Long time readers will remember the Compound Interest Quiz from July, 2017 that asked "If something is growing 100% per annum, how much does it grow every six months?" There were many correct answers all of which I posted online.
The SC Businessman responded "All I want to know is what is growing at 100% per annum!."
In response to JR who was working the problem from a few different angles using $1,000 as a basis I offered "The $1,000 needs to become $2,000 in one year (& then $4,000 the next year etc.).
Well it actually has happened.
Check out the following graphic & you will see that Nvidia did exactly what the original quiz asked & even more - it doubled twice in two years.
Click on graphic to enlarge
Using only information from the above graphic (i.e., year 1 Nvidia's market capitalization went from $1 T to $2 T & year 2 it went from $2 T to $4 T) & without using pencil, paper, or a calculator please let me know your intuition regarding Nvidia's performance:
A. Do you think the compound rate of growth is more in the first year than the second?, or
B. Do you think the compound rate of growth is more in the second year than in the first?, or
C. Do you think the compound rate of growth in the second year is less than or equal to the compound rate of growth in the first year?, or
D. None of the above choices.
I will post all correct answers or alternatively will send it privately to anyone who requests it if no one figures it out.
In the meantime I hope you own the next investment that doubles twice in two years. What the heck - three times in three years.
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