Most people don’t know about it, but the Compound Annual Growth Rate (CAGR), is the number one tool for spotting blockbuster investments.
What is CAGR? Simply put, CAGR measures the annual growth rate of an investment over a specific period, factoring in the magic of compounding. It smooths out yearly ups and downs to give you a clear picture of consistent growth. The formula is: CAGR = (Ending Value / Beginning Value)^(1 / Number of Years) – 1. For example, if you invest $10,000 and it grows to $20,000 in 5 years, the CAGR is (20,000 / 10,000)^(1/5) – 1 = 14.87%. That’s the steady annual rate your money grew, assuming compounding.
That’s pretty good. Most people would be very happy with a 14.87% CAGR that doubled your money every five years…
But I’m here to tell you about a 65.3% CAGR that you can invest in right now. That would turn your $10,000 investment in $123,740 over the same time period. Interested? Read more…
Who Invented CAGR?
Ever wonder who cooked up this tool that measures your portfolio’s true growth? Let’s unpack CAGR’s origins, spotlight a historical investment that delivered massive profits through a sky-high CAGR, and stack it against the red-hot robotaxi industry, projected to rocket to $98.59 billion by 2030 at a 65.3% CAGR. This is how you hunt for the next big win.
CAGR, which calculates an investment’s annualized growth rate while factoring in compounding, doesn’t have a single inventor.
Its roots trace back to 17th-century math, with John Napier’s 1614 logarithms easing exponential calculations and Jacob Bernoulli’s 1683 compound interest formula (e^rt).
By the 20th century, as finance became a science, analysts adapted these ideas to compare investments. The 1950s rise of modern portfolio theory, led by Harry Markowitz, made CAGR a standard for smoothing volatile returns. It’s not one person’s brainchild but a collective refinement by financial minds over decades.
For a real-world example, let’s rewind to Amazon (AMZN) from 1997 to 2007, a poster child for high-CAGR investing. If you’d plunked down $10,000 at Amazon’s IPO in May 1997 ($1.96 per share, split-adjusted), by 2007 it hit $89.15, a 4,446% gain.
The 10-year CAGR was a staggering 46.5%, calculated as (89.15 / 1.96)^(1/10) – 1. That growth came from Amazon’s early dominance in e-commerce, capitalizing on the internet’s rise—a trend akin to today’s tech disruptions. Holding through volatility (like the 2000 dot-com crash) rewarded investors with life-changing returns, turning that $10,000 into $454,600 by 2007.
Now, compare that to the robotaxi industry, a trend screaming high-CAGR potential. Forecasted to grow from $1.76 billion in 2022 to $98.59 billion by 2030, its 65.3% CAGR outpaces even Amazon’s early run.
I’ve found three companies that are riding this wave. Including one with 4D radar for autonomous driving. This company has integrated its tech with NVIDIA’s DRIVE platform, which powers Level 2+ and L3 systems. It has orders from European OEMs for 2028 models.
Another player dominates Southeast Asia’s ride-hailing market with 30 million users. Its autonomous vehicle trials in Singapore, backed by Mobileye, position it to slash costs as robotaxis scale.
The third company, a smaller bet, supports robotaxi infrastructure with AI-driven traffic management. Its sub-$200 million market cap and municipal contracts suggest a high-risk, high-reward but could be a 10-bagger is acceptance accelerates.
Amazon’s 46.5% CAGR from 1997-2007 shows what’s possible when you bet on a disruptive trend early. Robotaxis, with a 65.3% industry CAGR, offer similar potential but face hurdles like public skepticism and regulations.
CAGR, born from centuries of math and finance, is your lens for spotting winners. Amazon’s past proves that trend-driven investing pays off, and robotaxis could be next. Dig into fundamentals, hold through volatility, and hunt for high-CAGR trends.
All the best,
Christian DeHaemer
Outsider Club
