Risk Rewards of finding the next Pepsi

I have always found Pepsi to be in interesting example of a good way to invest in the stock market. If you bought Pepsi in 1980, you would be being buying the stock on a split adjusted cost of under $1 dollar. That <$1 dollar investment would be worth $166 dollars today not including dividends.

Lets say you bought $1,000.00 dollars worth of pepsi back in the 1980s. That thousand would be worth $166K today. Not super exciting for a 40 year investment, but if you reinvested the dividends now that $1k investment is worth over a million. That’s a risk reward ratio of greater than 1000 to 1. That means you can invest in 1000 individual stocks and if all of them fail but you find one Pepsi you will make money.

Thats the power of investing in the stock market. You don’t have to be right on every stock, but buying small amounts of companies you believe in can pay off over a long period of time.