Comment by rybosworld
2 years ago
This phenomenon also explains some others that may or may not be surprising:
1. Founder led companies have higher returns. And it's by A LOT. Hard to quantify exactly but, I've seen quoted numbers as high as 20% outperformance for founder led companies.
2. The biggest corporations never remain the biggest. Where is the Dutch East India company today? More recent examples: IBM was overtaken by Nippon Telephone, was overtaken by Exxon Mobil, was overtaken by GE, was overtaken by Microsoft etc.
3. It's not very common that a company stays in the S&P 500 for more than 30 years. The average lifespan is 21 years.
The common thread is that as soon as the sociopath MBA's take over, they Boeing the whole business.
>IBM was overtaken by Nippon Telephone, was overtaken by Exxon Mobil, was overtaken by GE, was overtaken by Microsoft etc.
And where is GE these days? They even sold off their consumer appliance division to the Chinese company Haier. They still make jet engines and some other big industrial stuff, but they're not as huge as they used to be.