All investment strategies have the potential for profit and loss, your or your clients’ capital may be at risk. Past performance is not a guide to future returns
Tune in to LTGG’s video series for a long-term perspective on today’s transformational companies.
It was the development scholar Carlota Perez who noted that US blue collar workers in the 1930s Depression could never have imagined the coming jobs-for life era, with its fully-equipped suburban houses and cars in every garage. Similarly, few 1960s hippies would have guessed that natural materials and organic foods would become the preserve of luxury and premium brands.
That periods of change can herald new and unexpected opportunities is, of course, nothing new. From the canal network of the 18th century, to the steam engines of the 19th, to the internal combustion, oil and plastics age of the 20th, to the information technology age in which we live, each revolution has shown striking similarities. Initial giddy excitement (canal and railway mania, the Roaring Twenties, the dot-com boom) was followed by deep and destructive recessions. These then lead to golden ages of creative construction and prosperity: the Industrial Revolution and the great Victorian boom, the Belle Époque and the Progressive Era of the early 1900s, and the post-second world war golden age.
So where are we now? Arguably still in the early stages of the IT age, replete with all the excitement, experimentation and fragilities characteristic of prior revolutions. Could the dot-com bubble and global financial crisis of the early 2000s have been harbingers of the new age? Could that turmoil have nurtured a new tech-enabled and sustainable golden age that will blossom for decades to come?
Professor Carlota Perez thinks so. Her fascinating research challenges us to interpret present-day phenomena from the vantage point of 240 years of technological revolutions.
Such differentiated thinking matters to us as long-term investors. By stepping back from the minute-by-minute news and the relentless treadmill of market commentary, and by challenging received wisdom and our own inherent biases, we can try more fully to understand the tectonic shifts already transforming the world as we know it. From genomics to semiconductors to media streaming to cloud computing to big data to the commercialisation of space travel, the drivers of change and opportunity abound.
Navigating Noise, a video series brought to you by the Long Term Global Growth team, seeks to gather and share some of the thinking we find so valuable when investing for the long term.
Fittingly, the series kicked-off in May with a lecture by Professor Perez on her research into the aforementioned paradigm shifts and what they may imply for the shape of tomorrow. In subsequent episodes, LTGG team members will examine some of the striking traits of companies spearheading and benefiting from these sorts of transformations.
For example, what special qualities should we look for in the leadership of such companies? These are the intangible factors that can’t be deciphered from earnings reports and traditional financial metrics, but which nevertheless have enormous bearing on the fortunes of a business. Also, how can we challenge preconceptions about the prospects of already-giant companies as they surge to a hitherto unseen scale? And is it possible to step back from often-blinkered perceptions promulgated by politics and news media, to think globally about exciting growth opportunities?
We don’t believe we are anywhere close to having all the answers to such questions. But our conversations with our clients, together with visionary business leaders and academic thinkers, do help us enormously. When watching Navigating Noise, please share your questions and comments with us. By continually challenging ourselves, we believe we can get better at generating long-term returns on your behalf.
To watch Navigating Noise, please visit ltgg.bailliegifford.com and click on 'Navigating Noise' at the top of the site – we will be adding episodes to the series in coming months.
The views expressed in this communication are those of the authors and should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect personal opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions.
This communication was produced and approved in October 2021 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.
Potential for Profit and Loss
All investment strategies have the potential for profit and loss, your or your clients’ capital may be at risk. Past performance is not a guide to future returns.
Any stock examples and images used in this communication are not intended to represent recommendations to buy or sell, neither is it implied that they will prove profitable in the future. It is not known whether they will feature in any future portfolio produced by us. Any individual examples will represent only a small part of the overall portfolio and are inserted purely to help illustrate our investment style.
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