Creative Destruction in Corporate America

By: John Alberg and Michael Seckler

-   Since 1950, 75% of public companies* have gone away   -

 -   ~18,000 COMPANIES PUBLIC AT ANY TIME BETWEEN 1950-2015   -

At Euclidean, we have always referenced this data in context of the challenges that value strategies face given that there have been (and will continue to be) high profile investments that turned out to be value traps.  The point we make is that value strategies have done well across long periods of time when creative destruction has been the norm.  While some inexpensive companies will prove to merit their cheap prices and will disappear, the inevitability of value traps does not invalidate a devotion to a value-focused strategy.

*NYSE, AMEX, & NASDAQ listed companies
**No longer publicly listed due to bankruptcy, merger, acquisition, or privatization 
Standard & Poor’s COMPUSTAT database was used as a source for all information about companies and securities for the entire period of analysis.  The number of currently active companies is the number of company records in the COMPUSTAT database who are marked as an active public company located in the USA. The total number of companies since 1950 is the number of company records in the COMPUSAT database that are marked as an inactive or active public company located in the USA.