Coke vs Pepsi
You might have read this story appeared this week about how Warren Buffett was convinced by one of his neighbors not only to switch to Coke in 1986 after five decades of allegiance to Pepsi drink, but also invested in the Coke business. According to the article, he drinks five cans of Coca-Cola each day. More importantly, the personal preference for the drink lead to his preference for or better understanding of the business. His subsequent investment in Coca-Cola, which began with purchasing $1.3 billion worth of its stock between 1988 and 1994, was influenced by both a personal liking for the product and the company’s strong fundamentals. Berkshire Hathaway now owns 400 million shares of Coca-Cola stock, equal to around 8% of the company. The classic fairytale story just adds to the legendary success of Buffett’s life and detailed in the book “The Deals of Warren Buffett Volume 2: The Making of a Billionaire." by Don Keough, who lived across the street from Buffett in Omaha, Nebraska.
Yet, there is just one small problem with the story.
Unlike thirty years ago when only professional investors had easy access to company information, anyone today can find sufficient financial information about any publicly traded companies in a few clicks. Comparison of past business performance between Pepsi vs Coke is actually much easier to decipher than deciding which of the two drinks to choose.
While both are great long term investment options and there is no doubt Buffett did very well with his Coke investment for his shareholders, one of two has been the clear winner in the past thirty years. Looking back 10, 20, 30 years, Pepsi comes out on top in every time frame. Obviously past performance does not provide guarantee for future performance.
More broadly, while Berkshire Hathaway had stellar performance vs the broad market for the first three plus decades, it has slightly underperformed the stock market (i.e. S&P 500) for the last 20 years, not because he had lost his magic touch, but mostly because the portfolio has become too big to have sufficient opportunities to make meaningful differences. A large portion of his investment in recent years has been in Apple and most of his investment are in a handful of stocks.
By no means I am trying to minimize his success and insights. Warren Buffett is obviously a genius when it comes to investment. His philosophy of focusing on low cost, long term, focusing only on businesses he can understand is still great advice to all investors. However, what works for Warren Buffett does not necessarily works for everyone. In fact, it probably wont work for most individual investors.
The Warren Buffett story further lead me to think about leadership. In fact, leadership works very much the same way. You can not become a great leader just by emulating what other great leaders do. As an example, Elon Musk could get away with many unique leadership behavior just because he is Elon Musk. It does not mean his leadership behavior is something we can emulate or we could achieve the same success.
Everyone's leadership journey is different and you have to find yours.
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Leadership blogger, Aspiring Writer, Photographer, Marathon Runner
9 个月Perfect timing. This article on FT about Warren Buffet just came out this morning. Buffett admits that the days for Berkshire’s eye popping return is over. https://www.ft.com/content/1a6f4bd9-b9c7-462e-8152-4ee52a41fba0
Co-Founder/Chief Strategist @ Proof Incubator | Food and Beverage Specialist, Senior Editor
9 个月This makes me think of the logical fallacy—the one-many problem. We may have an archetype of what a leader looks like (the one), yet we are individuals who have to forge our own identity and pathways for success. The idea is that we can learn from the examples of others, and then we still have to do the work ourselves. Ask any parent who has been raising a child for advice and they can tell you what they have learned. And still, when you become a parent you have to learn for yourself. It’s why we all should strive to stay humble, approach each other with curiosity, and be kind to ourselves and others. There’s no one right way to do this thing—and there are a lot of different, interesting, and well informed ways to do it well.
16+ Years' Recruitment Experience for India & Africa | Executive Resume Writer | Talent Acquisition Expert since 2007 | Unstop Top Mentor | Podcast Host - Expert Talk by Vipul The Wonderful | Top 1% Mentor at Topmate
9 个月Awesome
?? SENIOR MARKETING EXECUTIVE | DIGITAL AND TRADITIONAL MARKETING | STARTUPS | TURNAROUNDS | HEALTHCARE INDUSTRY ?? “Delivering Breakthrough Business Results at the Intersection of Sales, Marketing and Business Acumen”
9 个月Amen, we are always trying to emulate others. Trail your own path. You win some and you loose some…..dah. Follow your own instincts.
Distressed Turnaround, Restructuring, Business Growth and Offshoring
9 个月Mark Twain said “ it isn’t what we don’t know that causes us a problem. It’s what we know for sure , that just ain’t so “. Historic growth is no guarantee of future success. It’s how a leader controls the systematic risk ( the risk that exists in a market ) and unsystematic risk ( the risks not shared in a wider market ) . Mavrick entrepreneurs are visionaries who challenge the norm . Leaders understand understand people and can create teams who lead organisations to success .