What stocks will make their owners rich over the next generation?

[ukvalueinvestment]

Yes

[Fat Pitch]

 

Note the word 'generation'; so I mean over 20-30 years or so.  You picked the top of a bubble - when Coke traded for 80 times earnings, so yes, stock hasn't fared well since then, unsurprisingly. 

 

 

IMO, for a stock to qualify it would have to return a 15% CAGR over twenty years or longer.  14% would suffice as well.

 

 

Since most of us will be alive for 20-30 more years why aren't our investing horizons much closer to this length of time?

 

I bring it up as KO has been a very poor investment for a large group of people, for a large period of time.  KO didn't just spike up for a month or two.  If you bought in 1996 to something like 2001, you have not really made that much of a return.

 

Even Buffet made a mistake with KO, he refused to sell at or near the top.

 

So I question your assertion that KO provides investors to make returns that will make them fabulously wealthy "forever until forever".

 

Buffett couldn't have sold since it would have triggered a massive sell off. That's life when you become the market, but to say he just sat on the stock is a mistake. He gave shares in Berkshire which at the time was mostly inflated by his portfolio holdings to start up MidAmerican Energy. So in effect he did sell off his stake in KO and others to gain ownership in the utility business.

 

KO has been a great company and investment for many decades, provided you didn't over pay. People who bought KO when it was yielding 1% FCF were just idiots.

 

 

[JAllen]

 

Note the word 'generation'; so I mean over 20-30 years or so.  You picked the top of a bubble - when Coke traded for 80 times earnings, so yes, stock hasn't fared well since then, unsurprisingly. 

 

 

IMO, for a stock to qualify it would have to return a 15% CAGR over twenty years or longer.  14% would suffice as well.

 

 

Since most of us will be alive for 20-30 more years why aren't our investing horizons much closer to this length of time?

 

I bring it up as KO has been a very poor investment for a large group of people, for a large period of time.  KO didn't just spike up for a month or two.  If you bought in 1996 to something like 2001, you have not really made that much of a return.

 

Even Buffet made a mistake with KO, he refused to sell at or near the top.

 

So I question your assertion that KO provides investors to make returns that will make them fabulously wealthy "forever until forever".

 

 

I don't doubt there have been poor times to buy KO.  The primary determinant of long-term returns is the price one pays for an investment.  I very much agree that buying then did not produce great returns, KO was selling for a high multiple.  For people that didn't pay an inflated multiple, which probably excludes the time period you mentioned, KO has been a superior investment.  Also, 1996 isn't a generation, yet.  Ask anyone that has owned longer than say twenty years, when KO was $10.  SO yes, there can always be long periods of time where stock prices perform poorly with well-performing companies, but I doubt this happens very often at all over periods of twenty years or longer. 

 

 

The lesson is definitely don't buy even the best stocks at inflated multiples.

[Kraven]

 

Note the word 'generation'; so I mean over 20-30 years or so.  You picked the top of a bubble - when Coke traded for 80 times earnings, so yes, stock hasn't fared well since then, unsurprisingly. 

 

 

IMO, for a stock to qualify it would have to return a 15% CAGR over twenty years or longer.  14% would suffice as well.

 

 

Since most of us will be alive for 20-30 more years why aren't our investing horizons much closer to this length of time?

 

I bring it up as KO has been a very poor investment for a large group of people, for a large period of time.  KO didn't just spike up for a month or two.  If you bought in 1996 to something like 2001, you have not really made that much of a return.

 

Even Buffet made a mistake with KO, he refused to sell at or near the top.

 

So I question your assertion that KO provides investors to make returns that will make them fabulously wealthy "forever until forever".

 

All good points.  I can't imagine how someone can tell what the future holds for KO.  Soda consumption seems to have peaked, at least in more developed countries. 

[ukvalueinvestment]

As long as they allocate capital well, and don't try and fight the downward trend (in the west) they'll be fine...

 

[DTEJD1997]

 

Buffett couldn't have sold since it would have triggered a massive sell off. That's life when you become the market, but to say he just sat on the stock is a mistake.

 

If Buffet not selling KO at 35, 38, 41 back in the late 90's was NOT a mistake, then nothing is a mistake...He could have sold PART of his position, or maybe sold covered calls...

 

Buffet is pretty darn good, but I don't think he is infallible, he makes mistakes from time to time.

[JAllen]

 

Buffett couldn't have sold since it would have triggered a massive sell off. That's life when you become the market, but to say he just sat on the stock is a mistake.

 

If Buffet not selling KO at 35, 38, 41 back in the late 90's was NOT a mistake, then nothing is a mistake...He could have sold PART of his position, or maybe sold covered calls...

 

Buffet is pretty darn good, but I don't think he is infallible, he makes mistakes from time to time.

 

 

Pretty sure Buffett admitted that selling KO then was a mistake. 

[blainehodder]

 

Buffett couldn't have sold since it would have triggered a massive sell off. That's life when you become the market, but to say he just sat on the stock is a mistake.

 

If Buffet not selling KO at 35, 38, 41 back in the late 90's was NOT a mistake, then nothing is a mistake...He could have sold PART of his position, or maybe sold covered calls...

 

Buffet is pretty darn good, but I don't think he is infallible, he makes mistakes from time to time.

 

 

Pretty sure Buffett admitted that selling KO then was a mistake.

 

2004 letter:

 

"Clearly, Berkshire’s results would have been far better if I had caught this swing of the pendulum. That may seem easy to do when one looks through an always-clean, rear-view mirror. Unfortunately, however, it’s the windshield through which investors must peer, and that glass is invariably fogged. Our huge positions add to the difficulty of our nimbly dancing in and out of holdings as valuations swing.

 

Nevertheless, I can properly be criticized for merely clucking about nose-bleed valuations during the Bubble rather than acting on my views. Though I said at the time that certain of the stocks we held were priced ahead of themselves, I underestimated just how severe the overvaluation was. I talked when I should have walked."

[Kraven]

 

Buffet is pretty darn good, but I don't think he is infallible, he makes mistakes from time to time.

 

You're not getting into value investing heaven now.  I can hear Dee, the sarcastic sister from What's Happening, "Ooooo, you're in trouble!"

[stahleyp]

 

Note the word 'generation'; so I mean over 20-30 years or so.  You picked the top of a bubble - when Coke traded for 80 times earnings, so yes, stock hasn't fared well since then, unsurprisingly. 

 

 

IMO, for a stock to qualify it would have to return a 15% CAGR over twenty years or longer.  14% would suffice as well.

 

 

Since most of us will be alive for 20-30 more years why aren't our investing horizons much closer to this length of time?

 

I bring it up as KO has been a very poor investment for a large group of people, for a large period of time.  KO didn't just spike up for a month or two.  If you bought in 1996 to something like 2001, you have not really made that much of a return.

 

Even Buffet made a mistake with KO, he refused to sell at or near the top.

 

So I question your assertion that KO provides investors to make returns that will make them fabulously wealthy "forever until forever".

 

Buffett couldn't have sold since it would have triggered a massive sell off.

 

.

 

I don't know about that. If Buffett sold in 1999/2000 I bet he could have gotten an excellent price. This is especially true since the common wisdom was "he's old and doesn't know what he's doing."

[augustabound]

I can hear Dee, the sarcastic sister from What's Happening, "Ooooo, you're in trouble!"

 

Wasn't that Tootie from Facts of Life?

[DTEJD1997]

 

Buffet is pretty darn good, but I don't think he is infallible, he makes mistakes from time to time.

 

You're not getting into value investing heaven now.  I can hear Dee, the sarcastic sister from What's Happening, "Ooooo, you're in trouble!"

 

To complete my apostasy, I will say that I don't much care for the "aw shucks, I'm just a simple guy" act that Mr. Buffet puts on.  He is a ruthless competitor and has a very carefully crafted media image.  If you are across the table from him, you better watch out...

[Kraven]

I can hear Dee, the sarcastic sister from What's Happening, "Ooooo, you're in trouble!"

 

Wasn't that Tootie from Facts of Life?

 

Hmmm, maybe it was. Maybe Dee was "ooh, I'm gonna tell Mama". Well, "hey, hey, hey!"

[Spekulatius]

SPND -  a small E&P microcap run by a husband and wife team. They are mostly buying stakes in drilling ventures around Fort Worth and are very very good at it, as they have been hitting singles for more than a decade now.  Think they can do another 10x in ten years.

 

OTCadventures has a post about the stock a while ago:

http://otcadventures.com/?p=300

 

Needless to say, this stock is illiquid and hard to buy. I own some, bought in the low 2's, but not enough...