It Would Have Been Better to Buy Beer and Recycle the Cans Than to Buy Nortel, Worldcom, and Enron a Year Ago-Truth! & Fiction!
Summary of eRumor:
In a unique argument to buy beer instead of stocks, the eRumor says that $1,000 invested a year ago in Enron, Worldcom, and Nortel would have been worth only about $5 to $50. But buying $1,000 of Budweiser and recycling the cans in the state of Maine would have resulted in more than $200.
The Truth:
It depends on what months the writer of the eRumor was comparing for the three stocks, but according to our figures, the Budweiser would have been a lot better investment than Enron, but not as valuable as Worldcom or Nortel. Also, we could not find facts to support the conclusion that $1,000 worth of recycled Budweiser cans would have brought $214.
Here are some of the details assuming the eRumor started circulating in June:
Enron
Was about $54 per share in June of 2001 so $1,000 would have purchased about 19 shares. By June of 2002, the price was about 16 cents per share so the $1,000 investment would be worth about $3.
Nortel
Was about $14 per share in June of 2001 so $1,000 would have purchased about 71 shares. By June of 2002, the price was about $1.60 per share so the $1,000 investment would be worth about $114.
Worldcom
Was about $18 per share in June of 2001 so $1,00 would have purchased about 56 shares. By June of 2002, the price was about $1.41 per share so the $1,000 investment would be worth about $79.
The Budweiser Beer Can Index
According to a 711 and Bangor and a market in Augusta, the price of a can of beer in Maine is between $1.00 and $1.10. That means that $1,000 would buy between 900 and 1,000 cans of Budweiser. The writer of the eRumor says those cans would be worth $214 if recycled at 10 cents per pound, which is 2,140 pounds of cans. We didn’t find how many beer cans can be crushed into a pound of recycled aluminum but a manufacturers group says that a pound of aluminum can be used to make 34 cans. The number of cans per recycled pound would be a lot less. Using 34 cans as the measurement, however, means that 900 to 1000 cans would result in 26 to 30 pounds or about $2.60 to $3.00 worth at 10 cents per pound. We checked with a couple of recycling centers in Maine who said that in August, 2002, the price per pound of recycled aluminum was 27 cents per pound so the value of the 26 to 30 pounds would be between $7 and $8. It’s all academic, however, because most recyclers don’t accept aluminum cans, only other kinds of scrap aluminum. In Maine, however, bottles and cans can be redeemed at local stores for five cents per unit so the $1000 worth of Budweiser cans would be worth between $45 and $50. That’s better than putting the $1,000 into Enron a year earlier and not as good as having invested it in the Worldcom and Nortel stocks.
Last updated 8/12/02