The largest companies of 1956 were large by all measures — sales, market capitalisation, employment, and operating assets. No longer. Walmart and Hon Hai (better known as Foxconn) are today’s largest private sector employers, along with businesses like Compass, which might be regarded as global gangmasters.
Apple’s market capitalisation today exceeds $800bn, and Alphabet is not far behind. For both these companies, operating assets account for about $30bn of that value. Modern businesses like these employ very little capital, and such assets as they do use mostly need not be owned by the company that operates from them.
As a source of capital for business, equity markets no longer register on the radar screen.
John Kay is a person with very clear views. His recommendations definitely carry weight.
Let’s get into the books you’ve chosen. As it’s the one you’ve traditionally recommended, let’s start with Burton Malkiel’s A Random Walk Down Wall Street (1973).
Yes, that’s the book I recommend when asked by people who are highly intelligent, have a little bit of money, but feel at sea. I’m not very impressed by financial advisers—for pretty good reasons. But there is very little you can read on investment that’s not insulting to the intelligence. As you know, there are lots of ‘how to become rich by day trading’ books around, but intelligent people know what to do with those kinds of books: namely not to open them.
John Kay brings amazing insights in his writings. This article explains why a businessman might not be suited for politics. Simple and lucid.
The most important function of a chief executive is to build a strong and supportive management team. The ability of a political leader to do this is seriously circumscribed, because many others also enjoy democratic legitimacy. They are also elected, and they hold positions of power conferred by their party positions. This leads to dysfunctionality in leadership, as individuals who would not have chosen each other and more or less openly covet each other’s roles must work together: neither Donald Trump nor Paul Ryan would have selected the other for the role each occupies.
As the US election draws near, the number of articles on Trump and related topics is reaching stratospheric level. Today’s needull is a slightly older piece by John Kay.
While writing the book, I posed the following question for myself. ‘Of all well-known and successful business people, who is the one most obviously obsessed by money? ‘ And I immediately thought of the star of the American version of The Apprentice – Donald Trump. I followed up this inspiration by importing from the United States a second hand copy of Trump’s autobiography The Art of the Deal (The book was published in 1987, when Trump was barely 40, and was in those days, but sadly no longer, out of print.)