This post was written for CFA Institute and first published on the Enterprising Investor.
It’s easy to forget that business and commerce have been around for a long time, in fact almost as long as civilization itself.
William Playfair — who among other things, invented the bar chart — published a book in 1805 which investigated the causes of decline and fall of wealthy nations.
The chart below was in the very front of the book. It’s particularly provocative when read alongside modern attempts to look at the way that the economic productivity of countries changes over time, like this excellent Yearbook of Investment Returns from Credit Suisse.
Both excellent works serve as reminders that investors are well served by periodically remembering how dramatically things can change over time. In the graph below, the United States of America is newly ascendant in the international scene: a true emerging market. Russia, England, France, and Germany are the world’s economic powerhouses. China and India are not mentioned.
Chart of Universal Commercial History
It’s amazing what can change in a few hundred years, or even in a few decades.
To choose an example of a drastic change closer to living memory, did you know there was a time when serious businesspeople doubted that a South Korean company could produce a microwave? In “The Silent War“, a 1990 book about the future of competition in business, the author details what Samsung had to overcome in order to compete.
A glance at their market share in products that require highly advanced manufacturing processes, like hard drives and flash memory, makes it almost funny that there exists in living memory a time when serious businesspeople were skeptical they could pull something like that off. In the 45 years since Samsung’s founding, the competitive landscape in business has altered so much it is barely recognizable.
The investment ramification of this walk through history is straightforward: what’s changing under your feet?