New Companies Vs. Old

A study by McKinsey found that the average life-span of S&P 500 companies has fallen from 61 years in 1958 to less than 18 years today. McKinsey predict that, by 2027, 75% of the companies currently included in the S&P 500 will have disappeared.So, What happens to these companies? Well, many will be bought- out, merged, and some will even go bankrupt like Lehman Brothers and Worldcom did. Some companies keep on going. General Electric, Exxon Mobile and Procter & Gamble are among the oldest large companies listed on the New York Stock Exchange. It is worth noting though, that age does not necessarily make a company any better. In fact, evidence from the stock market indicates that age is quite possibly a hindrance. Of the companies that have stayed in the S&P 500 for more than 60 years, only a minority have managed to beat the average over time. It is worth noting that the biggest companies today are quite young, companies like Apple, Microsoft, Amazon, Alphabet and Facebook. If the S&P 500 was made up only of the companies that were part of the index sixty years ago, overall index performance would have been around a third lower.In Todays video we compare young vs. old companies and see if there are any lessons we can learn from the oldest companies in the world.Patrick's Books:Statistics For The Trading Floor:  https://amzn.to/3eerLA0Derivatives For The Trading Floor:  https://amzn.to/3cjsyPFCorporate Finance:  https://amzn.to/3fn3rvC Patreon Page: https://www.patreon.com/PatrickBoyleOnFinanceVisit our website: www.onfinance.orgFollow Patrick on Twitter Here: https://twitter.com/PatrickEBoylePatrick Boyle YouTube  Support the show