Author argues growth investing in renewable energy, semiconductors, AI and data today mirrors early value investing in manufacturing/conglomerates, favoring growth for wealth building.
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Here's what I think:
These value stocks of the past like those favored by Warren Buffett or Rakesh Jhunjhunwala have grown to dominate large portions of the market. Companies like Titan, Berkshire Hathaway, and Reliance now have significant market share and face minimal competition. These are mostly manufacturing or conglomerate businesses. Today it is nearly impossible for a new manufacturing company to emerge and grow like Titan did, offering high asymmetric returns or evolving into a diversified conglomerate. Entry barriers are extremely high.
On the other hand, growth investing in sectors like renewable energy, semiconductors, AI, and data is still in its early stages, like Titan, Asian Paints were back in the days. These industries are developing, with vast market opportunities. The pattern mirrors what happened in the past with manufacturing and conglomerates - companies are discovering new markets and using technology to become efficient, much like Titan, Berkshire, or Asian Paints did in their time.
I believe growth investing makes much more sense to build wealth, even though it sounds like recency bias.