and cash flow... and Warren Buffet... and I sleep just fine owning it. And theres's NOTHING in the rule books of investing that says if you own KO you can't also own a Monster (MNST) or own Pepsi AND Coke. I used to own Verizon AND AT&T... and I slept just fine knowing the dividend would be paid on time and that I wasn't suddenly going to wake up to a DOWN 25% investment.

A lot of the time the "noise" or discussion is the very same discussions that are going on at the board level. These people aren't idiots. They know what's going on. They have feedback from the customer. Their customers are HUGE. They have the clout to buy or invest in anything they see that will aid them going forward. They're not "nimble" and they might not always get it right and they might even have let a competitor get the jump on them... but they're NOT going away.

There has been a fundamental shift away from carbonated drinks. I don't think I have single can in my house. But the big guys own more than just carbonated drinks. Coke (KO) doesn't just own Coke - they own Dasani water - Minute Maid - Schweppes - Powerade - Vitamin Water... They're invested partners in Green Mountain Coffee... There are SEVENTEEN brands that are BILLION DOLLAR BRANDS on their own...

In other words - it's not the greatest make you millionaire next week investment... but owning it gives you the confidence you need to hang in there when the market sucks... and allows you to dabble in the "millionaire of the week" hot investment going forward when you're ready.

[WSSix]

captain, I've got Coke as well for many of the reasons Greg mentioned. Plus, I'm in the south. Pepsi tastes terrible. Don't bring that crap around here, lol. I've been doing some reading on KO though because like you, I'm hearing a lot of potentially worrisome information. I bought it as a steady eddy so I'm not trying to get rich off of it. However, I don't want to lose my money on it either. Since I'm long term on Coke, I have no intentions of selling at this point. I fully expect there will be times when it goes down. I fully expect there to be big changes over the course of years for all soft drink companies because people are changing their habits and preferences. In 10 or 20 years, I expect to be able to say I've made plenty of money on my investment in KO. To me, everything we're hearing now will be looked upon as noise in a few years when looking back.

[GregWeld]

Good post Trey! Even "steady eddies" need to be monitored for fundamental changes... Sears would have been a steady eddy just a few short years ago.. There are several names I could come up with that barely or don't even exist today! Every stock you own deserves to be looked at with a critical unemotional eye.

[captainofiron]

Originally Posted by GregWeld

Coke (KO) is an "institutional" brand... and they own many more products than just soft drinks. Soft drinks have a LOT of competition in the last 5 years or so... I don't even try to keep up with what everyone is drinking these days. The beverage aisles at the grocery store are loaded with brands of stuff... many of which are just subsidiaries of the big boys. But what you have with Coke - is power... and global... and cash flow... and Warren Buffet... and I sleep just fine owning it. And theres's NOTHING in the rule books of investing that says if you own KO you can't also own a Monster (MNST) or own Pepsi AND Coke. I used to own Verizon AND AT&T... and I slept just fine knowing the dividend would be paid on time and that I wasn't suddenly going to wake up to a DOWN 25% investment.

A lot of the time the "noise" or discussion is the very same discussions that are going on at the board level. These people aren't idiots. They know what's going on. They have feedback from the customer. Their customers are HUGE. They have the clout to buy or invest in anything they see that will aid them going forward. They're not "nimble" and they might not always get it right and they might even have let a competitor get the jump on them... but they're NOT going away.

There has been a fundamental shift away from carbonated drinks. I don't think I have single can in my house. But the big guys own more than just carbonated drinks. Coke (KO) doesn't just own Coke - they own Dasani water - Minute Maid - Schweppes - Powerade - Vitamin Water... They're invested partners in Green Mountain Coffee... There are SEVENTEEN brands that are BILLION DOLLAR BRANDS on their own...

In other words - it's not the greatest make you millionaire next week investment... but owning it gives you the confidence you need to hang in there when the market sucks... and allows you to dabble in the "millionaire of the week" hot investment going forward when you're ready.

Great! Thanks for clearing that up.

Originally Posted by WSSix

captain, I've got Coke as well for many of the reasons Greg mentioned. Plus, I'm in the south. Pepsi tastes terrible. Don't bring that crap around here, lol. I've been doing some reading on KO though because like you, I'm hearing a lot of potentially worrisome information. I bought it as a steady eddy so I'm not trying to get rich off of it. However, I don't want to lose my money on it either. Since I'm long term on Coke, I have no intentions of selling at this point. I fully expect there will be times when it goes down. I fully expect there to be big changes over the course of years for all soft drink companies because people are changing their habits and preferences. In 10 or 20 years, I expect to be able to say I've made plenty of money on my investment in KO. To me, everything we're hearing now will be looked upon as noise in a few years when looking back.

Haha, yea I know what you mean. Im in Texas and there are few meals that I can think of when I wouldnt have a bottle/can of Coke next to me