Buffett on Investing and changing market leaders.

[BlueOak]

A simple video for the layman. For anyone that invests what do you think to this conclusion, where buffet says it's likely/possible every single company on the top 20 list will be replaced over the next decades?
 

 

Seems hard to believe given the power of some of these corporations, anyone can fall down, but replacing most/all of them?

[Yarco]

1. I think we are reaching a state of technical stagnation. When I was in business school just a decade ago, we were taught things like Moore's Law. Basically that technology would continue to get exponentially faster and better forever. But it seems like we are already hitting a plateau on technological advancement, barring some huge new advancement.

2. Power is way more consolidated and closer to monopolies than it used to be. Big companies will just buy up smaller companies to stay on top, expanding to take over whole new emerging markets if they have to. Ie. Facebook becoming Meta to take over VR. It's way harder for smaller companies to break through to that level of success nowadays.

3. Most of the companies on slide L2 made commodities. Steel, electricity, gas. It's especially getting harder to grow in these areas, which is why everything has changed to technology and finance being on top. In order to displace tech and finance companies, you need to think of what the paradigm could possibly be that will come after them. There probably will be something, but at the moment I can't imagine what it would be. Just like in the 70s and 80s people couldn't foresee companies like Apple and Alphabet and Tencent and the stuff they would produce.

4. I do think America is exceptional and will continue to hold onto its power. It's possible that India, China, and a couple other countries could become real powerhouses and get 5 or 10 companies on the list. But it's not random chance that a Top 20 company is just going to pop up in Indonesia or Croatia.

That being said, predicting the future 10 years out is a fools game. There's a tiny chance America might not even exist by then. Weirder stuff has happened in my lifetime. 

I'd focus on the part he says today about how you can pick the industry but not the particular company that will succeed. Well, we have ETFs today that are made up of all the companies in an industry. So I guess the smartest thing based on his advice would be just to invest in ETFs of up-and-coming sectors. Even that isn't without a lot of risk though. I put some money into a psychedelics ETF in Feb 2021 and it's currently down -75% lmao. Other things like cryptocurrency or metaverse there aren't really ETFs for yet.