Coca-Cola’s Magical New Sweetener Might Have A Serious Problem: Its Taste – So What?

Note to subscribers: Sorry for the strange posts that went out yesterday, the site was probably hacked to send those out. I think it’s fixed.


The magical sweetener tastes fine to me; it’s as good as any other non-caloric sweetener I’ve tried. Maybe not as good as sugar. But then I have a bias towards zero calorie drinks that do not cause massive headaches and that do not make me worry about cancer… Or just give me sugar. The Coca-Cola product ZERO Vitamin Water tastes better than water, the other option that won’t make you fat and kill you. (So stop complaining!) ~ Ilene

p.s. The Market Shadows’ Virtual Value Portfolio is long shares of Coke (KO) and we sold several put options in the Virtual Put Selling Portfolio.

Coca-Cola’s Magical New Sweetener Might Have A Serious Problem: Its Taste

By  at Business Insider

Coca-Cola recently released a new product, Coke Life, intended to please anti-sugar consumers who are wary of artificial sweeteners like aspartame. The magic ingredient? Stevia: a calorie-free sweetener derived from plants.

But while large companies are just starting to warm to the alternative sugar replacement that has long been a mainstay in the supplement aisle of health food stores, it might not be ready for prime-time.

Stevia hit the U.S. sweetener market in 2008 under brand names like Truvia and Stevia in the Raw (made by the manufacturer of Sweet’N Low), and it has been used to sweeten specialty drinks like Zevia for years. Now major beverage companies like Coca-Cola and PepsiCo are banking on stevia as the perfect natural sweetener solution for a calorie-conscious consumer base that is also increasingly concerned with natural ingredients, as The New York Times Magazine reported.

But stevia is receiving pushback from customers. As we recently reported, fans of Vitaminwater took to Facebook to protest the use of stevia in the company’s products, complaining it tastes like “chemicals” and “cough syrup.” (Vitaminwater is made by a subsidiary of the Coca-Cola Company.)

Food scientists have been working for years to try and engineer both the plant and its chemical compounds in order to tweak the taste. The holy grail? A soda that tastes good — and is perceived as both healthy and “natural.”

What Exactly Is Stevia?

In its natural form, Stevia rebaudiana is a leafy green plant found in Paraguay and Brazil. It has been used in those regions for hundreds of years as a sweetener and also “as a treatment for burns, colic, stomach problems and sometimes as a contraceptive,” according to LiveScience.

Keep reading: Coca-Cola’s Magical New Sweetener Might Have A Serious Problem: Its Taste

Hunting for Tennis Balls and Dead Cats

Wade Slome, President and Founder of Sidoxia Capital Management, discusses what to look for when deciding whether to invest in a stock that has sold off from irrationally high levels. Identifying such opportunities is what we do in our Market Shadows’ virtual portfolios. Whether buying a stock outright (Virtual Value Portfolio) or selling puts on a company (Virtual Put Selling Portfolio), our initial stock selection is based on an assessment of the company and a search good prices. ~ Ilene

Hunting for Tennis Balls and Dead Cats

Courtesy of Wade of Investing Caffeine



When it comes to gravity, people understand what goes up, must come down. But the reverse is not always true for stocks. What goes down, does not necessarily need to come back up. Since the 2008-09 financial crisis there have been a large group of multi-billion dollar behemoth stocks that have defied gravity, but over the last few months, many of these highfliers have come back to earth. Despite the pause in some of these major technology, consumer, and internet stocks, the overall stock market appears relatively calm. In fact, the Dow Jones Industrials index is currently sitting at all-time record highs and the S&P 500 index is hovering around -1% from its peak. But below the surface, there is a large undercurrent resulting in an enormous rotation out of pricier momentum and growth stocks into more defensive and yield-heavy sectors of the market, like utilities and real estate.

To expose this concealed trend I have highlighted a group of 20 stocks below, valued at close to half a trillion dollars. Over the last 12 months, this selective group of technology, consumer, and internet stocks have lost over -$200,000,000,000 from their peak values. Here’s a look at the highlighted stocks:

Tennis Ball Dead Cat FINAL 5-14

With respect to all the punished stocks, the dilemma for investors amidst this depreciating price carnage is how to profitably hunt for the bouncing tennis balls while avoiding the dead cat bounces. By hunting bouncing tennis balls, I am referring to the identification of those companies that have crashed from indiscriminate selling, even though the companies’ positive business fundamentals remain fully intact. The so-called dead cats reflect those overpriced companies that lack the earnings power or trajectory to support a rebounding stock price. Like a cat falling from a high-rise building, there may exist a possibility of a small rebound, but for many severely broken momentum stocks, minor bounces are often short-lived.

For long-term investors, much of the recent rotation is healthy. Some of the froth I’ve been writing about in the biotech, internet, and technology has been mitigated. As a result, in many instances, outrageous or rich stock valuations have now become fairly priced or attractive.

Profiting from Collapses

Many investors do not realize that some of the greatest stocks of all-time have suffered multiple -50% drops before subsequently doubling, tripling, quadrupling or better. History provides many rebounding tennis ball examples, but let’s take a brief look at the Apple Inc. (AAPL) chart from 1980 – 2005 to drive home the point:

Apple 1980 - 2005

As you can see, there were at least five occasions when the stock got chopped in half (or worse) over the selected timeframe and another five occasions when the stock doubled (or better), including a +935% explosion in the 1997–2000 period, and a +503% advance from 2002–2005 when shares reached $45. The numbers get kookier when you consider Apple’s share price eventually reached $700 and closed early last week above $600.

These feast and famine patterns can be discovered for virtually all of the greatest all-time stocks. The massive volatility explains why it’s so difficult to stick with theses long-term winners. A more recent example of a tennis ball bounce would be Facebook Inc (FB). The -58% % plummet from its $42 IPO peak has been well-documented, and despite the more recent -21% pullback, the stock is still up +223% from its $18 lows.

On the flip side, an example of a dead cat bounce would include Cisco Systems Inc (CSCO). After the bursting of the 2000 technology bubble, Cisco has never fully recovered from its $82 peak value. There have been many fits and starts, including some periods of 50% declines and 100% gains, but due to excessive valuations in the late 1990s and changing competitive trends, Cisco still sits at $23 today (see chart below).


It is important to remember that just because a stock goes down -50% in value doesn’t mean that it’s going to double or triple in value in the future. Price momentum can drive a stock in the short run, but in the long run, the important variables to track closely are cash flows and earnings (see It’s the Earnings, Stupid). The level and direction of these factors ultimately correlate best with the ultimate fair value of stock prices. Therefore, if you are fishing in the growth or momentum stock pond, make sure to do your homework after a stock price collapses. It’s imperative that you carefully hunt down rebounding tennis balls and avoid the dead cat bounces.

Wade W. Slome, CFA, CFP®

Plan. Invest. Prosper.

DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients hold long positions in certain exchange traded funds (ETFs), AMZN, long NFLX bond, short NFLX stock, short LULU, and long CSCO (in a non-discretionary account), but at the time of publishing SCM had no direct position in TWTR, GRPN, YELP, ATHN, AVP, P, LNKD, BBY, ZNGA, WDAY, WFM, N, SSYS, JDSU, COH, CRM, FB or any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC Contact page.