Earlier today I was giving a keynote presentation to the Private Banking division of Wells Fargo in Minneapolis. As usual, I discussed the accelerating rate of change among a variety of technologies. To help put this acceleration in some perspective for my audience, I shared this little tidbit from Stephen Waite’s excellent book, Quantum Investing. In it, Waite explained how at the beginning of the 20th Century the average tenure of a company listed on the S&P 500 index was 46 years. By the year 2000, the figure had plummeted to 10 years.
To my knowledge no new figures have been compiled but I believe it is safe to say the average tenure has only grown smaller in the past decade. Moreover, it is likely to continue its downward trajectory. In other words, as Waite speculates, this implies that by 2020 more than half of the companies currently listed on the S&P 500 index will be gone-baby-gone.
Of course, this shouldn’t really be news to anyone. After all, more than 2500 years ago, it was the Greek philosopher Heraclitus who said, “The only constant is change.” To put a modern spin on this quote, I’d just add, “It’s the rate of change, stupid.”
