The average tenure of companies on the S&P 500 will shrink from 33 years to just 12 years by 2027. A gale force warning to leaders – at the current churn rate, about 50 per cent of S&P 500 companies will be replaced over the next ten years.
There is an interesting article on why investing is a domain ripe for comparison because of all the numbers. Its easier to compare 10 per cent versus 5 per cent, than apple versus orange. The financial press exists to tell us whos hot and whos not.
This article highlights six ways to opt out of the financial sorting game with an aim to focus more on inner scorecard.
The number of diabetes cases in India are expected to nearly double by 2025 as diabetes continues to be Indias fastest growing disease and medical facilities are almost nonexistent.
The last article is written by Jonathan Tepper to his nephews while travelling on a very turbulent plane ride when he was uncertain of surviving. He highlights all the important lessons learned in life that he would like to pass it on.
I reiterate that this is only a sampling of some of the best content I read through the week, with a dash of my own thoughts. Until next week…
S&P 500 lifespans continue to shrink, require new strategies for navigating disruption
Few companies are immune to the forces of creative destruction. According to Innosights biennial corporate longevity forecast, the average tenure of companies in S&P 500 is growing shorter and shorter over the next decade.
The 33-year average tenure of companies on the S&P 500 in 1964 narrowed to 24 years by 2016 and is forecast to shrink to just 12 years by 2027. In 2017, 26 companies were removed from the S&P 500 and 26 entered the list. This turnover rate of 5.2 per cent is about level with the prior two years, representing the most turbulent three-year period since the recession years a decade ago.
Record private equity activity, a robust M&A market, and the growth of startups with billion-dollar valuations are leading indicators of future turbulence. A gale force warning to leaders: at the current churn rate, about 50 per cent of S&P 500 companies will be replaced over the next ten years.
The study shows that lifespans of companies tend to fluctuate in cycles that often mirror the state of the economy and reflect disruption from technologies, ranging from biotech breakthroughs to social media to cloud computing.
Retailers in the US have been hit hard by disruptive forces, and there are strong signs of restructuring in financial services, healthcare, energy, travel, and real estate.
Looking at the future, the turbulence is expected to accelerate given factors such as the unicorn phenomenon of highly valued disruptive startups such as Uber and Airbnb, as well as intense M&A and private equity activity.
The turbulence points to the need for companies to embrace a dual transformation, to focus on changing customer needs, assess the cost of inaction and other strategic interventions. Read More
Six ways to opt out of the financial sorting game
1. Spending less than you earn is the real key to wealth building. If you do your saving correctly, any investment returns are the cherry on top. The right savings plan will reduce uncertainty and your dependence on returns. Find a way to enrich, rather than rob, your future self.
2. Pick a strategy that makes sense to you and stick with it. Some people like to buy high-quality companies, some dividend-paying. Others are like us and prefer stocks on sale with a margin of safety. Like the seasons, every investment approach has its spring bounty of good returns and cold winter where it will test your patience. The investors who really lose are the ones who chase what is recently hot and never catch the rebound. Dont be that person.
3. Create an investment plan and follow it. Without a plan, youre subject to the ebb and flow of fear and greed. As General Patton said, “A good plan violently executed now is better than a perfect plan executed next week.” It doesnt have to be complicated. Automated is preferable as you only have to make a smart decision once and you benefit for years. Time is your friend, so the earlier you start, the better.
4. Accept that others may get rich faster than you. And thats OK! They may also be taking risks you cant see and will crash and burn before the finish line. Who knows? “Run your own race” and avoid the pitfalls of envy. Its especially important to use debt judiciously. “Over the years, a number of very smart people have learned the hard way that a long string of impressive numbers multiplied by a single zero always equals zero.” – Warren Buffett
5. Ignore the financial press. Their real objective is to sell advertising, not provide you with useful investment information. You wont miss the noise; the signal is elsewhere. “Investing is one of the simplest fields run by people who believe in their souls that theyll do better if they make it more complicated.” – Morgan Housel
6. Practice compassion. The odds are overwhelming that if youre reading this, your quality of life is in the upper 90%+ of all people in the world. Recognize your good fortune — it doesnt have to be this way. Instead of coveting others returns or money, point your creativity toward easing the suffering of the less fortunate. Its all but guaranteed to provide you with a better ROI. Read More
For rich and poor Indians alike, Diabetes epidemic shows no sign of abating
India currently represents 49 per cent of the worlds diabetes burden, with an estimated 72 million cases in 2017, a figure expected to almost double to 134 million by 2025. This presents a serious public health challenge to a country facing a future of high population growth and a government attempting to provide free health insurance to half a billion people.
Diabetes prevalence has increased by 64 per cent across India over the past quarter century, according to a November 2017 report by the Indian Council for Medical Research, Institute for Health Metrics and Evaluation and the Public Health Foundation of India.
As salaries have increased, and all socio-economic groups have experienced a rise in living standards, diabetes became the countrys fastest growing disease burden over 16 years to 2016. However, due to a lack of awareness of diabetes symptoms and risk factors compared to those in higher socio-economic groups, the poor have greater difficulty managing the disease.
Lifestyle changes linked to an increase in wealth are impacting all age groups. For age group of 15-19 years up to 2 per cent women and 2.9 per cent men had high or very high blood glucose levels according to data from the NFHS 2015-16. This further rises to 2.6 per cent for women and 3.7 per cent for men for age group 20-25 years.
Diabetes strikes Indians a decade earlier than the rest of the world causing reduced productivity, increased absenteeism in working population and gives more time for complications to arise.
Wealthy states have higher incidence of diabetes with Tamil Nadu having the highest death rate at 53 per 100,000 followed by Punjab (44) and Karnataka (42), all significantly higher than the national average (23).
Policymakers and healthcare providers are concerned by a trend where the diabetes prevalence is rising as India develops, adding to the financial burden. States with lower GDP, not immune to growing diabetes caused by a change in lifestyle and rising incomes, are faced with a double financial burden. This makes a universal plan to treat and prevent diabetes across a developing India difficult. Read More
Letter to my nephews
· The most important lesson is that the vast majority of things you worry about will not bother you the next day. A year later you will not even be able to remember them if you try. Learn to enjoy every day, and try to enjoy it as if it is your last.
· Happiness is not a destination but a journey. Whatever it is you want, there is always something better. Enjoy the journey of learning, working, and living. If you enjoy the journey, youll probably achieve a lot more than if you focused on goals.
· If you do decide you want to be “successful”, there are only three things you need to do. First, decide exactly what it is you want. Second, determine the price you will have to pay to get what you want. And third, and this is the hardest and most important part, pay the price. Few are willing to pay the price.
· Money can provide security, but once you have security, more money cannot buy you more happiness. If you show me someone who thinks money can buy happiness, Ill show you someone who has never had a lot of money.
· Things dont make you happy, but experiences and memories can make you happy forever. Youll remember the time youve spent with friends and family more than any shiny things youll ever have.
· Your family is the most important thing you have in life. Friends, co-workers come and go, but the only thing that you can always count on is your family. One day, you will have your own family. You must love them and look after them. Strive to be a good son and daughter. One day, you will be like your parents. Your parents are not perfect, and you will not be either.
· Always stay curious, and youll be surprised how much you can learn. Never stop asking questions. Youre never too old to learn, grow and build things. Life is a marathon, not a sprint. Most people develop over time and become wiser as they get older. Warren Buffett made 99 per cent of his money after the age of 50. Every day is the first day of the rest of your life. Read More