People love new things, and investors are no different. Currently, investors are fixated on artificial intelligence. Before that it was electric vehicles. Further back it was cryptocurrency. And prior to that, it was software. New technologies are fast moving and grab media attention.

Less talked about are older technologies. These are slower moving, though have stood the test of time. Think of air conditioning or water filtration.

There’s something to be said for valuing things which have endured. Because the longer something’s lasted, the longer it’s likely to last. It’s proven that people know the product or service, and often depend on it.

For this reason, I like older businesses. These are businesses that have done something right to have lasted. They’ve proven stronger than competitors. They’ve probably applied a certain formula for years and decades. And they’ll probably continue to apply that formula in future.  

The Lindy effect

There’s a term for the above and it’s called the Lindy effect. The theory is that how long an idea or technology may last is correlated with how long it has already lasted. Put a different way, old things have better odds of getting older still than newer things.

The term was first invented by a media columnist before being taken on by statisticians, including Nassim Taleb, who popularized it. In his book, Antifragile, Taleb, said of the Lindy effect:

If a book has been in print for forty years, I can expect it to be in print for another forty years. But, and that is the main difference, if it survives another decade, then it will be expected to be in print another fifty years. This, simply, as a rule, tells you why things that have been around for a long time are not "aging" like persons, but "aging" in reverse. Every year that passes without extinction doubles the additional life expectancy. This is an indicator of some robustness. The robustness of an item is proportional to its life!”

Taleb elaborated further in his later book, Skin in the Game, where he linked the Lindy effect to fragility. For Taleb, “time is equivalent to disorder, and resistance to the ravages of time, that is, what we gloriously call survival, is the ability to handle disorder”. And “things that have survived are hinting to us ex post that they have some robustness”.

Market application

On this point, I remember getting an odd request when I was an equities analyst at a stockbroker in Asia. One of the more successful funds in the region at that time, First State, was a large client of my firm, and they requested analysts provide them with annual write-ups on the histories of 20 nominated companies.

First State didn’t just want things you could get from Google. It wanted anecdotes, background on leaders past and present, and insights into company culture.

First State may have heard of the Lindy effect because they were one of the few investment firms that valued the history of companies, and wanted to learn what made them tick over long periods of time.

Some of the oldest companies on the ASX

In the spirit of valuing enduring businesses, here’s a list of some of the oldest companies listed on the ASX.  Note that the youngest company on the list is 95 years old, and the oldest has lasted 206 years.

AGL (ASX: AGL)

This company was formed in 1837 to light up the town of Sydney via gas. It was the second company to list on the Sydney Stock Exchange, initially as the Australian Gas Light Company in 1871.

Now it’s the largest generator and seller of electricity. There’s been plenty of change of late after merging with Alinta and then demerging to create separate retail and infrastructure companies.

The company has had recent challenges with the moves toward net-zero climate emissions, though it remains a premier energy provider and it’s likely to remain that way for a long time to come.

Washington H. Soul Pattison (ASX: SOL)

This investment company began life as a pharmacy in 1872. It’s then that Caleb Soul opened the chemist in Pitt Street, Sydney. In 1886, Lewy Pattinson opened a pharmacy in Balmain. Caleb and Lewy became friends and in 1902, Washington Soul bought out Pattinson and a year later, listed on the Sydney Stock Exchange.

Today, the company has a diverse portfolio of assets across many industries. Amazingly, it’s managed to pay a dividend in every year since listing. And SOL has rewarded patient shareholders handsomely for many decades.

ANZ (ASX: ANZ)

The Australia and New Zealand Banking Group Limited (ANZ) dates back to 1835. Its current corporate structure was set up in 1970 when ANZ merged with the English, Scottish and Australian Bank (ES&A). It was the largest bank merger in Australia’s history at that time. ANZ itself was formed in 1951 as the result of a merger of the Bank of Australasia and the Union Bank of Australia – and these banks’ histories go back to 1835 and 1837 respectively.

ANZ is now the second largest Australian bank by assets.

Australian Foundation Investment Company (ASX: AFI)

AFIC dates back to 1928. The company is now the largest Listed Investment Company (LIC) in Australia. It’s attracted a large group of investors due to its conservative investment approach and ability to consistently grow income and dividends.

Westpac (ASX: WBC)

Westpac calls itself Australia’s oldest bank. It started as the Bank of New South Wales in 1817. In 1956, it was granted a license to operate as a retail bank, meaning it could pay interest on savings deposits. In 1982, it merged with the Commercial Bank of Australia. And in that year, the company changed its name to Westpac. A decade later in 1992, Westpac lost $2 billion and was raided by Kerry Packer as it fought for survival.

Today, the bank is comfortably ensconced in the banking oligopoly which is unlikely to change in the decades ahead.

BHP (ASX: BHP)

It’s hard to believe but BHP began life as Broken Hill Proprietary in 1885. It owned a single silver, zinc, and lead mine in the outback. BHP merged with Billiton in 2001. Billiton began with a tin mine in what’s now Indonesia in 1851.

In 2015, the company decided to spin off assets mostly belonging to Billiton into South 32. And the Billiton part of the name was dropped two years later.

Today, BHP is the world’s largest mining company by market capitalization.

Equity Trustees (ASX: EQT)

This company is embedded in the Melbourne establishment. The walls of its headquarters are decorated with portraits of former Prime Ministers, Premiers, and Governors-General who’ve served on its board. Former Prime Ministers Robert Menzies and Stanley Bruce were once on the board.

Throughout much of its history, Equity Trustees has offered estate planning services to the wealthy. Yet that’s changed of late as the company has become a leading player in the superannuation trusteeship sector. It now has more than $150 billion in funds under management, administration, and supervision.

Whitefield (ASX: WHF)

This company is an LIC with a difference. It only invests in industrial companies, therefore stays away from resources.

Initially, the company invested in mortgages, taking advantage of a resurgent housing market during the 1920s. But with the Great Depression, and then price controls on house prices and rents during World War Two, Whitefield pivoted to investing in companies that would benefit from growth in the broad industrial economy. That’s how the investment strategy evolved towards owning a diversified portfolio of Australian share for long-term wealth creation.

Rio Tinto (ASX: RIO)

The company was founded in 1873 when a group of investors bought a mine on the Rio Tinto, in Huelva, Spain from the Spanish Government. It’s grown through a long history of mergers and acquisitions. Today, it’s the world’s second largest materials company and not only focuses on mining but refining, especially iron ore and bauxite. It’s dual listed on both the London Stock Exchange and ASX.

James Gruber is an assistant editor at Firstlinks and Morningstar.com.au