« Companies are not. »
Founded 178 years ago by the cabinet-maker Thomas Cook, the Thomas Cook & Son, recently in its third iteration, Thomas Cook Group plc, was a famous British global travel group. In September 2019, just the other day, they announced their compulsory liquidation. Game over. About 600,000 customers (150,000 from the UK alone) were left abroad, triggering the UK’s largest peacetime repatriation.
Founded in 1850, in Alabama, USA, by Henry, Emanuel, and Mayer Lehman, Lehman Brothers Holdings Inc. was a global financial services firm, the fourth-largest investment bank in the United States. They were strong and resilient enough to survive the 1929 Great Depression but not the 2007/2008 subprime mortgage crisis. They filed for bankruptcy in 2008 and dragged the entire stock market together with it.
Founded in 1762, Barings Bank was the world’s second-oldest merchant bank. Solid as a rock until it encountered its fate in 1995 in the hands of the head of derivatives, a trader named Nick Leeson, working at its office in Singapore. (Position sizing is everything)
These are just three examples of too-big-to-fail companies who collapsed overnight at the height of their success. I bet we can continue adding to the list until this email reaches 5,000 words.
In order to prosper in the stock market and build wealth over time, a solid portfolio of stocks that can endure the harsh environment naturally present in the business world is something required.
However, as investors, we have to stay vigilant. Companies won’t last forever, like diamonds and gold. These are, indeed, the only ones that are truly eternal.
“I don’t need love
For what good will love do me?
Diamonds never lie to me
For when love’s gone, they’ll luster on”
Chart of the Day
20 businesses that died in the 2010s
One of our team members, Tasha Waddell, posted an interesting article from Business Insider yesterday in the Clubhouse “20 businesses that died in the 2010s”. Access it here.
Video of the day
Diamonds Are Forever (James Bond Theme Song)
Soundtrack performed by Shirley Bassey for the 1971 James Bond movie Diamonds Are Forever.
Today’s line up
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