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Interesting brief article about the "Nifty Fifty" from back in the day (1970s stocks).  These were presented as "can't miss" kinds of things that garnered high valuations and were said to be great investments (by some).  I recall another old expression, "Trees don't grow to the sky.".

The Nifty-Fifty Re-Revisited (pomona.edu)

The basic elements of the Nifty Fifty story are sound: with the spectacular exception of Wal-Mart, the glamour stocks that were often pushed to relatively high P/E ratios in the early 1970s did substantially worse than the market, in both the short and long run.

1982 - Roger Craig, Mike Rozier, Tom Rathman

There's a point at which the shit would hit the fan, yes?

I've been at the same company for over 16 years. I've seen our stock price in the teens and I've seen it in the 115 range. We are in a bit of a cyclical industry. 

When the stock price is low, there are usually reasons why it's low. Some of them are cyclicality of our business, some of them are competitive missteps, etc. And the reasons why it's low (i.e. poor earnings or even losing money) bring pain. I.e. the "people I used to work with were told they no longer work with" pain of layoffs. I've had the difficult task of giving people that news myself, and if you think anyone in a company delights in layoffs, you're wrong. We spent the latter part of 2022 and all of 2023 in one of those painful periods--people say it's the most protracted downturn our industry has seen since 1986. Quite severe measures were taken to cut costs, because the company was losing money. Thankfully we're pulling out of that now. 

When the stock price is high, it's usually because cyclical business conditions are good and/or we've been executing well. Earnings are high. Those earnings fund raises / variable incentive payouts / benefits that lead to company morale being very high. 

In 2012, my boss who had been with the company ~40 years was retiring. He told me "I've seen this company almost go out of business four times. This might be the fifth." At the time we were in the middle of an expensive acquisition/merger with a competitor right at the time that a natural disaster hit the country where we do the bulk of our production. We literally had a factory under water. Or at least head-height on the first floor. I've been to the facility and they now have a plaque on the outside wall showing how high the floodwaters reached. Of our entire group, I was the only one who would have been able to stand up and keep my mouth above water. Luckily we survived (helped, in fact, by that flood--it disrupted the supply chain of multiple players in the industry, leading to shortages, leading to high prices). 

But not everyone has been so lucky. My industry used to have 100 companies building what we do. Today there are three, globally. Business is hard. 

As it relates to a company like KO, I obviously think there's a point where the shit hits the fan. As far as "existential crisis / go out of business", I think you have to look at a company like that and ask the odds of whether they'll be around at various points in the future. There could be a lot of reasons. Bad management is just one. Consumer preferences changing and KO being unable to adapt is another. The company having a major scandal that destroys the (very valuable) brand is another. A combination of those could knock them out all at once. But you think about it in the terms of timeframe. 20 years from now? I'd put money on KO existing. 50 years? IMHO certainly better than even odds. 100 years? Now we're not so sure, because so many consumer preferences could change in the interim and plenty of opportunities for management to screw up / damage the brand / etc to slowly deteriorate and have died by then. 

But none of these are caused by some sort of "perpetual growth" myth that everyone needs to hit. That's where your insistence was a fallacy. 

Do the great lakes borders count?



 

Yes, and Wisconsin does not share one with Canada. It shares Lake Superior borders with Michigan and Minnesota. Ohio and PA share a Canadien border but are not included.