Apple, Tesla Reinventing Or Low-Cost Business Models Emerging? Such 100% Growth Opportunities Might Be Missed If Focus Stays On Rates/Inflation, Says Economist

The markets are in the doldrums as an inflationary environment is keeping the Federal Reserve from easing up on rate hikes. As investors flee the markets in droves, economist Raoul Pal has this piece of advice for the community.

What Happened: Exponential-age technologies are so "incredibly game-changing" that this macro set-up is one of the best gifts we will ever be given, economist Pal said. But most people won’t take it because they consider interest rates and inflation as more important than exponential growth, he added.

“It is the rate of change of rates that hurts growth, not absolute rates, and when we hit ‘terminal’ rates the rate of change goes to zero (or negative if they cut),” the economist said.

He sees new-age technologies such as AI, metaverse, IoT, longevity, distributed computing, space, robotics, genetic science and blockchain as “unstoppable.”

Most people miss out on this, he said, adding it could be Apple Inc. AAPL or Tesla Inc. TSLA reinventing, or even a “shitty, low-cost capital” business model emerging.

Everyone will miss that 100% year-over-year growth, rendering those rate/inflation fears invalid, he said. This is “secular” and not “cyclical,” he added. Very soon, valuations will be very attractive, according to Pal.

“Exponential trends are not mean reverting except to the long-term long trends," he said.

See also: China's Semiconductor Industry 'Decapitated Overnight': What 'Annihilation Looks Like'

Why It’s Important: Most blue chips and high-growth stocks have taken a heavy beating in the current market downturn. Tesla, for instance, is down about 50% since its Nov. 4 record high. This is despite the company continuing to deliver despite the macro and geopolitical pressures.

Fund manager Cathie Wood has previously gone to bat for technology. In May, she suggested artificial general intelligence will likely transform the way the world works. This tech alone can help accelerate GDP growth from 3% to 5% per year currently to 30% to 50% per year, she said.

Photo: Thapana_Studio via Shutterstock