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@ 2019-10-09 14:01:00

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"If Warren breaks up Boeing and erodes the corruption underpinning Boeing’s business model, who knows what would happen to investor holdings? Maybe one of the spinoffs of Boeing might go down, but other parts of the company could go up as value gets unlocked. It could be in aggregate a net increase in market value. If the aerospace industry gets healthier in terms of products, the resulting multiple spinoffs may become more profitable because there’s just more value to go around.

To take a better example, look at Facebook and Instagram, Amazon and AWS, or Google and YouTube. Scott Galloway notes that any of these, if spun off, would probably lead to net increases in overall market value. Amazon and AWS are probably worth more apart than together, same with Facebook and Instagram. This isn’t just true in technology; in 2015, Goldman Sachs said that JP Morgan should be broken up and that would *help* stockholders in the bank.

Historically, break-ups and producer-ist policies have actually not been bad for the stock market. There are examples, like Teddy Roosevelt filing an antitrust suit against Northern Securities, that caused market problems. But there are many examples of just the opposite. One of my first newsletter issues was about how Standard Oil’s break-up, the break-up of electric utilities, and the break-up of AT&T in 1982 all increased productivity, innovation and stock prices. The Standard Oil break-up helped lead to the gasoline industry, the AT&T break-up helped lead to the internet. In both cases, an incumbent was squatting on world-changing technologies."

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