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For SPY, or the U.S. market, we have to pay time even if we don't want to pay efforts and stresses. Buffet, who is a value investor and does not care about the stock prices, can beat the SPY. I might not be an investor like him, but I can keep the money safe.
The fact people keep calling it Facebook despite the change to Meta shows how bad of a marketing decision it was. The name became so ingrained in society they thought they could just change it on a whim.
One of oldest publicly traded companies in the world is The Hudson's Bay Company (AKA the Bay). They once defacto owned most of North America. Today they do okay as a department store and still hold a lot of land, but yeah a far cry from its height.
The "hot hand fallacy" only really applies in business when considering profits. When considering longevity it is actually totally reasonable to expect an old company to outlast a young one. This is because of the sort of people who will be drawn to work for an old established company versus a "young dynamic" company. The former will inevitably be far more risk averse. This might well lead to a slow decline but is unlikely to see the sort of decision that might ruin the company next year. In short we expect to see less volatility in old companies.
Plus, If a company survives for a long time, the chances that it has some characteristics that contribute to such longevity is high, compared to a new startup
Yeah, that was my one criticism about the title of this video and mentioning such a fallacy. What if the owners don't care about massive profits and just want to offer a consistent product/service? No, that might not be a company worth investing in, but it has value and merit and deserves to still exist. It's admirable, sounds like the people there (usually family-run) are just doing what they enjoy and saying screw it to the rat race. I can appreciate that.
The idea of "hot hand fallacy" is itself very reductive, falling to an even bigger fallacy that I just call the fundamental statistical fallacy. Maybe you will discredit me because I don't have a history of making correct summaries like this :^) Basically it's the human tendency to go for statistics, and ASSUME that there's not REAL statistical gradient, that CORRECT way to bet 90/10 is to the chance of the 90. But that is not how statistics work, that is how DETERMINISM works, acting like you GET to try and try again until YOU get it right most of the time. In reality, if you fall into the 10, it is GUARANTEED to fail the 90, because it's NOT 100/0, it's not 80/20, it's THAT outcome. In practice, if a player makes three hoops in a row, the likelyhood is that TODAY is their day, they're on top of their game, there's low wind or noise, anything, but you're dealing with REAL WORLD EXCEPTION and NOW is the MOMENT to bet. If you have a leukemia with 99/1 chance, guess what you don't BET on not having leukemia, you DO HAVE leukemia. And giant, long-standing corporations are not enterpreneurships, that follow the "rules" of idealized economics texts. They WRITE them and they get to break them.
@@BewareTheLilyOfTheValley THose people already won the rat race, tho. A successful family business will last you for generations. You don't need to be the top dog to actually win the race, tbh
The book "Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies" goes (as well) over the point of longevity of companies. An incredibly interestin read!
This is just an obvious consequence of the senior people not wanting to be unemployed with a bankruptcy on their CV. There is no organization, only people.
You also have to remember what industry certain older companies specialize in. An older company like Hershey isn't going to be a high flying stock like Microsoft or Amazon but it's a leader in its specialty (chocolate). The other way they may survive is by either creating new products or by buying other existing companies in their niche. In this case Hershey bought out Wrigley (the gum company). Mondelez is a spinoff of the Kraft foods division which bought Nabisco from RJ Reynolds, the tobacco company. Kraft made some money from Nabisco but decided to focus on their cheese and condiments business while creating Mondelez to focus exclusively on snacks. Meanwhile, Church and Dwight has been around for over 150 years selling their signature brand Arm and Hammer.
@@devinmcmanus specialised, yet generally needed things aren't gonna disappear over night. Brooms gonna remain brooms, there's little need to reinvent. Even if you reach absurd levels of modernty, a hammer will still be an invaluable tool regardless of if you're fixing a barn or a whole darn robot.
The reason people like old companies isn't because they are old companies, it's because people like to invest in companies that are proven to have a secure economic and competitive advantage within their industry, and a tell-tale sign of such companies is their ability to generate profits year after year despite competition. The fact that they have inefficiencies means they have even more room for growth.
@@trappart9209 The better the systems, the better the results (profits). Calling something an inefficient system implies a more efficient system exists. The issue is most companies that get "too big to fail" become too arrogant to accept their flaws. Meta's PR strategy has been a major flop. Had Meta followed better systems, it wouldn't have been. Imagine where they would be if they had positive PR rather than negative PR. That's one huge area with room for growth.
@@devinmcmanus no. The existing successful products like second life and imvu demonstrate that the product is something that is viable. Facebook should have had a big advantage since it can use Facebook to encourage it's use, as it does with its marketplace, video calling and messaging services, meta failed because it's implementation was severely lacking.
@@BastiatC the issue is IMVU and Secondlife let you do mostly whatever you want and are already established with abilities for content creators to get paid. Metaverse would be nothing like that at all.
Reminds me a little of the gaming industry and it's seemingly endless need for growth. It's been a well growing industry for a while, but it feels like investors expect there to be infinite people willing to jump into games when there's obviously not. Rather than improving existing products they're always looking to draw a wider net which has led to worse and worse experiences for many of them. Or I could have entirely misunderstood this video and they're not alike at all. Just feels like similar situations in a broad sense.
Less about casting a wider net, but more staying on the tail of the newest trend and squeezing the ever loving fuck out of it with Microtransactions before then rushing it out half-baked. games take a handsome development time depending on the type, but still are quicker to develop than say, a car. It falls under tech, and tech is just idea stealing, hype chasing and the one innovation that causes the former two. I wish gaming wasn't regarded as just another money pot by those money sacks...
@@Gearsio Many of which don't get the recognition they deserve. Among a sea of them, it's hard to find the gems, unless the whole internet is singing their praises, i guess.
Facebook pissed every content creator off when they stopped showing business pages to every fan who liked it and required paid ads instead to show it to anyone.
@@spicychad55 MySpace lasted less than 2 years before Murdoch bought it and it basically suffered its first death when Murdoch sold it for $35 million in 2011 when MySpace was 8 years old.
I think you're underselling longevity. Sure just shopping around for companies with _past_ longevity isn't going to be a great way to earn big bucks. But if I knew ahead of time if a company would last 30 + years from now without diluting its stock by issuing more to raise money (in other words if I knew _future_ longevity) I'd probably be rich in a decade even if that meant I got a few Kongo Gumis and missed out on a Facebook now and then. Granted, most outsiders (and probably most insiders) don't know the future longevity of their own company. But it's not a bad thing, it's just that past results are no guarantees of future returns. By the way, a good foul shooter is more likely to be on a 15 successful shooting streak than a bad foul shooter, so the streak for sports players, while probably overrated by fans, actually gives more information than streaks in stock prices.
I wish that more people knew/remembered that originally corps were intended to have a limited life intended to complete a project ot set of projects, then gracefully die off again.
Send me informations about it, cause it sound like something that could be true, and for sure would be good in most brands, cause a lot of companies are literally selling us stuff we don’t need and cause of that we are waisting those precious resources for nothing.
The biggest failure for Instagram are its horrible search feature, terrible commenting tools, and rampant bots. Other then that, it’s actually a great social media platform, but I think those three items hinder it’s growth. Also, TikTok is doing it better.
I think the problem is that these days big companies have a TON of patents and IPs that makes it hard for them to fall or for their work to be iterated as no one would let them expire. Disney is one thing, but there's also how software, code, and designs can be registered and restricted -- see how video games cannot iterate on ways to circumvent loading time tedium due to old patents.
meh... that isn't a good example / the real issue for most big companies to stay around just comes down to a barrier to entry for new competition... eventually over time its normal for a successful company to buy out a competitor if they want to leave the market... the companies that have a hard time doing this are more or less publicly traded companies as they are visible but there are industries that have private companies that have been around a long time... say industrial equipment -- HVAC and the like the cost to compete efficiently in those areas requires a lot of capital but that capital is hard to gain interest when its already an old industry because over time there are few advancements that can be made for improving how to move air..... this is why tech companies are considered worth more for investment due to the fact that tech is constantly changing
Family-run businesses make this even more complicated. Such a businesses are rarely successful over multiple generations for a variety of reasons. There are exceptions to this though. If the family members are successful on their own and don't have much interest in the business they can be absent owners choosing instead to have someone or another entity run the business ( my father is in the process of doing this with his business as neither I nor my sister has any interest in the 40-year-old company).
That japanese company must have immense cultural significance. I think you missed the part where it could be a marketing move, and of course, just a wish to not see that company die.
It boggles my mind just how stupid Facebook is by betting so heavily on the metaverse. The best explanation I can think of is that they think they can will it into relevance by using their sheer size.
The swedish Riksbanken shown as one of the oldest companies isn't a company but Sweden's central bank. A gouvernment agency. Same can be said for the norwegian postal service for much of it's history.
he compares here the oldest companies with the most profitable ones, but not with all new companies. Under no circumstances should you underestimate a reliable and long-lasting investment and bet everything on the short-lived and risky.
As someone else pointed out you are underselling longevity. The company that has been around for 100 years has much higher chance of surviving the next 20 years than a company that has been around for 5 years.
I mean yes but we’re missing the broader message. Past longevity can be an indication of whether you will still own the stock in 20 years and gain from its valuation although there is no guarantee. Past longevity is no indication of whether or not you could make the same if not more investing in a company that is in a high growth field and has solid bases for business and sustainable growth. TLDR: look at numbers, strategies and market forecasts for the industries you’re going to invest in. Not necessarily past longevity.
I feel like it would be better (ie in an ideal world) if companies as they start to reach their growth threshold, start working on optimizing what they do, cutting administrative bloat, and finally work on buying back stock from investors to take the company private. I can see where a worker directed enterprise would have the incentive to do this, while the standard executive model has more incentive to try to keep “Frankenstein’s monster” per say, running until it’s last breath. Realistically though, it makes sense that businesses will reach a growth limit. A business however not growing shouldn’t necessarily be considered a bad thing (especially if it’s revenue is net positive)
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Facebook started out dull and is ending with angry grandmas. You be better off starting a new social media network which is just simply a shared calender . It would just show you what's on in your town or state, send you reminders and link to other platforms. The news feed is now just pointless and the advertising is mostly scams and bullsh*t.
the average company should not last forever. exceptionally good ones should. same deal with individual people. this however is an ideal, not something immediately practical.
Hot hand fallacy is not fully falatious. A person shooting dry will need a few shots to get a feel of the ball and distance. There's a higher likelihood of making consecutl baskets rather than just the first shot.
Yeah, Nate Silver is a good one on the topic. Having a background in both sports and statistics he's able to separate which is statistical anomaly and which is situational. Eg. If I was guarding Curry he's going to shot much better than his usual 43% because of open looks and poorly contested shots. There's a psychological effect to in many sports when you feel you're on a cold streak. The difference between consciously trying to do something like shot and going though it from muscle memory is night and day. Edit: the use of free throws in the video is a good example however.
Now lets think about governments like companies, the only difference they should seek not profit, but comfort of citizens. As I understood from the video the main problem for old companies is bureaucracy. But that's the one of the first things coming to mind when one thinks about gocernments.
So you're saying that eventually all businesses - even the most long lasting and stable - will eventually faulter to the point a new startup can take considerable market share away from them? This is eye-opening as I had operated under the assumption that the business opportunities are ever decreasing as new companies occupy new markets. As in - soft drinks/social media exist, so good luck being the next Coca Cola or Facebook. I guess Pepsi (in the 80s) and Tik Tok prove this is not the case
The modern day economy desperately needs to evolve. Not entirely unlike how agriculture had to evolve to keep up with the expanding human population. We need an economic analog to the idea of crop rotation in our society
I don’t see how it’s a negative for a company to function sustainably without going public or taking huge risks. They provide a service to their customers and long term jobs to their employees. Honestly I think one of the most harmful aspects of the modern economy is this incessant need to grow grow grow no matter what to please investors every quarter that are way more focused on the short term. It’s how successful companies like Netflix somehow get into a tricky budget situation when they can no longer expand past the MILLIONS of customers they already have. This type of thinking is also how we end up with the type of investing that led to the 2008 crash.
04:12 that’s completely untrue. Theres a steady decline in the number of businesses failure from year 4 to every year after. I just looked up papers that did this research on google scholar. By Alexander Kucher in the journal “Review of Managerial Science”. Your over applying hot hand fallacy to something that it doesn’t cover. The reason advertisers want the 18-34 demographic is because people get accustomed to a brand and product early in their life and stay with it. Beyond that there is just a human significance put on an establishment that went through history it has a story to tell. That’s why the engineering firm bought the oldest company.
What you're saying does make sense... for investors. It makes less sense for the employees... which makes it make less sense for the larger society... of which, of course, investors are members... so it kinda makes less sense for them as well. I don't know... it's like mutual funds advising people to save their money by not eating out or going on vacations then investing in restaurants and hotel chains. That's good financial advice... but it would be bad for the larger economy if everyone followed it... which would be bad for the people following the advice.
Umm... thanks for the invite, but those numbers show up as a bunch of Xs in boxes on my device... Glad the feedback was taken in the spirit given. It is an insightful video.
Diminishing Returns. Amazon, Alphabet, Apple and Tesla all went from $10 to $1000. You could still buy it $1100 to $3000 but the best gains were in the $10 to $1000 time.
The free throw example is one of the few wrong examples of the hot hand fallacy. Human performance is correlated to immediately preceding performance, due to immediately preceding performance indicating a greater likelihood of favorable physiological and psychological conditions presently at play.
there's only thing that I would like to stress (you mentioned this at the end of the video), is that when selling and buying assets - they are worth only as much as buyers willing to pay and only in quantities as big a buyers willing to buy. that's that. if you offload controlling package of company like facebook - you figure out that you get 1/2 or 1/3 or 1/10 of what people say it is worth at the moment. why? cause you need money and you're desperate. the company evaluation is something tangible yet ephemere, something that exist but doesn't. people will newer pay you what you want unless they feel there's something that they can make on this and they would be ruthless.
Tbf Bayer didn't come up with using opiods (Heroin- diamorphine) to treat cough and cold. Opium (10% morphine sap) use goes back thousands of years for that and we continued using Codeine (methyl-morphine) until the 2000s and continue using Dextromethorphan (also a partial opiod) in cough syrups
I was about to get pretty upset that you didn’t include Richard Thaler and Selena Gomez’s scene in the big short, but seeing you include that warmed my heart
Ichan bought up Pep Boys when I was working there and within a few years, got rid of the operation I was a part of for 7 years. Thankfully, I moved on before that happened.
Sveriges Riksbank are the Swedish equivalent of FED. And Posten Norge are owned by the Norwegian government. And has a long history of monopoly over the distribution of letters and packages. So... Probably not the best example of "European family bussiness" However great video, but please for future videos check your sources to avoid misleading information
Free throws mentioned in the video are a good example. People like Nate Silver (who know both sports and statistics) are usually careful with examples like shooting from the field as things such as favourable defensive match ups can lead to a player shooting above average, rather than it being a statically anomaly. Nate's book "The signal and the noise" is a great read on the topic.
I just realized that this is how seasonal business works. In a very short iteration. Business grows in few days, reach it's peak after few weeks and then plataeu the next 3-4 days and die immediately the next day.
3:35 This is just stupid and not how statistics and estimation works. I do not know what the exact distribution of his throws are, nobody does, but I can observe a subset of throws and build an estimated statistic/distribution of his throws (ie via Bayesian parameter estimation). I can continuously update my estimation as more throws come in. If he doesn‘t miss but adds more throws then my estimated parameters will necessarily drive the distribution closer to ‚hit‘ and away from ‚miss‘. So based on all available information and math I should become more and more sure that he will hit more often. This is not a fallacy, its just math.
I used to sell life insurance. The first company I did it for was brutal. It was an most prominent company in the industry. I could not handle the problems. I then started working for a newer company and it was so much better. This company was a life insurance broker instead of a company that produced its own life insurance. Of course, I figured out how to make a better company.
I think this is misleading because if a basketball player is continually making free throws this could be an indication that he is good at making free throws thus making it more likely he will make the next one than a random player with unknown skill will make a free throw
Lol are you seriously suggesting that shot history, whether a player is warmed up, focussed, in the zone, flowing, hitting every hoop is completely irrelevant to whether you'd bet on them making the next shot? You don't know humans very well, if so.
I strongly disagree that a company's history means absolutely nothing when trying to predict its future success. Companies are run by people, and a long track record of financial success indicates that a business has a legacy of hiring the right leadership and making wise decisions. That's not a guarantee that this will continue, but it's valid evidence, and the more evidence, the better. A company with no track record has no proof that they can sustain their initial success, and is therefore riskier to trust. Perception of trust matters.
Ichon’s attitude to ACF seems pretty similar to Elon’s strategy now that he’s stuck with Twitter. Lay off half the managers, redstucture the business, and give no fucks if the overall customer base shrinks because you’ve sunk tens of billions into this and need to make it profitable again for it to ever be worth it
I feel like there are some services where it would be extremely beneficial to the customers for them to not have to worry about it going away but maybe those kinds of services should be public instead
Great video but as someone who works in a marketing company, I think you missed the BIGGEST point in why Facebook is pivoting their business model. It's NOT because they're runnning out of new people to add. It's not even because people might leave their platform to another one. They have the money to buy whichever new social media app is stealing Facebook/Instagram users. Talking about revenue, Facebook is still cheaper than TV advertising and there are so many companies who've yet to advertise on Facebook. More companies can come, existing ones can bump up their marketing budget and that's even more revenue for Facebook. What I'm saying there's room for growth. BUT THAT IS NOT THEIR MAIN PROBLEM. Their biggest concern is privacy regulations and Apple's iOS updates making it harder for them to track the data of people. As the world is growing more privacy focussed, Zuck realised that the online advertising business is not a safe bet anymore. That's why he's pivoting Facebook.
Imagine the dystopian world we live in where someone making a fortune by simply sacking people with experience in a certain job is viewed as a good thing. It increases unemployment, it reduces loyalty and solidarity, it contributes to income inequality - but, you know, it's good for the handful of investors who are already rich enough (which is why they can invest in the first place). God help us all, how far we have strayed from basic humanity.😢
also, good people do not live forever. eventually the ceo/head gets replaced by someone who doesn't exactly share the same vision, and definitely someone who didn't go through building the company.
Financial peace isn't the acquisition of stuff. It's learning to live on less than you make, so you can give money back and have money to invest. You can't win until you do this. --Dave Ramsey
The “hot hand fallacy” itself turned out to be a myth. It is a real phenomena in basketball. Researchers simply weren’t accounting for defenders adjusting their defense against the player with the hot hand. When this was re-examined, the hot hand turned out to be real.
Most companys don't even try to be sustainable and exist for the long term, companys always try to maximize short term gains at the cost of long term gains.
I would hardly call Apple or Microsoft companies that started a short time ago. If you can hire someone younger than the company, you no longer qualify as having a recent start.
There is statistical proof that there is an inherent inertia to success creating more success especially in basketball - it's just about 5 or 10 percent advantage at best so not a fallacy but an overstated advantage.
To invest in Warren Buffett you'd buy Berkshire Hathaway (BRK.B). However, Warren Buffett's Berkshire Hathaway has underperformed the S&P 500 for a decade and is getting toward the end of his life (92 years old).
I'm down 20k so far. Knowing mr. Cuckenberg's personall loss is in billions and he wont bail out, i think i will hold, all while giggling uncontrollably.
Who are you more likely to trust your child with, a charity work who decided his life to save children or an insane drug addict who will do anything for his next fix? By this logic history has nothing to do with it, but that is completely nonsensical. Past history shouldn’t be your only evaluation, but it shouldn’t be completely dismissed.
But companies like facebook never paid significant dividents, so as value companies they are very cheap. I cant remember any case when GIANT company of "enless groth" become value compamy. May be Apple is closest to become value company
When showing those old european companies you talked about small family owned businesses, however the examples you showed were amongst other: the national post, the national bank, and a monastery. So not exactly public or privately owned companies.
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Lol I’m probably your first like after you 😅
Merck executives will panic after seeing this video
For SPY, or the U.S. market, we have to pay time even if we don't want to pay efforts and stresses.
Buffet, who is a value investor and does not care about the stock prices, can beat the SPY.
I might not be an investor like him, but I can keep the money safe.
Not to believe how much I like this video because everyone puts buufet on pedestal like it's fucking a god
The fact people keep calling it Facebook despite the change to Meta shows how bad of a marketing decision it was. The name became so ingrained in society they thought they could just change it on a whim.
I think it's the same as alphabet renaming their company, people still call alphabet: "Alphabet, the parent company of google"
@@diskyariajetmiko wait alphabet is not their name anymore?
@@superchargedpetrolhead it trades as GOOGL now, which I guess is what they're refering to
@@BastiatC oh okay
@@Ushio01 that may be the case but the OPs point still stands. Most people know the company as Facebook not meta
One of oldest publicly traded companies in the world is The Hudson's Bay Company (AKA the Bay). They once defacto owned most of North America. Today they do okay as a department store and still hold a lot of land, but yeah a far cry from its height.
Hudson's Bay Company isn't publicly traded.
A bit like the Dutch East Indies company.
@@FutureCommentary1 some guy on his way to defraud whole nations: 🗿
'Get in, get rich, get out' seems to be true for both price fighters & the largest companies in the world on a long enough timeline.
It's more like "Get in, get rich, control the government, print infinite money"
The "hot hand fallacy" only really applies in business when considering profits. When considering longevity it is actually totally reasonable to expect an old company to outlast a young one. This is because of the sort of people who will be drawn to work for an old established company versus a "young dynamic" company. The former will inevitably be far more risk averse. This might well lead to a slow decline but is unlikely to see the sort of decision that might ruin the company next year. In short we expect to see less volatility in old companies.
Plus, If a company survives for a long time, the chances that it has some characteristics that contribute to such longevity is high, compared to a new startup
Yeah, that was my one criticism about the title of this video and mentioning such a fallacy. What if the owners don't care about massive profits and just want to offer a consistent product/service? No, that might not be a company worth investing in, but it has value and merit and deserves to still exist. It's admirable, sounds like the people there (usually family-run) are just doing what they enjoy and saying screw it to the rat race. I can appreciate that.
It's called Lindy Effect: the longer a period something has survived to exist or be used in the present, the longer its remaining life expectancy.
The idea of "hot hand fallacy" is itself very reductive, falling to an even bigger fallacy that I just call the fundamental statistical fallacy. Maybe you will discredit me because I don't have a history of making correct summaries like this :^)
Basically it's the human tendency to go for statistics, and ASSUME that there's not REAL statistical gradient, that CORRECT way to bet 90/10 is to the chance of the 90. But that is not how statistics work, that is how DETERMINISM works, acting like you GET to try and try again until YOU get it right most of the time. In reality, if you fall into the 10, it is GUARANTEED to fail the 90, because it's NOT 100/0, it's not 80/20, it's THAT outcome.
In practice, if a player makes three hoops in a row, the likelyhood is that TODAY is their day, they're on top of their game, there's low wind or noise, anything, but you're dealing with REAL WORLD EXCEPTION and NOW is the MOMENT to bet. If you have a leukemia with 99/1 chance, guess what you don't BET on not having leukemia, you DO HAVE leukemia. And giant, long-standing corporations are not enterpreneurships, that follow the "rules" of idealized economics texts. They WRITE them and they get to break them.
@@BewareTheLilyOfTheValley THose people already won the rat race, tho. A successful family business will last you for generations. You don't need to be the top dog to actually win the race, tbh
The book "Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies" goes (as well) over the point of longevity of companies. An incredibly interestin read!
I am going to have to check that out, thank you for the suggestion.
@@HowMoneyWorks One of those life (/perspective) changer books for me. YOU reading this comment, go read that book!
Scale was written by Geoffrey West. He is a British physicist who works with the Santa Fe Institute.
Oh wow I nearly ran out of breath while reading the title! Definitely gonna check it out tho, sounds good from the title lol
@@SlabtheKiller89
I read 📚 your comment too! Now off you go to celebrate 🍾. 😶
The zeroth law of any organization seems to be to maintain its own existence whether it is doing anything useful or not.
Exactly, applies universally to absolutely everything humans do
It’s the law, companies have to act in the interest of their shareholders
Every organism exists primarily to maintain itself
This is just an obvious consequence of the senior people not wanting to be unemployed with a bankruptcy on their CV. There is no organization, only people.
With corporations that have no real checks or balances whatsoever I don't think they should be allowed to exist on such a scale.
You also have to remember what industry certain older companies specialize in. An older company like Hershey isn't going to be a high flying stock like Microsoft or Amazon but it's a leader in its specialty (chocolate). The other way they may survive is by either creating new products or by buying other existing companies in their niche. In this case Hershey bought out Wrigley (the gum company). Mondelez is a spinoff of the Kraft foods division which bought Nabisco from RJ Reynolds, the tobacco company. Kraft made some money from Nabisco but decided to focus on their cheese and condiments business while creating Mondelez to focus exclusively on snacks. Meanwhile, Church and Dwight has been around for over 150 years selling their signature brand Arm and Hammer.
Interesting that several of these older companies produce food, personal hygiene and cleaning products.
@@devinmcmanus specialised, yet generally needed things aren't gonna disappear over night.
Brooms gonna remain brooms, there's little need to reinvent.
Even if you reach absurd levels of modernty, a hammer will still be an invaluable tool regardless of if you're fixing a barn or a whole darn robot.
The reason people like old companies isn't because they are old companies, it's because people like to invest in companies that are proven to have a secure economic and competitive advantage within their industry, and a tell-tale sign of such companies is their ability to generate profits year after year despite competition. The fact that they have inefficiencies means they have even more room for growth.
Can you please explain how inefficiency shows existence of the room for growth? And inefficiency in what and growth of what? Thanks
@@trappart9209 The better the systems, the better the results (profits). Calling something an inefficient system implies a more efficient system exists. The issue is most companies that get "too big to fail" become too arrogant to accept their flaws.
Meta's PR strategy has been a major flop. Had Meta followed better systems, it wouldn't have been. Imagine where they would be if they had positive PR rather than negative PR. That's one huge area with room for growth.
@@SquidShield Is it possible that the metaverse is something that consumers don't want?
@@devinmcmanus no. The existing successful products like second life and imvu demonstrate that the product is something that is viable. Facebook should have had a big advantage since it can use Facebook to encourage it's use, as it does with its marketplace, video calling and messaging services, meta failed because it's implementation was severely lacking.
@@BastiatC the issue is IMVU and Secondlife let you do mostly whatever you want and are already established with abilities for content creators to get paid. Metaverse would be nothing like that at all.
Reminds me a little of the gaming industry and it's seemingly endless need for growth. It's been a well growing industry for a while, but it feels like investors expect there to be infinite people willing to jump into games when there's obviously not.
Rather than improving existing products they're always looking to draw a wider net which has led to worse and worse experiences for many of them.
Or I could have entirely misunderstood this video and they're not alike at all. Just feels like similar situations in a broad sense.
Less about casting a wider net, but more staying on the tail of the newest trend and squeezing the ever loving fuck out of it with Microtransactions before then rushing it out half-baked.
games take a handsome development time depending on the type, but still are quicker to develop than say, a car.
It falls under tech, and tech is just idea stealing, hype chasing and the one innovation that causes the former two.
I wish gaming wasn't regarded as just another money pot by those money sacks...
@@justascarecrow6988it’s not all grim thanks to Indie Devs. There are People out there who know to follow the fun rather than the money
@@Gearsio Many of which don't get the recognition they deserve.
Among a sea of them, it's hard to find the gems, unless the whole internet is singing their praises, i guess.
Great Video, and thanks for the shout out!
Facebook pissed every content creator off when they stopped showing business pages to every fan who liked it and required paid ads instead to show it to anyone.
thats why i love meta, its killing itself, its a gold star for the ZUCC
going the way out like MySpace and many other social media sites! it's a pattern!
meta will never be oasis in ready layer one
It really isn't though it's just reinvesting its massive profits rather than give it to shareholders.
@@spicychad55 MySpace lasted less than 2 years before Murdoch bought it and it basically suffered its first death when Murdoch sold it for $35 million in 2011 when MySpace was 8 years old.
😂😂😂😂
I think you're underselling longevity. Sure just shopping around for companies with _past_ longevity isn't going to be a great way to earn big bucks. But if I knew ahead of time if a company would last 30 + years from now without diluting its stock by issuing more to raise money (in other words if I knew _future_ longevity) I'd probably be rich in a decade even if that meant I got a few Kongo Gumis and missed out on a Facebook now and then. Granted, most outsiders (and probably most insiders) don't know the future longevity of their own company. But it's not a bad thing, it's just that past results are no guarantees of future returns. By the way, a good foul shooter is more likely to be on a 15 successful shooting streak than a bad foul shooter, so the streak for sports players, while probably overrated by fans, actually gives more information than streaks in stock prices.
I wish that more people knew/remembered that originally corps were intended to have a limited life intended to complete a project ot set of projects, then gracefully die off again.
Send me informations about it, cause it sound like something that could be true, and for sure would be good in most brands, cause a lot of companies are literally selling us stuff we don’t need and cause of that we are waisting those precious resources for nothing.
The biggest failure for Instagram are its horrible search feature, terrible commenting tools, and rampant bots. Other then that, it’s actually a great social media platform, but I think those three items hinder it’s growth. Also, TikTok is doing it better.
I think the problem is that these days big companies have a TON of patents and IPs that makes it hard for them to fall or for their work to be iterated as no one would let them expire. Disney is one thing, but there's also how software, code, and designs can be registered and restricted -- see how video games cannot iterate on ways to circumvent loading time tedium due to old patents.
meh... that isn't a good example / the real issue for most big companies to stay around just comes down to a barrier to entry for new competition... eventually over time its normal for a successful company to buy out a competitor if they want to leave the market... the companies that have a hard time doing this are more or less publicly traded companies as they are visible
but there are industries that have private companies that have been around a long time... say industrial equipment -- HVAC and the like
the cost to compete efficiently in those areas requires a lot of capital but that capital is hard to gain interest when its already an old industry because over time there are few advancements that can be made for improving how to move air..... this is why tech companies are considered worth more for investment due to the fact that tech is constantly changing
Patents can and do expire...
Family-run businesses make this even more complicated. Such a businesses are rarely successful over multiple generations for a variety of reasons. There are exceptions to this though. If the family members are successful on their own and don't have much interest in the business they can be absent owners choosing instead to have someone or another entity run the business ( my father is in the process of doing this with his business as neither I nor my sister has any interest in the 40-year-old company).
i dont know how weve reached a point where companies this big arent allowed to fail
That japanese company must have immense cultural significance. I think you missed the part where it could be a marketing move, and of course, just a wish to not see that company die.
Exactly, they even buy because sheer amount of respect
It boggles my mind just how stupid Facebook is by betting so heavily on the metaverse. The best explanation I can think of is that they think they can will it into relevance by using their sheer size.
The swedish Riksbanken shown as one of the oldest companies isn't a company but Sweden's central bank. A gouvernment agency. Same can be said for the norwegian postal service for much of it's history.
Most of the biggest banks are many centuries old.
he compares here the oldest companies with the most profitable ones, but not with all new companies. Under no circumstances should you underestimate a reliable and long-lasting investment and bet everything on the short-lived and risky.
As someone else pointed out you are underselling longevity. The company that has been around for 100 years has much higher chance of surviving the next 20 years than a company that has been around for 5 years.
Why exactly
@@lonle6506 inertia and consolidation
I mean yes but we’re missing the broader message. Past longevity can be an indication of whether you will still own the stock in 20 years and gain from its valuation although there is no guarantee. Past longevity is no indication of whether or not you could make the same if not more investing in a company that is in a high growth field and has solid bases for business and sustainable growth.
TLDR: look at numbers, strategies and market forecasts for the industries you’re going to invest in. Not necessarily past longevity.
@@lonle6506 See Lindy effect/principle
I feel like it would be better (ie in an ideal world) if companies as they start to reach their growth threshold, start working on optimizing what they do, cutting administrative bloat, and finally work on buying back stock from investors to take the company private. I can see where a worker directed enterprise would have the incentive to do this, while the standard executive model has more incentive to try to keep “Frankenstein’s monster” per say, running until it’s last breath. Realistically though, it makes sense that businesses will reach a growth limit. A business however not growing shouldn’t necessarily be considered a bad thing (especially if it’s revenue is net positive)
The secret to wealth is simple: Find a way to do more for others than anyone else does. Become more valuable. Do more. Give more. Be more. Serve more
You're right
You see many people remain poor because of ignorance
@James Waster
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Facebook started out dull and is ending with angry grandmas. You be better off starting a new social media network which is just simply a shared calender . It would just show you what's on in your town or state, send you reminders and link to other platforms. The news feed is now just pointless and the advertising is mostly scams and bullsh*t.
the average company should not last forever. exceptionally good ones should. same deal with individual people. this however is an ideal, not something immediately practical.
Hot hand fallacy is not fully falatious. A person shooting dry will need a few shots to get a feel of the ball and distance. There's a higher likelihood of making consecutl baskets rather than just the first shot.
Yeah, Nate Silver is a good one on the topic. Having a background in both sports and statistics he's able to separate which is statistical anomaly and which is situational. Eg. If I was guarding Curry he's going to shot much better than his usual 43% because of open looks and poorly contested shots.
There's a psychological effect to in many sports when you feel you're on a cold streak. The difference between consciously trying to do something like shot and going though it from muscle memory is night and day.
Edit: the use of free throws in the video is a good example however.
Its okay.
We all Want Facebook Meta to fail too!
Good companies are a phase of businesses. Once greed takes over, we go to the it's downhill from there phase
Good companies can fail for a whole host of reasons, not just greed.
Now lets think about governments like companies, the only difference they should seek not profit, but comfort of citizens. As I understood from the video the main problem for old companies is bureaucracy. But that's the one of the first things coming to mind when one thinks about gocernments.
The true is that it is better to go for traditional business. Innovative one tend to go bust thus no safety for family in future.
Better for what? Better for security. True. Better for getting rich quick. False. It all depends on your tolerance for volatility.
So you're saying that eventually all businesses - even the most long lasting and stable - will eventually faulter to the point a new startup can take considerable market share away from them? This is eye-opening as I had operated under the assumption that the business opportunities are ever decreasing as new companies occupy new markets. As in - soft drinks/social media exist, so good luck being the next Coca Cola or Facebook. I guess Pepsi (in the 80s) and Tik Tok prove this is not the case
The modern day economy desperately needs to evolve. Not entirely unlike how agriculture had to evolve to keep up with the expanding human population. We need an economic analog to the idea of crop rotation in our society
I don’t see how it’s a negative for a company to function sustainably without going public or taking huge risks. They provide a service to their customers and long term jobs to their employees. Honestly I think one of the most harmful aspects of the modern economy is this incessant need to grow grow grow no matter what to please investors every quarter that are way more focused on the short term. It’s how successful companies like Netflix somehow get into a tricky budget situation when they can no longer expand past the MILLIONS of customers they already have. This type of thinking is also how we end up with the type of investing that led to the 2008 crash.
04:12 that’s completely untrue. Theres a steady decline in the number of businesses failure from year 4 to every year after. I just looked up papers that did this research on google scholar. By Alexander Kucher in the journal “Review of Managerial Science”.
Your over applying hot hand fallacy to something that it doesn’t cover. The reason advertisers want the 18-34 demographic is because people get accustomed to a brand and product early in their life and stay with it. Beyond that there is just a human significance put on an establishment that went through history it has a story to tell. That’s why the engineering firm bought the oldest company.
What you're saying does make sense... for investors. It makes less sense for the employees... which makes it make less sense for the larger society... of which, of course, investors are members... so it kinda makes less sense for them as well.
I don't know... it's like mutual funds advising people to save their money by not eating out or going on vacations then investing in restaurants and hotel chains. That's good financial advice... but it would be bad for the larger economy if everyone followed it... which would be bad for the people following the advice.
Umm... thanks for the invite, but those numbers show up as a bunch of Xs in boxes on my device...
Glad the feedback was taken in the spirit given. It is an insightful video.
Diminishing Returns.
Amazon, Alphabet, Apple and Tesla all went from $10 to $1000. You could still buy it $1100 to $3000 but the best gains were in the $10 to $1000 time.
The free throw example is one of the few wrong examples of the hot hand fallacy. Human performance is correlated to immediately preceding performance, due to immediately preceding performance indicating a greater likelihood of favorable physiological and psychological conditions presently at play.
there's only thing that I would like to stress (you mentioned this at the end of the video), is that when selling and buying assets - they are worth only as much as buyers willing to pay and only in quantities as big a buyers willing to buy. that's that.
if you offload controlling package of company like facebook - you figure out that you get 1/2 or 1/3 or 1/10 of what people say it is worth at the moment. why? cause you need money and you're desperate. the company evaluation is something tangible yet ephemere, something that exist but doesn't. people will newer pay you what you want unless they feel there's something that they can make on this and they would be ruthless.
Tbf Bayer didn't come up with using opiods (Heroin- diamorphine) to treat cough and cold.
Opium (10% morphine sap) use goes back thousands of years for that and we continued using Codeine (methyl-morphine) until the 2000s and continue using Dextromethorphan (also a partial opiod) in cough syrups
I was about to get pretty upset that you didn’t include Richard Thaler and Selena Gomez’s scene in the big short, but seeing you include that warmed my heart
😂😂 at the 8:47 mark. Angry boomer convention??? Well damn 😂
Favorite one so far 😂 this dudes mockery is next level and I’m all about it
Ichan bought up Pep Boys when I was working there and within a few years, got rid of the operation I was a part of for 7 years. Thankfully, I moved on before that happened.
I see this problem a lot. Producers in a company are outnumbered by non-producers
Sveriges Riksbank are the Swedish equivalent of FED. And Posten Norge are owned by the Norwegian government. And has a long history of monopoly over the distribution of letters and packages. So... Probably not the best example of "European family bussiness"
However great video, but please for future videos check your sources to avoid misleading information
'Hot hand fallacy' learned something new today.
Read “Standard Deviations” by Gary Smith for learning those kinds of fallacies and biases.
Free throws mentioned in the video are a good example. People like Nate Silver (who know both sports and statistics) are usually careful with examples like shooting from the field as things such as favourable defensive match ups can lead to a player shooting above average, rather than it being a statically anomaly.
Nate's book "The signal and the noise" is a great read on the topic.
You never saw The Big Short?
I'm SO ADDICTED to this channel!
It's almost as if continuous growth is not a sane expectation.
everyone knows this, the goal isn't to find it. but find companies that grow alot and then ditch them when they don't
Its strange to see a lack of volatility in established companies framed as a bad thing
I just realized that this is how seasonal business works. In a very short iteration. Business grows in few days, reach it's peak after few weeks and then plataeu the next 3-4 days and die immediately the next day.
...for everybody to keep on learning how money work.
@How Money Works: You excused for your pronounciation of Kongo Gumi, but not for your pronounciation of Bayer at 8:26 :(
3:35 This is just stupid and not how statistics and estimation works.
I do not know what the exact distribution of his throws are, nobody does, but I can observe a subset of throws and build an estimated statistic/distribution of his throws (ie via Bayesian parameter estimation). I can continuously update my estimation as more throws come in.
If he doesn‘t miss but adds more throws then my estimated parameters will necessarily drive the distribution closer to ‚hit‘ and away from ‚miss‘.
So based on all available information and math I should become more and more sure that he will hit more often.
This is not a fallacy, its just math.
I really need to watch all your videos
I used to sell life insurance. The first company I did it for was brutal. It was an most prominent company in the industry. I could not handle the problems. I then started working for a newer company and it was so much better. This company was a life insurance broker instead of a company that produced its own life insurance. Of course, I figured out how to make a better company.
How are life insurances “produced” ? Do you mean the offering of financial aid on demand?
WOW your channel is awesome. went through 5 videos so far and now questioning my channel lol
I think this is misleading because if a basketball player is continually making free throws this could be an indication that he is good at making free throws thus making it more likely he will make the next one than a random player with unknown skill will make a free throw
All corporations used to be temporary until they were given legal personhood.
Lol are you seriously suggesting that shot history, whether a player is warmed up, focussed, in the zone, flowing, hitting every hoop is completely irrelevant to whether you'd bet on them making the next shot? You don't know humans very well, if so.
You’re showing everyone your stupidity
I strongly disagree that a company's history means absolutely nothing when trying to predict its future success. Companies are run by people, and a long track record of financial success indicates that a business has a legacy of hiring the right leadership and making wise decisions. That's not a guarantee that this will continue, but it's valid evidence, and the more evidence, the better. A company with no track record has no proof that they can sustain their initial success, and is therefore riskier to trust. Perception of trust matters.
Ichon’s attitude to ACF seems pretty similar to Elon’s strategy now that he’s stuck with Twitter. Lay off half the managers, redstucture the business, and give no fucks if the overall customer base shrinks because you’ve sunk tens of billions into this and need to make it profitable again for it to ever be worth it
Thanks for this VERY useful advice my good man. I'll keep it close to my heart in my own future endeavors. Keep up the good work.
Did you even watch the video? What advice did you glean and how will you use it?
@@AlcoholicBoredom plenty my dude.
Laying off all 12 floors of operations...for a second I thought he was talking about Elon and Twitter.
12 floors of management
I feel like there are some services where it would be extremely beneficial to the customers for them to not have to worry about it going away but maybe those kinds of services should be public instead
Great video but as someone who works in a marketing company, I think you missed the BIGGEST point in why Facebook is pivoting their business model. It's NOT because they're runnning out of new people to add. It's not even because people might leave their platform to another one. They have the money to buy whichever new social media app is stealing Facebook/Instagram users. Talking about revenue, Facebook is still cheaper than TV advertising and there are so many companies who've yet to advertise on Facebook. More companies can come, existing ones can bump up their marketing budget and that's even more revenue for Facebook. What I'm saying there's room for growth. BUT THAT IS NOT THEIR MAIN PROBLEM. Their biggest concern is privacy regulations and Apple's iOS updates making it harder for them to track the data of people. As the world is growing more privacy focussed, Zuck realised that the online advertising business is not a safe bet anymore. That's why he's pivoting Facebook.
9:50 Should stretch the font instead of squishing it lol, I read that as "Garlic Chan"
(8:08) This is Japan's main problem. They stick to old process that are clearly not working.
Imagine the dystopian world we live in where someone making a fortune by simply sacking people with experience in a certain job is viewed as a good thing. It increases unemployment, it reduces loyalty and solidarity, it contributes to income inequality - but, you know, it's good for the handful of investors who are already rich enough (which is why they can invest in the first place). God help us all, how far we have strayed from basic humanity.😢
also, good people do not live forever.
eventually the ceo/head gets replaced by someone who doesn't exactly share the same vision, and definitely someone who didn't go through building the company.
what is the name of this film? 3:16 plss
6:15, it is called the sunk-cost fallacy.
Exactly what I was thinking about a video I watched on Company Man on KFC...
Financial peace isn't the acquisition of stuff. It's learning to live on less than you make, so you can give money back and have money to invest. You can't win until you do this. --Dave Ramsey
Poor Kmart & toys'R'us . they made me happy as a kid
> Good Companies Should Not Last Forever.
Also applies to people
Great video!
The “hot hand fallacy” itself turned out to be a myth. It is a real phenomena in basketball. Researchers simply weren’t accounting for defenders adjusting their defense against the player with the hot hand. When this was re-examined, the hot hand turned out to be real.
Most companys don't even try to be sustainable and exist for the long term, companys always try to maximize short term gains at the cost of long term gains.
No company should be too big to fail as well.
I would hardly call Apple or Microsoft companies that started a short time ago. If you can hire someone younger than the company, you no longer qualify as having a recent start.
There is statistical proof that there is an inherent inertia to success creating more success especially in basketball - it's just about 5 or 10 percent advantage at best so not a fallacy but an overstated advantage.
Meta was not the reason for the massive layoffs. It was due to the ongoing employee hiring inflation and banks being strict
How does one invest in Warren Buffett?
To invest in Warren Buffett you'd buy Berkshire Hathaway (BRK.B). However, Warren Buffett's Berkshire Hathaway has underperformed the S&P 500 for a decade and is getting toward the end of his life (92 years old).
Buy Berkshire Hathaway
@@2011blueman the joke was that Warren Buffett lasts forever
@@CaseyBurnsInvesting If you have to explain your "joke", it's not a joke.
9:07: Wirecard wasn't a legitimate business for decades. Not even for a moment xD
South Korean companies have been able to survive lotte, samusung etc...
Good video.
love this video
I invest in META because I enjoy burning money
I'm down 20k so far. Knowing mr. Cuckenberg's personall loss is in billions and he wont bail out, i think i will hold, all while giggling uncontrollably.
Who are you more likely to trust your child with, a charity work who decided his life to save children or an insane drug addict who will do anything for his next fix? By this logic history has nothing to do with it, but that is completely nonsensical. Past history shouldn’t be your only evaluation, but it shouldn’t be completely dismissed.
They arent the same companies. Different products, processes, systems, etc. The brand is what survives not the business.
While we wait for a corrupt company to fold workers suffer. That’s why we need laws protecting citizens in the workplace
Oldest companies in the world, shows a picture of the swedish national bank
But companies like facebook never paid significant dividents, so as value companies they are very cheap. I cant remember any case when GIANT company of "enless groth" become value compamy. May be Apple is closest to become value company
No company will ever last forever and all systems eventually grow stale.
When showing those old european companies you talked about small family owned businesses, however the examples you showed were amongst other: the national post, the national bank, and a monastery. So not exactly public or privately owned companies.
Also, massive old banks like Barclays
Now, Zuckerberg has become a failure meme.
Is that a step up or step down from the robot/reptilian meme he already was?
Basically avoid glamour stocks/blue chips and focus on growing small companies.