The Massive Investment Implications of the 'Law of Accelerating Returns'
Editor's note: Technological breakthroughs are reaching an inflection point...
Stansberry Research's newest analyst, Matt McCall, is an expert in what he calls "hypergrowth investing." He uses his 20-plus years of experience to identify the industries that will shape our future – and the stocks that have the potential for outsized growth as a result. And according to Matt, the innovations we've seen so far are only the beginning...
Matt says the convergence of new technologies over the next 10 years will make it a decade of epic proportions. And if you know what companies to invest in at the extremely early stages, it could lead to life-changing gains...
Today's Masters Series is adapted from a recent special report for Matt's newest research service, Matt McCall's MegaTrend Investor. Read on to learn about the growth process that can give you a huge investing advantage... the principle that will lead to the biggest innovations of the next decade... and the types of stocks with the potential to grow at least 10X in size...
The Massive Investment Implications of the 'Law of Accelerating Returns'
Let me tell you a story about a king who invited a traveler to play a game of chess...
The king loved chess – and like many people in power, he wanted a challenge. The king told the traveler that he could name his reward if he won the game.
The traveler modestly asked for some rice. If he won, the king was to give the traveler a single grain of rice on the first square of the chessboard... and then give him double the amount – two grains of rice – on the next square... and on and on. The third square would hold four grains of rice, and the fifth would hold eight.
The king lost the game.
Being a man of his word, he called for a bag of rice and began placing the promised grains on each square of the chessboard. He put one grain on the first square, two grains on the second square, four grains on the third, and so on.
Eventually, the king realized the numbers were getting very large. He owed the traveler 32,868 grains of rice on the 16th square.
And soon, the king realized he couldn't fulfill his promise. Because of what's called "exponential growth," he would need to put more than 1 million grains of rice on just the 21st square.
By the 31st square, he would need to put down more than 1 billion grains of rice.
And finally, on the 64th and final square, the king would need to put down 18,446,744,073,709,551,615 grains of rice – more rice than the kingdom could produce in more than 100 years.
That is the power of exponential progress.
By the time you get to the second half of the chessboard, each stage of growth produces massive change relative to the early stages.
Knowing the difference between linear growth – which increases by the same amount at each interval – and exponential growth is essential to being a successful long-term investor. It instantly gives you a huge advantage... and makes the difference between treading water with your investments and making life-changing gains in your personal wealth.
When a small number grows at an exponential rate, the first stages of growth aren't necessarily incredible. Looking at a chart, the growth doesn't soar upward during the early stages.
The massive growth happens at an inflection point – when the exponential growth begins to "snowball," like it did on the second half of the king's chessboard.
This is the "liftoff" point you see in the chart below...
Over the last several decades, advancements in hypergrowth megatrends like artificial intelligence, the Internet of Things ("IoT"), the future of health care, telecommunications, and self-driving vehicles have followed a trajectory like what you see on the chart above.
That's because they started like every other next-generation technology... quietly and with little understanding, acceptance, or adoption. But now, after years of slow incremental growth, these technologies are starting to enter the liftoff phase – when adoption and evolution will accelerate at exponential rates.
These technologies are crossing over to "the second half of the chessboard"... when the growth truly accelerates.
Over the next 10 years, multiple technological breakthroughs will converge at the same time to make this decade one of historic proportions.
And it's all thanks to the "Law of Accelerating Returns"...
That's a term that MIT futurist inventor Ray Kurzweil coined. Kurzweil, who currently works at Google parent Alphabet (GOOGL), believes that we're going to experience 20,000 years of technological change over the next 100 years... or 2,000 years of technological change in the next 10 years.
Said another way, throughout the "Roaring 2020s," we're likely to witness all the technological changes that happened from the birth of Jesus to the dawn of the Internet. If you think the world changed a lot with cellphones and the World Wide Web... get ready. That was like watching the preview reel at a movie theater.
The biggest innovations are just getting started.
In a few years' time, you'll be able to see and do all sorts of things never before dreamed of. We'll have flying cars and lifesaving noninvasive medical procedures. You'll be able to sit courtside at an NBA game without ever leaving your home. Your wearable devices will know more about your health than you do.
I'm not exaggerating when I say that every single industry on Earth is going to be reimagined...
And the investment implications will be massive.
But just because these technological innovations will touch every corner of the world, it doesn't mean you can throw your money at any old industry... any old technology... or any old company. You have to invest in the technologies and companies changing the world as we know it.
This means you have to find the companies working within hypergrowth megatrends.
Hypergrowth investing is exactly what it sounds like – the investment of money into industries and companies with the potential to grow at least 10X in size.
Old Wall Street is all too happy to report a 7% to 10% annual return on investment. Tell traditional investors they can double, triple, or even quadruple their money... and they're thrilled.
Now, don't get me wrong. Any investment that makes money over time is fantastic.
But hypergrowth investing isn't about finding one company that will double or triple in size. Like I said, it's about finding megatrends that will shape our future and produce stocks with the potential to grow at least 10X in size. Our favorite investment targets are ones that can produce 100X gains over the long term.
In the past, these were the companies at the forefront of the Internet revolution... or Sears (SHLDQ) when it introduced the world to discounted goods through its groundbreaking catalog... or Apple (AAPL) with its invention of the iPhone... or Netflix (NFLX) when it pioneered the streaming industry.
I could go on... but you get the point.
Hypergrowth investments involve the industries and companies changing the world as we know it.
These types of investments are possible. They've happened in the past... and they will continue to happen in the future.
In my newest research service, Matt McCall's MegaTrend Investor, my job is to find these opportunities... help you invest in them at the very beginning stages of their growth – at the "ground floor"... and let the Law of Accelerating Returns work its magic.
That's how you achieve hypergrowth. And tomorrow, I'll share two such hypergrowth megatrends that are driving the Roaring 2020s.
Here's to the future,
Matt McCall
Editor's note: In Matt McCall's MegaTrend Investor, Matt helps subscribers identify and invest in world-changing trends before they take off for potentially thousands-of-percent gains. He believes these companies are the fastest and best ways you can grow your money in the stock market right now...
Matt recently put together a special presentation with all the details about this brand-new research service – which he's calling "the culmination of my life's work." Plus, he revealed the name and ticker symbol of a little-known company that he says has 100X upside potential. Learn more here.