A version of this post first appeared on TKer.co

Nothing lasts forever.

This is especially true in the business world: Entrepreneurs and executives come and go, and industries and companies rise and fall.

These dynamics are very much at the core of TKer Stock Market Truth No. 9: There’s a lot of turnover in the stock market. Specifically, this observation concerns how stocks are regularly added to and removed from the market and the major indices.

But philosophically, Truth No. 9 also speaks to the many changes that long-lasting businesses experience during their time as going concerns.

People come and go 👋

Last Monday, Apple announced that Tim Cook, its CEO for 15 years, would step down from the top job in September.

This is a big deal as Cook oversaw many of the company’s wins, creating trillions of dollars of shareholder value. From the announcement:

He became CEO in 2011 and has overseen the introduction of numerous products and services, including new categories like Apple Watch, AirPods, and Apple Vision Pro, and services ranging from iCloud and Apple Pay to Apple TV and Apple Music. He was also instrumental in expanding existing product lines. Under Cook’s leadership Apple has grown from a market capitalization of approximately $350 billion to $4 trillion, representing a more than 1,000% increase, and yearly revenue has nearly quadrupled, from $108 billion in fiscal year 2011 to more than $416 billion in fiscal year 2025.

His departure surely has some investors concerned. Indeed, Apple shares fell 2.5% on the first trading day following the announcement, underperforming the market.

While leadership changes don’t always go as hoped, history also shows they can work out well. In fact, Apple is arguably the epitome of what shareholders hope for.

Cook had incredibly big shoes to fill in 2011 when he stepped in for visionary leader Steve Jobs. And he delivered.

“The fact of the matter is nobody is irreplaceable,” Berkshire Hathaway’s Ajit Jain said at his company’s 2024 shareholder meeting. “We have Tim Cook here in the audience who has proved that.”

Jain, who oversees Berkshire’s massive insurance operations, made his haunting observation after his boss Warren Buffett quipped, “We won’t find another Ajit.”

Buffett himself made his comment after the then-recent passing of Berkshire executive Charlie Munger, who had been at the company for over 40 years. Buffett, 95, handed the Berkshire CEO reins to a successor earlier this year.

No one leads a business forever.

Earlier this month, the once-popular, now-flailing shoe brand Allbirds announced a major pivot to its business model.

From the announcement:

In connection with this pivot, the Company anticipates changing its name to “NewBird AI.” … NewBird AI’s long-term vision is to become a fully integrated GPU-as-a-Service (GPUaaS) and AI-native cloud solutions provider. Over time, the Company intends to grow its neocloud platform by expanding its compute and service offerings, deepening partnerships with operators and customers, and evaluating strategic M&A opportunities.

People were quick to remember when the alcoholic beverage maker Long Island Iced Tea Corp pivoted to blockchain and changed its name to Long Blockchain Corp. Some noted the time AMC Theatres bought a stake in a gold and silver miner.

All this is to say, people — including me — have their doubts. It’s one thing to pivot to an adjacent business. It’s another thing to dive headfirst into an unrelated business that just happens to be hot right now.

That said, it’s not crazy for companies to make big changes to how they make money. Sometimes it happens gradually — think of Netflix becoming a streaming platform after starting as a DVD rental-by-mail business. Sometimes it happens through acquisitions — think of Berkshire Hathaway, which started as a textile company but bought its way into the insurance business.

There are a lot of prominent companies today in businesses that their founders probably couldn’t have imagined.

• Nokia, the Finnish telecommunications company, got its start in 1865 as a paper pulp factory.

• Nintendo, the ubiquitous Japanese video game company, originally sold playing cards in 1889.

• Raytheon, the American defense company, was in the refrigeration business in 1922 long before it sold Tomahawk cruise missiles and Patriot missile defense systems.

• Samsung was exporting dried fish and produce in 1938 before getting into the electronics it’s known for today.

• DuPont, the 200-year-old chemical giant, had gunpowder as its first product.

• American Express was delivering packages in 1850 before it got into credit cards.

• Bayer, the German pharmaceutical giant, was originally in the production of dyes in 1881 before it started selling Aspirin. (If you dig a little deeper, you’ll find bottles of Heroin with the Bayer logo on it.)

• William Wrigley Jr. didn’t originally sell gum in 1891. He gave it away for free to customers who bought his soap.

To be clear, companies don’t have to exit their early businesses to survive and grow shareholder value. Alphabet (formerly Google) still offers search; Apple still sells personal computers; Microsoft still sells operating systems; Amazon still sells books online; and Meta (formerly Facebook) still operates its original social network. But all these companies got into many other massive businesses before they became trillion-dollar corporate behemoths.

At the end of the day, publicly traded companies aren’t out here to sell a product. They’re out here to allocate capital, make money, and increase shareholder value. Sometimes, this means shifting focus away from the original product the company was known for.

Leadership transitions and business pivots don’t always work out.

But the companies that pull it off sometimes go on to become the largest and most successful enterprises in the world.

And it’s often the case that turnover in the stock market and the major market indices can be explained by whether or not a company was able to execute these transitions successfully.

All of this makes investing in the stock market complicated and interesting. Who knows what businesses and which business leaders will be responsible for driving the market higher in the years to come?

A version of this post first appeared on TKer.co