Jake and I are having a little debate about stocks, in the previous thread. While he may be correct about the ultimate destiny of Green Mountain Coffee Roasters Inc. [[GMCR]] ; it is silly to single out any stock as a “fad.”
Unless the company is a conglomerate, mega cap corporation, pretty much all stocks are fads, in the sense that businesses get hot then cool off, like MSFT or DELL. They come and they go. Big companies and former Dow 30 components, Xerox Corporation [[XRX]] and Eastman Kodak Company [[EK]] , would have never been labeled “fads” 15 years ago. In hindsight, they most certainly were fads, albeit long lasting ones, if by “fad” you mean the stock sucked (and still sucks) dick.
If we are to label GMCR a fad, then it’s important to view the company over a longer time frame, in order to get a feel for how its business is run.
Basically, the stock has been lifting off for 15 years. Perhaps in 5 years, the share price will suffer and Jake may be able to say “Ha, I told you so.” But, I’ll be long gone by then and onto another “fad stock,” where I will attempt to make another killing. The point is: some companies shine for 50 years, others for 5 days. If you were able to make 300% in FADDY, inside of 5 days, would your new car look any different?
So goes the spirit of the market.
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Hmmm
A mullet is a fad. A stock is not a fad. Wrong use of the word. That’s what tripped you up and unfortunately wasted your time.
Although I agree, there are exceptions to every rule. Ever heard of the dot com fad?
People that had no business buying stock were buying simply because it was the “cool” thing to do. That lasted about as long as the dot com bubble
Coffee. The only longer lasting fad on the planet is prostitution and try betting against that shit and winning.
Merry Christmas.
Don’t forget to get your BVX shares before it is too late.
The Company is full of my classmates. Ironically, your chart coincides with my first introduction to it.
You don’t need to tell me anything about the company.
The fad I was speaking of was the device, which is what’s generating the current frothiness.
Even Starbux — another great company that had something to do with cawfee — eventually fell off the fad rip.
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TBT and TBF.
Newest fad stocks.
lol.
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Addedum — even great companies can become faddish — you mentioned Xerox and Kodak — both part of the famed Nifty Fifty.
Where is that Bernie Cornfeld guy when we need him?
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But the word “fad” implies fragility in the business. For Christ’s sake, the company supplies MCD with beans.
You taking exception to the Keurig is no different than someone saying windows won’t work, back in the early 90’s. How do you know the Keurig will not take 50% of the market before leveling off?
How do you know the company will not sell devices abroad to men living in caves?
I guess my problem is the word “fad” and the connotation is possesses.
Well, I guess it’s a condition of the market. Cawfee, as you know, is a commodity, as is, for the most part it’s delivery.
The question is, how long will the market allow GMCR to make outsize profits in a specific delivery vehicle w.out engineering around it, or onto the “next best thing?”
I agree, I find more comfort in their supply chain than I do in a single product offering.
When I use “fad” in this sense, I am really talking about the valuation boost being supplied by that one product.
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You rang ?! 😀
Off for a late night drive.
Mr. Fly,
Respectfully, perhaps you should allow Jake the luxury of a guest post, as a headliner, to rebut.
Very funny.
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LMAO
The Chinese are acquiring South American plantations and shipping in their own slav… , ahem, workforce for harvesting.
“The point is: some companies shine for 50 years, others for 5 days. If you were able to make 300% in FADDY, inside of 5 days, would your new car look any different?”
Only thing that matters ^^
I regret not taking that 59 entry point a couple of weeks back
This is better than Tupac and Biggie.
The Fly vs. JakeGint. I hope nobody gets shot.
For the record, I am biggie.
Once again, I beg to differ about the Keurig’s lasting power. It is a game changer, no different than the iPod changed the music delivery business. All major threats to the Keurig have joined them, licensing out their technology.
Coffee is a fucking giant market.
Agreud, but you cannot expect that single delivery system to remain dominant for anything more than a short amount of time. Neato technology aside, it’s a pain in the ass, and expensive. Not a great combo for “beloved by families for ages” no?
Personally, I like making 12 cups at a time, but I’m a late adapter.
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PS — for the record, I am Leon Redbone.
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Single server market is monstrous on the corporate side. Think about it.
I am going to buy you one and have it shipped to you. I guarantee you it will brew 12 cups faster than your old school machine, with less hassle and mess. If you have a preferred coffee, you can use your own coffee—no need to worry.
Well — like Ben Nelson skulking around the back alleys of Omaha — I am always open to a nice bribe.
That said, I do recognize the conveniences of the machine from a single serve standpoint. These things have been in the jetports of various midsize airports around the country for a couple of years now, and they are fun.
But in the example you give of the office, let me give you a counter… We have a big conference room downstairs, while our cawfee machine is upstairs. If we have more than two visitors at a time (frequent), then we usually brew a pot of cawfee and put it in the thermal thingee and haul it down. With the Keurig, wouldn’t I have to make a bunch of individual cups, and then pour them into the carafe, and then haul, etc, etc?
How mobile is the machine? I suppose I could bring it downstairs…
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@I am Leon Redbone…..GENIUS! Lulu’s back in town, baby.
Fly
Read a post on Seeking Alpha this week. Consider the source i.e. it may be apocryphal:
duede quoted a research article claiming in the 50 yrs from 1947 to 1997, 425 of the SP500 stocks were out of the SP500. Of the remainders most were sorry and slipping. If true almost all stocks are fads and finding the “desert island” or ‘kids college” stocks is near impossible. So much for buy and hold. Will mother of all strategic mergerers CSCO ultimately fail? Heard Only GE remains from the 30 Dow stocks of 100 yrs ago. Spinning wheel keeps on turning.
Correct. Stocks share the same characteristics as people, brilliant over a short period, then fade into oblivion. Some make it big, while most tow the line of mediocrity.
If you think about it, most companies have flagship products, which they live and die by. It is rare to find true conglomerates that are diversified amongst various industries.
Do something and do it well.
razor blades
“Do something and do it well”.
So you are saying 10 perfectly executed and successful brain surgeries might be better than 400 total fuck ups in the long run.
Hey RC, I am getting a kick out of the Fly and Jake Giant.. They both have great points but I always prefered Biggie more than 2pac in the rap department.. lol.. I will call you tomorrow dude.. TTYL Bro… WHO DAT NATION baby!!!
As I mentioned in the earlier thread, I witnessed the awesome powers of the Keurig today at a car dealership…an experience not unlike what the Ancients must have had when in the presence of the Ark of the Covenant. Or Frodo near the Evil Eye of Sauron. It was piercing, calling, a force to be reckoned with. The Bells. THE BELLS.
I never trusted that coffee.
LOL. A+ for the multiple cultural mix metaphors.
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yeah, now if only da gints can continue an upside breakout we’d have a real Santa rally going.
Damn you Fly.
I was coming home to Melb. sitting in the Sydney airport lounge going through IBC on the iphone
I read this:
See folks, the market is not about what you and I believe to be true. It is about being an animal. You cannot “think normal” and make serious coin. Believe you me, all of those uptight money managers, who made a gagillion dollars in the market, those fuckers are 10 minutes away from losing their marbles for good. Successful people are not “normal,” as defined by Joey Stampcollector, over at engine house #10. They might walk around in their $10,000 overcoats thinking “hey, I’m soooo normal,” but they’re not. More often than not, they’re assholes, sociopaths of the first order.
I fucking cracked out laughing aloud unable to contain myself while drinking (a non-Green Mount) coffee . Lost control of the paper cup from the uncontrolled laughter and spilled the crap all down my shirt. Everyone’s watching me make a complete ass of myself as I went from hysterical laughter to screaming out in pain from the burning coffee and threatening to go over and kill the coffee maker for the loose lid.
had to go into the toilet with a change of shirt.
Fly, people thought I was a nutcase and its your damn fault 🙂
Good true words spoken in that post. Normal is being part of the herd. The herd always ends up getting their balls chopped off because they fail to think for themselves and see both sides
Sweet chart, Fly. I like how you put little arrows on it to really drive your point home.
word, but you’re still a asshole 😀
‘for the record’ JG is a fucking putz.
Thank you for your valuable input, spicy green Japanese condiment.
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All our problems are solved and utopia is on the way…………..just read on Al Gores internets that GS says 2010 will be a strong year…….who knew???
May I please suggest ,with deep concern of course . That you and Jake consider couples counseling .
I her it did wonders for Elton and his male friend
Do you subscribe to a special newsletter for that kind of information?
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Aem doing a little rip
The whole stock market is a farce.
Not to rain on the coffee party, but McDonalds’ coffee sucks. Sucks bad.
GMCR supplies this?
GMCR is the main supplier in the North East.
good debate. That’s what I like.
Ho ho ho
Companies come and companies go. But MARKETS TREND UP over time.
That’s why you buy Indexed Mutual Funds to “buy and hold” with half your investment capital.
You buy individual stocks to TRADE, looking for small 5% to 10% gains, using maybe one fourth of your investment capital. You keep another fourth in cash for the great “market opportunities” such as the Generational Bottom of Nov. 26, 2008; or the second Generational Buying Opportunity of March 9 2009.
When these happen you go “all in” with your 25% cash reserve so you are 50% invested.
You NEVER go in on margin and you never sell short. You go 40% in to individual stocks at the typical
3-4 year “market bottoms” and you hold till the market rallies 30-40%, then you reassume your normal
25% cash position and you resume TRADING individual stocks.
One other investing “twist”: When the long-term bond rate goes above 10% you put 25% of all your
money into ten-year treasuries, and get out of bonds when the rate drops to 5-6%
The market is easy if you are moderately cautious.
No fun
No fun, but pretty good advice.
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Bought some FUQI @ $17.08
Epic short-squeeze commencing…
Is this dude the best CEO in the world today?
http://maddmoney.net/jim-cramer-ceo-interview-video-ford-motor-nysef/
2 cents on the coffee broo-ha-ha
1) Whether or not the machine is a fad or not remains to be seen, there are plenty of examples of consumer products with staying power that actually changed the dynamics of their market including pushing the price point higher. Never underestimate how far the consumer will travel up the curve when you make mundane tasks more appetizing.
2) While coffee is traded as a commodity, in this context it is not so. McDonald’s is using Green Mountain for it’s brand not it’s supply chain or anything else under the covers. McDonald’s served it’s own coffee for decades but when they decided to go after the Starbuck’s/Dunkin Donuts segment they switched brands to increase their credibility with the “Sure I’ll pay $4 for a coffee” crowd. A decision to switch away from Green Mountain will carry with it consequences beyond which truck pulls up to the loading dock every week.
3) Companies are using these machines to save money by charging their employees for the cups. They attempt to hide this punch in the gut by touting the increase in quality over the stale pot of Folger’s we’ve grown accustomed to. Never underestimate a CFO’s appetite for cutting costs…..
I own zero shares of GMCR
I agree with your comments, Lemon, but at $129 a pop, you are likely seeing the highest price point (for that product) that you will ever see. The margins are too fat for someone to not take a crack at engineering around any IP. Granted, increased volumes will make up for lower prices.
I also think point number two is their best long term value — meaning their brand value. I also think the McDonald’s coup is well priced into the stock.
Well, I said the other day $71.90 is the logical next stop, at the near term 61.8% fib line. If it busts through there, we go all the way back to the recent highs, though ($79.23).
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Once you get competitors entering the market it’s even further from a fad and the market for high-end coffee makers is cemented. Then the next phase begins, although I can come up with nothing to enhance the current models there are engineers hard at work to add to the first generation in the hopes that consumers will fork over another $129 two or three Christmases from now. And on and on and on…..
No question the pop from McDonald’s is over, but as their fortunes in that space go so to does that portion of GMCR’s business and I am not inclined to bet against Micky-D’s. Every day McDonald’s is building that GMCR brand a little more and I’m guessing increasing their uptake on the corporate space.
I suck at investing in these consumer products (as evidenced by my zero share holding in the aforementioned company), so I’m not trying to get all preachy or anything. I just couldn’t bear to write another line of code at the moment so I decided to enter the pit.