Money Maze Podcast
120: Why Do Companies Die? Value Creation in Public Equity Markets - With Michael Mauboussin, Head of Consilient Research at Counterpoint Global, Morgan Stanley Investment Management.
Nov 23, 2023
Michael Mauboussin, Head of Consilient Research at Counterpoint Global, Morgan Stanley Investment Management, discusses the unique patterns of wealth creation in public equity markets. He explains the increasing corporate 'death rate' and why firms are choosing to stay private for longer. He covers the theory of wealth destruction, the distinction between value investing and value factors, and the importance of looking beyond tech headlines.
19:48
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Quick takeaways
- Corporations are surviving longer and winning more, possibly due to a decrease in the number of companies going public and the increased stability of those that do.
- Significant wealth creation in public markets is highly skewed, with only 2% of companies responsible for over 90% of aggregate net wealth creation, challenging common expectations and raising questions about long-term investment strategies.
Deep dives
Decrease in Number of Public Companies
The podcast episode discusses the decline in the number of public companies in the United States. In 1976, there were roughly 4800 public companies, which peaked at over 7300 in 1996. However, as of 2022, there are only slightly over 4200 companies. This represents a 40% decrease since 1996 and even fewer companies than in 1976.
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