This concept is important to know. Most stocks will disappear in 30 years’ time, if that.
Some will simply go bankrupt, like the old-line retailers under attack right now, such as Sears. Some will be merged/acquired such as Staples. Most others will be relegated to the smaller indexes as their growth potential ends.
By tracking all the additions and deletions from the S&P 500 over the past half century, our 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. Over time, the larger trendline is for average longevity to continue to slope downward. Looking to the future, we expect turbulence 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.