Changing with the Times

Have you or anyone close to you gone through a late in life career change?  I’m not talking about a job change, but a career change.  You spent 25 years working for a bank and now you run a kitchen remodeling company.  You taught elementary school for 30 years and now you bake cupcakes out of your kitchen for weddings/graduation parties.

What are the chances that the skills needed for the new career suddenly blossomed at age 55?  For decades you enjoyed baking and everyone told you that you should sell your cupcakes…and one day you decided that you agree – and you took the leap.  And while you began by selling to your friends and former co-workers, it didn’t take long before they were referring others to your website.
Sounds easy, doesn’t it?  But anyone who has lived through this change knows how challenging it is to create success in a new career after decades performing other work.  There are the emotional costs of leaving security (salary, title, desk) behind.  There is the fear of failure and losing touch with co-workers who may feel like family.  And there is the actual $ costs of starting a new business. 

This is true for large, publicly traded companies and even countries.  We are seeing the effects of this as the world adjusts to both new governments and life after COVID.  As investors, we need to be aware of both the challenges and potential rewards when buying into these opportunities.
Here are two examples:

In June of 2024, The Detroit News reported that GM reduced its 2024 EV production goals by at least 50,000 units.  This was while the Biden Administration and certain states were still pushing for the eventual elimination of gas-powered vehicles.  The reduction in production was due to a variety of reasons – consumer demand, production costs, and a potential change in government policies (which ended up happening when Donald Trump won November’s election).  As an ecologically aware investor, this may disappoint you.  As an investor more concerned with profitability, this would excite you.  At the time of the announcement, GM shares hovered around $48/share.  As of 2/25/2025, GM’s share price is $46.  This is an example of a company attempting to change its identity from 100+ years of gas powered to electric vehicles in a relatively short time.  And it turned out that its consumers were not completely ready for the change.  But just when the investors could get ready to cheer (November 2024 share price high of $59.63), President Trump began to create tariff uncertainty that exists today.  GM has a lot of upsides, and a lot of potential downsides.

Starbucks is one of the most well-known companies in the world, and it seems to exist on every corner.  For a company that theoretically sells a commodity (coffee), it has had decades of growth and is woven into the fabric of the coffee drinking world.  The company had explosive growth in employees and physical locations throughout the early 2000’s and expanded dramatically overseas as well.  When COVID hit, the stores were shut down for almost 5 months and opened up to drive thru business in June of 2020.  In July of 2020, Starbucks’ stock price was $126/share.  Only 4 ½ years later, the company announced layoffs of over 1100 employees as it restructures the company and menu.  The change in momentum comes from multiple issues.  First, the company’s locations went through multiple changes over the years from a place to get a cup of joe to political hotspots, from a quick stop for a drink and a pastry to a workspace, and from employing college students to being organized by labor unions.  Second, consumers in other countries began frequenting companies that were more in tune with local tastes – China is a country that had a significant reduction in revenue for Starbucks.  Finally, the inflation that hit the US had an impact on how much consumers were willing to pay for a coffee.  How will Starbucks look after trying to return to its roots?  Will this be a boom or a bust for investors?
​
In business, as in life, change is constant.  As an investor, you must be aware of the potential opportunities and pitfalls of companies.  It’s not enough to look at current or historical returns.  Evaluate why those returns occurred and does the risk involved in achieving those returns match your tolerance.  Let us know what questions you have about individual investments.  Let us do the research and help you make decisions.  There’s nothing wrong with a company making a leap of faith and changing their business.  The question is whether you want to leap with them.
 
Written by Sean Budlong, CFP®, AAMS, Chief Executive Officer, Majestic Financial, Financial Consultant, RJFS
 
Disclosures: Any opinions are those of Sean Budlong and not necessarily those of Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct