Change Is Coming … Faster Than You Think
A private, internal email here at InvestorPlace … what exponential progress will do this decade … how to benefit instead of being destroyed by it
Today, you’re getting a peek behind the curtain …
With permission, I’m going to show you a private, internal email that just circulated here at InvestorPlace.
It’s from our CEO, Brian Hunt, to a handful of department heads, explaining what he sees coming in the investment markets — and as importantly, how fast it’s coming.
Having an awareness of what Brian writes about below — and acting on that awareness — will likely be a major deciding factor between average market returns and massive wealth-creation this decade.
Stepping back, if you’re less familiar with Brian, beyond helming InvestorPlace, he’s a highly-successful investor, trader, and teacher.
Given this, it’s not uncommon for Brian to send internal emails containing his market views.
But I haven’t seen an email from Brian with this much urgency in a long time …
In fact, we’d have to go back to January 2019 when Brian was adamant about a big move coming for gold. Since then, the precious metal has climbed almost 50%, set a new all-time high, and appears poised to continue surging.
While that’s wonderful, the returns attached to what Brian writes about below will likely dwarf anything we’ll see from gold.
At this point, let’s turn to Brian’s internal email. I’ll pick back up with you after it’s finished.
***As powerful and world-changing as exponential progress is, I often get funny looks from people when I describe it
Even most experienced business people don’t understand exponential progress. They don’t understand how it affects their industries, no matter how large those effects are.
In fact, I often get smirks and criticism from entrepreneurs when I warn them about the harmful effects exponential progress could have on their businesses.
They just can’t fathom the idea that their businesses are in danger.
They can’t believe how their strong market positions could be undermined in an instant.
But here’s the thing: Most of the people running businesses and portfolios these days grew up in a world of linear progress and linear thinking.
But what we’re starting to see now is exponential progress.
The world is changing at the fastest pace we’ve ever seen … and that rate of change is speeding up every year.
The rate of change we saw in the world 10 years ago is much faster than it was 20 years ago.
The rate of change we saw in the world five years ago is much faster than it was 10 years ago.
And yes, the rate of change we’re seeing now is much faster than the rate of change we saw five years ago.
Our world is like a car that has accelerated from 10 miles per hour to 50 miles per hour to 150 miles per hour.
As you know, the faster you go in a car, the less reaction time you have. The less time you have to correct mistakes or react to obstacles that appear your path.
If you run over a large branch in the road while going five miles an hour, you’ll feel a small bump.
But if you run over that large branch while going 105 miles an hour, it could break your axle.
This new blistering rate of change has huge implications …
For one, exponential progress is making it so businesses can grow to huge sizes faster than ever before … with fewer employees than ever before.
It used to take a decade for a company to grow to $1 billion in market value. Now, it can happen in months.
And here’s another amazing fact: Recently, Amazon tripled in size in just under three years!
That kind of growth from an already large company was totally unheard of 40 years ago.
These days, it’s a regular occurrence.
But for business owners and entrepreneurs, there’s a dark side to exponential progress.
Now that we are entering an era of rapid change …. In which the rate of change speeds up every year …
… entrenched, seemingly strong companies can be disrupted in a very short time.
They can lose their market shares rapidly. They can see their market values plummet 50% … 60% … even 90% in just a few years.
In 2015, Macy’s was one of the largest, strongest, most admired retailers on the planet. But new, innovative online retailers began gobbling up its market share.
By 2020, Macy’s stock had plunged 85%!
Thirty years ago, this kind of rapid change was unthinkable.
It just wasn’t how the world worked.
So, you can’t blame most folks for not understanding what’s going on now. It’s not how the world worked when they learned their trade.
But this is how the world is working now.
It’s how it will work in the future.
Will you resist or deny the change?
Or will you learn about this new change, embrace it, and harness it?
If you don’t embrace it, you won’t be alone. In fact, you’ll have plenty of company in the poorhouse.
Let’s face it, most people don’t like change.
Change is uncomfortable.
Learning new ideas and new skills is hard work.
It’s far easier to get set in your ways and “coast” than it is to constantly learn about new ideas, new businesses, and new paradigms.
It’s far easier to stick your head in the sand and ignore change and hope things will work out than it is to be open minded, study constantly, and be ready to change at a moment’s notice.
But just know this: As an investor, if you ignore the coming changes, you’ll be acting just like the people at Kodak that ignored digital photography.
You’ll be acting like the people at Blockbuster that ignored the emerging threat coming from Netflix.
You’re acting like the people that managed all the now-bankrupt retailers that ignored the threat from Amazon.
The people running the companies that were mauled and destroyed by their competitors weren’t stupid.
They just didn’t understand how innovation can very quickly change the game they were playing.
They didn’t understand exponential progress.
But I’ll be blunt: if you think like those people in the 2020s, you’re toast.
You’ll struggle in business.
Your portfolio will decline in value or stagnate … while others around you enjoy huge increases in wealth.
You’ll fall behind.
In the 2020s, there will be two kinds of investors. There will be people that acknowledge exponential progress, learn how it works, and use it to their extreme advantage.
And then there will be people that ignore what’s happening and get left behind, and in many cases, lose everything.
They’ll be the modern-day equivalent of Kodak and Blockbuster.
I believe this is the single most important thing that will determine how successful you are in the 2020s.
Knowing how exponential progress works — and anticipating the gigantic shifts it will create — will give your business and investment “superpowers.”
Understanding exponential progress works and harnessing its power is 100 times more important than any election … and 100 times more important than any one trading strategy.
So much of doing well in business and the stock market comes down to getting the big picture right … getting the one most important thing right.
In the 1950s, it was all about knowing how the post-World War II boom would create prosperity. If that’s all you knew, you’d make a fortune.
In the 1990s, it was all about knowing how the Internet would change the world. If that’s all you knew, you’d make a fortune.
In the 2020s, knowing how exponential progress works and how it will change the business world is one most important thing.
Whoever is president … where interest rates are … what the U.S. dollar is doing …
Is virtually meaningless compared to exponential progress when it comes to you building wealth in the 2020s.
You can literally ignore all those things and make millions — even billions — of dollars if you’re one of the rare people that understand and harness exponential progress.
It will be the most important thing that determines if someone is in the “haves” or “have nots.”
It will be the most important factor that determines if your portfolio steadily multiplies in value, allowing you to enjoy an early and very comfortable environment …
… or if you struggle to get by in your old age.
People like to talk about the retirement savings crisis.
THIS is a retirement savings crisis.
If you don’t understand exponential progress, you will have a personal retirement savings crisis.
***Putting exponential progress to work for you
Jeff here again.
While all of our InvestorPlace analysts have been recommending tech-based companies that benefit from the exponential progress Brian just referenced, Eric Fry has been at the forefront.
Regular Digest readers recognize Eric as our macro specialist who has been writing extensively about the “Technochasm.” That’s his word to describe the vast wealth gap that’s expanding today, in large part, due to huge returns coming from select technology stocks.
Interestingly, Eric’s update from yesterday put numbers behind Brian’s warning about businesses going under.
The “temporary” damage caused by the pandemic is rapidly becoming permanent. As of July 10, Yelp Inc. (YELP) had listed 132,580 closures on its crowd-sourced business review website.
According to the company’s July 23 Economic Average Report, 55% of those closures — more than 72,000 businesses, most likely mom-and-pops — are now considered permanent.
On top of that, this morning, we received the grim news about the U.S. GDP falling at a 32.9% annual rate in the second quarter.
Additionally, we learned that the number of people receiving unemployment benefits increased to 17 million in the week ended July 18.
This underscores Eric’s takeaway from his update:
… it’s apparent that this divide between the very rich and everyone else will grow in the coming years.
Being on the right side of the Technochasm has two components — one, avoiding the old guard stocks that will be destroyed by technology; and two, aligning your portfolio with the tech leaders that will drive this exponential progress and create vast wealth.
Eric has put together a research video on the Technochasm that dives into these details. Click here to watch.
A sea-change is coming. Make sure you’re prepared for it.
Have a good evening,
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.