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☕ Starbucks' Billion-Dollar Brew
How did Starbucks investors strike gold? Discover the power of thinking like a business owner, not a lottery player.
Jeff
August 13, 2024
Hi there… We'll explore how Starbucks turned coffee beans into billions, examine the potential impact of activist investors on the company's future, and delve into the quirks of our decision-making brains. Get ready for a rich, full-bodied analysis that might just change how you view stocks, corporate strategy, and your own investment choices.
— Jeff
Wisdom of the Day
Although it's easy to forget sometimes, a share is not a lottery ticket... it's part-ownership of a business.
Starbucks has proven that treating stocks like businesses, not lottery tickets, can lead to astounding returns. Back in 1992, Starbucks was just a small Seattle chain with 165 stores. Fast forward to today, and a $1,000 investment from those early days would now be worth over $230,000.
This incredible return didn't happen overnight. It took years of ups and downs, including a stomach-churning 50% drop during the 2008 financial crisis. The secret? Remembering Peter Lynch's wisdom: "A share is not a lottery ticket... it's part-ownership of a business."
By focusing on Starbucks' fundamentals - people's enduring love for coffee, the company's expansion, and its strong brand - patient investors were rewarded handsomely. Since those 2008 lows, Starbucks stock has risen by over 1,000%. The lesson? Don't play the stock market like a lottery. Think like a business owner, and you might just brew up a fortune of your own.— Jeff
The Inverted Lens
Invert, always invert: Turn a situation or problem upside down. Look at it backwards. What happens if all our plans go wrong? Where don't we want to go, and how do you get there?
Is Elliott's Board Push a Shot of Espresso or a Bitter Brew for Starbucks?
Activist investor Elliott Investment Management is pushing to add Jesse Cohn to Starbucks' board. But let's flip this coffee cup upside down and look at the grounds left behind.
While this might seem like a quick espresso shot to boost the stock price, could it be a bitter brew for Starbucks' long-term health? Elliott's tech-focused playbook might not translate well to Starbucks' customer experience-driven model. It's like trying to serve a frappuccino in a wine glass – the content might be good, but the presentation could leave a bad taste.
Moreover, could this move erode Starbucks' unique corporate culture or undermine the new CEO's vision? It's like removing the comfy chairs from a Starbucks store – you might save money, but at what cost to the customer experience?
In the world of investing, as in coffee, it's not just about the immediate jolt – it's about finding a blend that keeps you energized for the long haul. Sometimes, the best way to improve a good cup of coffee isn't to change the recipe, but to perfect the brewing process.
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What's your take on Elliott's push for Starbucks board representation? |
MULTIDISCIPLINARY WISDOM
In the high-stakes casino of decision-making, your brain might be the dealer, but it's not always dealing you a fair hand. Welcome to the wild world of behavioral economics, where our minds play tricks on us faster than a seasoned magician.
At the heart of this mental sleight of hand is prospect theory, which reveals we're more like nervous squirrels than cool calculators. We're far more scared of losing our nuts than excited about finding new ones. This fear of loss can make us do some pretty wacky things, like holding onto a losing stock while quickly selling a winner.
But there's hope for us poor decision-makers. Knowing these quirks exist is half the battle. Try flipping the frame when making big decisions, or use decision trees for tricky statistics. Your brain might be playing tricks on you, but now you know how to play a few tricks of your own. And that, is how you start winning the mind game.
REC
📚 Book: "Onward" by Howard Schultz
Want to learn about resilience in business? Grab "Onward" by Howard Schultz! It's like getting a front-row seat to Starbucks' turnaround story. With recent challenges in the retail sector, Schultz's insights on maintaining brand integrity while navigating tough times are more relevant than ever.
🎥 Video: Li Lu at Columbia Business School
It's like sitting in on a master class with one of the brightest minds in investing. With recent market volatility, Li Lu's insights on long-term value creation are more valuable than ever. Grab some popcorn and get ready for an investing epiphany!
🎓 Course: Santander-Google AI Productivity
Ready to boost your investing game with AI? Check out the free Santander-Google AI course! It's like having a tech-savvy friend teach you the ropes of AI-powered productivity. With AI reshaping the investment landscape, this course could be your ticket to staying ahead of the curve.
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Looking for a Swiss Army knife for investors? Check out FinChat.io! It's like having a team of analysts at your fingertips. Get real-time data, AI-powered insights, and customizable dashboards all in one place. With recent market volatility, having reliable tools for research and analysis is more crucial than ever.
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MY WATCHLIST
$SBUX, $GOOGL, $CELH, $DIS, $CHWY, $CROX, $ULTA
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