Luck, Risk, And The Coca-Cola Millionaires Of A Tiny Town In Florida

How does a tiny town in Florida end up at one point with the highest concentration of millionaires in America? With one guy, one company, and a mix of risk and luck. The guy: Mr. Pat. The company: Coca-Cola. The risk and luck: the Great Depression and the recovery that followed. The lesson to learn is how luck and risk are two sides of the same coin – each existing outside of our control and exerting some influence over everything. Once in a while, when things work out, a place like Quincy, Florida gets a disproportionate share of millionaires.


Leading up to and then during the Great Depression, Florida banker Mark “Mr. Pat” Munroe noticed how dedicated people were to buying their Coke. Even in the depths of the depression, the consumption pattern stuck. On top of the economic problems, drama with the sugar industry and their bottling company had previously caused Coke’s share price to crash. An adamant Mr. Pat not only bought shares for himself but encouraged his friends and neighbors to buy some, even giving loans to depositors to make purchases. He was convinced Coca-Cola would not only survive, but thrive in time.


In the years that followed, 67 Coca-Cola millionaires emerged with significant fortunes that would pass on to their children and grandchildren. Mr. Pat was right. The bank where it all started still had about two-thirds of their trust assets in the stock as of 2015. It’s an amazing story, but if we’re actually interested in what went right and why we also have to be interested in what could have gone wrong. Enter risk and luck.


Mr. Pat made a gutsy investment call and the people of Quincy trusted him. The economy was in shambles, the markets were decimated, and he was asking people to take a risk with funds some of them didn’t even have (remember, he gave loans in a time when banks were collapsing). Coke’s durability obviously seemed like a reasonable argument, but the outcome was also out of anyone’s reasonable control too. Had it all gone bust, it’d be another unfortunate depression-era story. But it didn’t. Some people in Quincy took some risk and some of them got really, really lucky. 


The outcome surely exceeded anyone’s wildest expectations. No doubt there are plenty of stories lost to history of those who passed on Mr. Pat’s advice, or who listened to someone else and bought snake oil instead. So what lesson can we learn from what we know happened? 


Mr. Pat controlled for the risks that he could control for. He had some basis for his belief on why Coca-Cola would probably at least stay in business. That’s why, as Morgan Housel puts it, today people will pay risk managers to build risk models. The problem is, while these points hopefully protect us from the most negative outcomes, they can’t grant us knowledge of how positive the outcome will or could be either. Housel also points out that no one hires a luck manager or would take a luck model seriously. There’s simply a lot of mediocrity between “didn’t do something idiotic” and “got profoundly lucky,” and most of the time, mediocre without bad luck is just fine.


Mr. Pat and the people of Quincy are a testament to the power of risk, luck, and the lesser-but-very-relevant magic of compounding returns too. If we could purposefully recreate their scenario we’d all be rich. For ourselves and our clients, we have to mind the existence of both risk and luck as two sides of the same coin and stay humble. We don’t control the outcomes, we just do our best to pick the exposures we have and see where they take us.

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