Global Opportunities Beyond the Radar

1,000% a Year: The Industry of the Future?

 

Quantum Wealth Summary

 

 


 

In August 2020, Forbes estimated Jeff Bezos had a net worth of $200 billion. He was the ‘richest man in modern history’.

To put that into perspective, this was around the value of the entire GDP of New Zealand at the time.

Divorce and Nasdaq drawdown have since reduced Bezos’ wealth. Yet there are compelling lessons for investors here on how to find growth.

We are in a simple yet devilishly complex business of finding companies and industries poised for the next round of strong growth.

Bezos was in the same business.

In the early 1990s, he was working at the hedge fund D. E. Shaw. Right place, right time. His role was to research businesses involved in the new and emerging internet industry.

Reflecting back on the founding of Amazon [NASDAQ:AMZN] in 1994, Bezos said in a 2001 interview: ‘I found this fact on a website that the web was growing at 2,300 percent per year.’

 

Amazon was started in the garage of the home Bezos rented in Seattle with his then-wife MacKenzie. His parents contributed almost $250,000 in seed money. Source: Feedough

 

Well, the rest is history. Bezos, determined not to look back with regret, gave up his Wall Street annual bonus, and began building an online bookstore.

I was reminded of this tale recently, watching the new documentary Rise of the Billionaires (currently on TVNZ).

And I found myself asking, ‘So, where is the next industry ready to grow 2,000% a year?’

We hear a lot about the ‘exponential growth’ of various sectors. From EVs, to renewable energy, to lithium.

Yet I am not surprised that Tesla [NASDAQ:TSLA] and other makers saw their stock prices fall disastrously last year.

The CAGR (Compound Annual Growth Rate) for EVs is only expected to run at around 22.5% through to 2030.

There’s a lot of margin of error available in 22.5%. Charging stations may not roll out fast enough. Consumer patience with charge times is waning. The emission equation versus efficient fuel vehicles is far from decisive.

So, I’m sitting at a table at our local café in Devonport with a friend and investor. Between the two of us, there is over 70 years of investing experience around the world.

We’ve seen every kind of market cycle. He is a pessimist and orders mince on toast. I am an optimist and order the salmon benedict.

But we both agree on something.

Maybe it won’t be 2,000%. But it might be 1,000%. And it may come from this sector…

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