Roaring Twenties

“The Roaring Twenties will not be the result of a post COVID recovery, although that will be part of it, but one derived from the extraordinary creation of wealth and productivity enhancement that the current technological wave is delivering.”

Nick Train, manager of the Lindsell Train Global Equity Fund and Finsbury Growth and Income Trust is bullishly optimistic for the economies and companies he backs within his portfolios. A common message from many of the most successful managers is that they have no idea where they are in any boom or bust cycle, they ignore the short term noise and concentrate on the long term sustainability in the profits of the companies they back.

One only has to read today of NASA’s  extraordinary feat of the landing of the Perseverance Rover  on the surface of Mars to understand the pace of technological change – and it only left Earth in July of last year. From science fiction movies one was led to believe it would take years to reach Mars.

In 1965 Gordon Moore forecast that the number of components on an  integrated circuit board would double every two years.  He predicted that cramming more components onto the circuit board would “lead to such wonders as home computers”. His prediction was proved correct and is now referred to as Moore’s Law. Can this continue at such a pace? James Anderson, Co- Manager of the Scottish Mortgage Investment Trust spoke with  the Chief Scientist at ASML a Dutch manufacturing company of machines used to produce integrated circuits and computer chips whose assertion is that over the next twelve years there will be a sixty fold increase in computing capacity. It is hard to get around the implications of this fact but it is likely that whole industries will be transformed by such an increase.

James Anderson goes on to explain how two inevitable exponential trends being applied to healthcare will translate into real outcomes for the benefit of patients, gene sequencing and machine learning. “We have reached the extraordinary point where gene sequencing and machine learning is giving us insights that run well ahead of our understanding of human biology.”

Moderna is a case in point.  It is little known that Moderna took just four days to carry out the gene sequencing to creating a vaccine for COVID -19 and did so without ever having the virus in their lab. (The time delay in roll-out is regulatory). There is a big misunderstanding between the wonders of the company’s COVID- 19 vaccine and its long term opportunities. The firm has the potential to lead the world in the treatment of the four big killers, autoimmune disease, cardiovascular disease, cancer and infectious disease.  The CEO, Stephane Bancel, seems to have realized that the traditional biotech model, let alone that of Big Pharma, simply doesn’t work. He is determined to make improvement not marginal, but tenfold. He has brought a silicon valley type attitude to drug development . Such is the pace of development that companies will start to run themselves more aggressively. He wants to prove that success in biotechnology is replicable and abundant.

James believes people are not grasping Moderna’s ability to keep replicating what it has done in the one off COVID saga, and not only in vaccines. “It is the most culturally different and identifiably ambitious company that I have come across in health care in a very long time”.

Scottish Mortgage is well known for its capabilities in identifying the world’s most promising growth companies and holds around 30% in privately owned unquoted companies and has a considerable pipeline of opportunities from an ever broadening pool of industries in transport, healthcare and energy.

An article produced by Baillie Gifford & Co. Ltd.

Past performance is not a reliable guide to future performance.

The views expressed in this article are those of the interviewees and the author and should not be considered as advice of a recommendation to buy, sell or hold. They reflect personal opinion and should not be taken as statements of fact nor should any reliance be placed on then when making decisions. Both the Lindsell Train funds and the Scottish Mortgage Investment Trust are holdings within the Irongate Bespoke Stockbroking Global Equity Portfolio.