2021-03-13 20:24:18
"So how do you pick three winners out of 2000? I mean it's not so easy to do. It's easy when you look back, but it's not so easy looking forward. So you could have been dead right on the fact that the auto industry- in fact, you probably couldn't have predicted how big of an impact it would have. But you wouldn't have- if you'd bought companies across the board you wouldn't have made any money, because the economic characteristics of that business were not easy to define.
I've always said the easier thing to do is figure out who loses. And what you really should have done in 1905 or so, when you saw what was going to happen with the auto is you should have gone short horses. There were 20 million horses in 1900 and there's about 4 million horses now. So it's easy to figure out the losers, you know the loser is the horse. But the winner was the auto overall. But 2000 companies just about failed, a few merged out and so on.
There were three auto companies in the Dow Industrials in the 1920s and 30s: Studebaker, Nash-Kelvinator, and Hudson Motor. Now those names are all familiar to me, and maybe some of them are familiar to you, but they're not making any cars. They didn't make money. And yet at one time they were in the Dow 30, they were the aristocrats of American business. And they got creamed. So, figuring out the economic characteristics of the winners in a wonderful business is not easy."
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