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| FEBRUARY 10, 2025 Hey y’all, I hope you had an absolutely delightful Super Bowl weekend — and for those that aren’t Chiefs fans or Drake reading this, I imagine you did. A headline caught my eye this morning, and I think it teaches a valuable lesson about investing strategies. When you think of Coca-Cola, what do you think of first? For me, it’s either a fresh and crispy Diet Coke from Mcdonald's (perfection) or that new plant that I often drive by in Tifton, GA where the bubbles light up on the side.
You probably don’t think of anything that specific. But whatever comes to mind first, I’d imagine it’s something to do with soda or, maybe, Warren Buffett, who has always been a big backer of KO stock.
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You almost certainly don’t think about lactose-free milk. But the folks at Coca-Cola would like you to, since they made a $1 billion investment in the “ultra-filtered” (whatever that means) lactose-free dairy alternative back in 2020.
The move is part of an effort to diversify Coke’s holdings away from “just” soda, and there’s a clear reason for their efforts: Soda sales have plummeted over the last two decades. Since the late 90s, health concerns about sugary soda products have led to decreased sales for companies like Coca-Cola and Pepsi.
That reality has forced these companies to re-think their business models. And Pepsi was the leader in this: currently, 60% of their sales come from non-soda products, like Doritos (although, with the Make America Health Again (MAHA) movement sweeping the country, they, too, are looking to diversify into healthier options). Coke is behind the times, but trying to play catchup, and Fairlife is one of their biggest weapons in that effort. Their strategy wasn’t working as well as it used to, so they’ve decided to switch it up. Similar to how Patrick Mahomes last night decided that throwing the ball to the other team wasn’t working as well as he’d hoped, so he decided to hit his own receivers for some meaningless, late-game touchdowns (sorry, Chiefs fans… had to get one in there…) Traders need to use the same mindset. Bill Ackman has been quoted as saying “Diversification is a lack of conviction.” I think there’s a lot of truth in that. If you believe five stocks will outperform all others over the next twenty years, then why on earth would you put even a single dollar into a sixth stock? You always want to bet the biggest on the strongest, fastest, horses. But Ackman doesn’t address what to do when things simply aren’t working. If you have a stock in your portfolio that looks like a loser, swap it out. If you’re using a strategy that used to be great but has stopped winning, change it. As traders you need to expect the unexpected and adapt with the markets. Things are possible now that weren’t possible years ago, like any of the very successful 0DTE strategies our experts like Chris Pulver are using and currently coming up with. You need to be aware of shifts in the wind and move your sails with the breeze. That’s what Coca-Cola’s trying to do. And we should follow suit. Hope you have a terrific Monday. To your prosperity, Stephen Ground Editor-in-Chief, ProsperityPub |
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ABOUT US: We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Prosperity Pub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. |
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