Pepsi or Coke
Today, I was drinking a Pepsi for a change. This was odd as it is not a popular drink in South Africa. Coke is the more dominant. As I was sipping my ice-cold Pepsi, my mind wandered. Is there really such a big difference in being a Coke shareholder vs a Pepsi shareholder. Sure, one of them would have “performed” better and earned higher profits. There will always be a winner.
Let me put it this way. There are two families. Family A founded the Coca-Cola Company and Family B founded Pepsi Co. Would I really care too much which family I am in? Let’s say both companies were founded in the same year. Could we ahead of time have known which company would be the “winner”? I believe the answer is a resounding no. Also, is the “loser” really a loser or just came in second place?
This is a simplified tale but I am trying to demonstrate a point. Shares in both companies would be seen as investments in productive assets. I.e. they create things, sell goods and their earnings create inflation. How much value can someone add by picking one over the other? Is it possible to predict the right times to switch in and out? There are many very smart people in Wall Street, London, Sandton et al that try do this every day. I doubt that they succeed.
Surely, it is easier to step back and say “I need to invest in things that create things, sell things, build things. I need to own a bunch of this stuff and keep adding to what I own every month. If I do, I have a good shot at living a financially stress-free life”.