Michael Mauboussin - Pattern Recognition and Public Markets (EP.370)
Capital Allocators – Inside the Institutional Investment Industry
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The Profound Impact of Wealth Creation by a Small Percentage of Companies
Venture capital has a short time horizon compared to public markets. Research studying public companies since the 1920s found that nearly 60% failed to earn returns exceeding treasury bills, resulting in $9 trillion in wealth destruction. In contrast, the remaining 40% generated $64 trillion, with the top 2% creating $50 trillion out of the total $55 trillion in wealth creation. This signifies that just a small percentage of companies contribute significantly to overall wealth creation in an extraordinary manner.
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