Why Life Seems Faster
Does it seem like technology is moving faster over time? It’s not your imagination; it is. Innovations are being developed more quickly and diffusing through our society more quickly than ever before with dramatic consequences for economic growth and investing.
Adoption of Innovations among U.S. Households
- By 1900, the stove had reached 10% penetration of U.S. households; it would be another 60 years before it reached 100% penetration. Newer technological innovations such as the internet, smartphone and social media achieved majority penetration in a fraction of the time.
- As we wrote in The Enduring Force of Innovation, technological advances occur at an exponential rate, which means the rate of change is accelerating. This causes newer innovations to develop more quickly and become adopted by society faster.
- The exponential growth of innovation should inspire confidence in the bigger picture of growth through innovation without having to predict the next invention or becoming overly concerned with the ebb and flow of economic cycles.
- Because the rate of change is increasing, value stocks that appear cheap may simply be victims of change while growth stocks, the purveyors of change, may benefit.
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