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Unformatted text preview: ing other factors that contribute to the value of a coffee or cola company, the firm cannot justify its recommendation. Secondly, the argument fails to account for the timing of the increase in coffee consumption. Perhaps the population will age dramatically during the next five years, then remain relatively flat over the following 15 years. Or perhaps most of the increase in average age will occur toward the end of the 20 year period. An investor has more opportunity to profit over the short and long term in the first scenario than in the second, assuming the investor can switch investments along the way. If the second scenario reflects the facts, the firm’s recommendation would be illfounded. Finally, the firm unjustifiably relies on the studies that correlate coffee and cola consumption with age. The firm does not provide evidence to confirm the reliability of the studies. Moreover, while the phrase “studies suggest” may appear to lend credibility to these claims, the phrase is vague enough to actually render the claims worthless, in the absence of any information about them. In conclusion, the firm shoul...
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- Spring '09