Know The Town Of Secret Millionaires - Yusuf Bhandarkar from The Mumbai Multimedia Studio - The MMS

Pat Munroe's Town of Secret Coco-Cola Millionaires – A Shining Example of Long-term Investing

We have been reading of long-term investing for a few time now. So, we thought of sharing an amazing story that became a component of case studies for financial investors.

Before we share the story, here could be a Warren Buffet quote that sums up our sentiments exactly. "Only buy something that you’d be perfectly happy to carry if the market finish off for 10 years."

Our story began within the unknown town of Quincy, Florida within the middle of the nice depression in 1920. The story tells us how a comparatively community became one in every of the richest in America. Quincy is that the Secret town of Coco-Cola millionaires even today.

During the good depression banker, Mark ‘Pat’ Munroe found the townsfolk willing to spend their last cent on a relaxing glass of Cola even once they struggled to survive on a daily basis. Pat realized, despite the patron demand, brand image, revenues, and favorable market position Coco-Cola enjoyed, it absolutely was still trading not up to benefit the bank, and therefore the shares were cheap. So, he invested in Coco-Cola but didn’t stop there.

He advised his customers and neighbors to take a position within the company then hold onto the shares regardless of what happened. As a trusted banker, people followed his recommendations and acquired equity shares in Coco-Cola. He even offered loans to depositors who were willing to take a position.

Munroe strategy paid off. His idea of convincing the townsfolk to take a position and keep investing when the market was down; saved the town when the remainder of the U.S. was struggling to create end meets.

The Coco-Cola dividends helped new shareholders survive the downturn even when their crops failed and each financial condition at the moment. As a result, Quincy became the richest town per capita in America with a minimum of 67 residents called the Coco-Cola millionaires.

These millionaires amassed fortunes from these early shares and passed them on-to future generations. A visit to the current town and you may find several signs of Coco-Cola’s legacy over the years. The bank where this story began has Coco-Cola on display. As of 2009, the bank had a large 65% of its trust assets under management still invested in Cola.

Can you guess what proportion a 1919 share would be worth?

One share of Coco-Cola bought at $40 within the 1919 IPO is worth over $10 million, including dividend reinvestment. The investment would yield $270,000 in pre-tax cash dividends, sent to investors quarterly. These earnings were six fold the typical American earnings. Amazing what long-term investing can do for you. Remember -the magic of compounding is at play here.

What was different about Quincy?

In Quincy, the residents ignored the securities market volatility completely. They focused only on the profits Coco-Cola generated and also the percentage of that profit distributed as dividends.

The people continued to shop for the stock as long because the profits and dividends increased annually and there was no change within the competitive position of Coco-Cola. But they didn't sell the shares -a staggering 102 years since the general public offering in 1919. This growth is what the phrase 'it only takes one good idea in life to urge rich means.

How does this story help YOU?

We have only a few stories like Pat Munroe town of Quincy and its millionaires in India. A shining example is Wipro Ltd, which has generated returns better than Coca-Cola but finding the first shareholders apart from the promoters today isn't easy. Stories of how Rs. 10,000 invested in Wipro pre-independence has grown multi-fold, while the dividend income is multiple times the initial investment, is lost within the drama of buy and sell calls put out a day.

Wealth creation is feasible on condition that you concentrate on long-term equity investments.