Editor's note: The following is a fictitious account written by the author. However, all the dollar figures and returns are consistent with the actual performance of the stock discussed.
In February 1912, Glon and Thros Mert, fraternal twins of Scandinavian immigrants, were born at an Atlanta hospital. The Mert family didn't live an extravagant life by any means: Mrs. Mert was a stay-at-home mom, while Mr. Mert worked for the local Coca-Cola (NYSE: KO ) headquarters. Though their life was modest, both parents were very proud of what they were able to give their children.
In 1920, a year after they became available for purchase on the stock market, Mr. Mert bought two shares of Coca-Cola -- one for his daughter, Glon, and one for son Thros. They were $21 each, and Mr. Mert was determined to reinvest any dividends the stocks produced. The children would be able to gain control of the shares upon their 18th birthday.
The Great Depression
The Roaring '20s progressed nicely for the family, and by mid-1929, Glon and Thros were starting to make plans for their post-high school lives. Then, in October, things changed. On Black Friday, the stock market went into an absolute freefall, and the country plunged into the Great Depression.
By the time the children's 18th birthday came around in February 1930, it was clear there was no hope for a quick economic fix in the country. Thros decided it was time to sell his shares of Coke -- which now numbered three. After a long talk with his father, Thros was persuaded to sell just one share. He collected $182 when he sold, an amazing 2,500% return in just 10 years.
Glon wondered why Thros, who was lucky enough to have a steady job lined up after high school, would do such a thing. But she kept her thoughts to herself, hoping to save the three shares she owned to help pay for a house in the future.
Post-World War II
Fifteen years passed quickly. Glon got married, had kids, got a job teaching at the local middle school with her husband, and lived a modest existence in rural Georgia.
Thros was doing well, too. Following the war, he had moved to New York City, was married with kids, and had a job on Wall Street. Thros, however, was living well above his means, trying to keep up with the latest styles from Madison Avenue.
In October 1945, after listening to a report about how Coke was bound to face stiff competition, Thros decided to part ways with half of his remaining shares. The payoff was great -- just over $2,000.
Thros phoned Glon and tried to persuade her to do the same. "Coke's amazing run is over, Sis," he said. But in the end, Glon's day-to-day experience in rural Georgia told her that Thros' information just didn't make sense in the real world, and she held her shares.
Old age creeping up
Fast-forward another 40 years to 1985. Glon and her husband, both 73, still lived in rural Georgia, grandparents to seven young ones. Thros lived in Georgia now, too -- though it was not by choice. His extravagant lifestyle had by then caught up with him. When he ran out of money in the mid-1970s, his wife ran out of patience.
He had since remarried and was living comfortably -- but not extravagantly -- near his sister and other relatives. One late August day, Thros was sitting on his porch with a friend, reading the newspaper. He came across a quote for Coke's stock price, did a little back-of-the-envelope math, and realized his remaining shares were worth a whopping $93,000!
"That's amazing," his friend said. "That's a return of 1,328,471%. You'd better cash that out; only a fool would risk losing that." And that was all the convincing Thros needed.
Thros called Glon and told her it was time to sell. Finally, Glon had had enough: "Thros, you have absolutely no need to do that. Your family is all taken care of, and you're not going to put that money anywhere useful."
"Yes," Thros said, "but think about it: My remaining third comes from an investment of just $7 by Dad. It's up more than 1,000,000%. I'd be stupid not to sell!"
"Unless you need it, or you've got better places to put it, the only stupid thing to do would be to sell it," Glon shot back.
Thros, of course, sold his shares.
Sadly, Thros has since passed away. But Glon is still alive and kicking!
Recently, on the occasion of her 100th birthday, I had a chance to talk with Glon. We discussed a lot of things, but when I brought up Thros and the shares of Coke, here's what she had to say:
Thros just didn't get it. First, he sold his shares because they were down and everyone else was doing it. Then, he sold when he heard a report telling him to. Finally, his friend convinced him that since it had gone up so much, he had to sell his remaining shares. He never actually thought for himself about it.
Glon admits she's sold a few shares -- they helped finance the education of her children, grandchildren, and great-grandchildren. Other than that, she hasn't touched them. I asked her if she knew how much her father's original $21 investment was worth today had none been sold. She slipped me a graph she'd prepared beforehand, knowing I'd ask about it.
Source: Coca-Cola Investor Relations.
Source: Coca-Cola Investor Relations.
"Almost $9.3 million," she said with a smile.
"Not that we need it," she added as she gestured to the guests gathered in her honor at the same house she'd lived in for more than 70 years.
Clearly, Glon Mert's long-term thinking trumped Thros Mert's short-term thinking approach. If you're ready to start your own investing journey, read a special retirement report that promises to help get you started.