Prediction 112
By 2025, at least 25 of the 30 stocks currently in the Dow Jones Industrial Average will be dropped from the index and replaced with other companies.
Prediction 112
Duration 22 years (02003-02025)
Predictor
Stephen R. Waite
Challenger
TBA
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As the pace of technical change accelerates in coming years, so to will the pace of creative destruction. If one assumes that we will experience as much technical change in the next 22 years as we experienced during the 20th century, many companies currently in the DJIA will be unable to adapt. It is interesting to note that only one of the original 12 companies in the DJIA has remained in the index since 1896--General Electric. Chances are we will witness a similar phenomenon with the Dow in the first part of the 21st century.
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By 2025, at least 25 of the 30 stocks currently in the Dow Jones Industrial Average will be dropped from the index and replaced with other companies.
While I greatly respect Steve's investment insights and his Quantum-oriented perspective, I respectfully disagree on this point, as I think Schumpeter's creative destruction is a social, not a technological dynamic. If that is true, it follows long-tuned evolutionary psychological patterns, not accelerating technological ones.
Humans have to make the social decisions as to which companies fail or succeed, and they can't accelerate those decisions, unlike the increasingly human-independent technological evolutionary developmental cycles they are catalyzing. So creative destruction rates are very likely to stay mostly the same (probably a gentle upslope but near saturation), and I'd expect they've been in semi-saturation for the last 50 years or so.
I've discovered other social cycles that have long been been stable to accelerating technological change. If interested, I'll send you a paper on the Sorokin-Smart 30 year Materialism-Idealism-Completion (MIC) Cycle, stable since at least 1700, or visit http://www.accelerating.org and you'll find it there in coming months.
Due to the stabilizing nature of social immune systems (which tend to stay balanced within an envelope of necessary and desirable chaos/destruction) I'd expect creative destruction to follow the same biological thought-constrained dynamic.
I'd be interested in knowing, based on prior creative destruction rates, how many of the DJI we'd expect to still be around in 2025. Perhaps something like 1/2 to 2/3? And of those that disappeared, I'd expect 1/2 to be mergers or fire sales, not outright liquidations. But these are just hunches, I'd like to see hard historical numbers from recent years, and then gently increase them for a counterprediction.
Warmly,
John Smart
________________________________________
Chair, Institute for Accelerating Change
johnsmart{at}accelerating.org
http://accelerating.org
please send me a copy of the sorokin-smart paper
Begging your pardon John, but it seems to me that from what you wrote that you may have misunderstood Mr. Waite's prediction (unless I misunderstood what you were saying).
You said "I'd be interested in knowing, based on prior creative destruction rates, how many of the DJI we'd expect to still be around in 2025. Perhaps something like 1/2 to 2/3? And of those that disappeared, I'd expect 1/2 to be mergers or fire sales, not outright liquidations."
Mr. Waite did not say that the companies would cease to exist. He just said that they would no longer be a part of the DJIA. I am not saying I agree with this prediction, I just wanted to clarify what was being predicted. All 30 of the current components could still be in business in 2025 and he could still win his bet. It is not at all uncommon for Dow Jones to adjust which companies make up the Index. In fact, 8 of the 30 have been replaced just in the last 6 years.
http://www.djindexes.com/downloads/DJIA_Hist_Comp.pdf
I won't agree completely.2025 is only 22 years away from now
In that time, may be 10 to 15 stocks may be replaced at max,
but I don't believe 25 of 30 stocks will be replaced.
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