OT - it won't lasts long

whatever company you buy it probably won’t be around for long


using a statistical technique called survival analysis, Daepp and her mentors discovered something no one had predicted: a firm’s mortality rate – its risk of dying in, say, the next year – had nothing to do with how long it had already been in business or what kinds of products it produced.
“It doesn’t matter if you’re selling bananas, airplanes, or whatever,” Hamilton says – the mortality rate is the same. Though the number, of course, varies from firm to firm, the team estimated that the typical company lasts about ten years before it’s bought out, merges, or gets liquidated.

considering the exponential increase in technology with ever more frequent disruptive innovations, the lifetime of most companies will probably get even shorter in the future.
Which alters my ideas on long term (decades long) investing. Mostly I limit that to index based ETF. Or real property.

bought out, merges, or gets liquidated

I would think that merging or getting bought out is by far more common when investing in companies that have strong balance sheets and a strong market position. I’m not concerned that any companies that I own will get liquidated without a fair amount of advanced warning.


1 Like

“Creative destruction.” Joseph Schumpeter uttered the phrase over 70 years ago. That’s how capitalism works. But more important is how companies grow before they die. Buying too early is risky because the company might not make it. Buying too late you miss the best part but that’s were you find “value” stocks – which aren’t necessarily the best values. The best time to own a stock is catching the fast growth in the middle.

Denny Schlesinger

1 Like