Natural Limit to Growth
What most investors tend to forget
In the heart of California's Redwood National Park, Hyperion, the tallest tree on Earth, stands as a natural wonder. Towering at 380 feet, this coast redwood has grown for centuries, weathering storms, fires, and the changing climate. Yet, even Hyperion, with its monumental height, will not grow forever.
When it was young, Hyperion could grow up to 10 feet per year under the right conditions. However, after more than 700 years, the tree now barely grows at 1.5 inches per year. The most common explanation for this decreasing growth rate is gravity. As trees grow taller, they must work harder to overcome gravity, pushing water and nutrients all the way to the top. Additionally, they face structural limitations in supporting their weight and increased wind exposure. Eventually, all trees reach an equilibrium.
Everything has a natural limit to growth. This concept is evident everywhere if you look around.
It is an elementary principle of aeronautics that the minimum speed needed to keep an aeroplane of a given shape in the air varies as the square root of its length. If its linear dimensions are increased four times, it must fly twice as fast.
Now, the power needed for the minimum speed increases more rapidly than the weight of the machine. So the larger aeroplane, which weighs sixty-four times as much as the smaller, needs one hundred and twenty-eight times its horsepower to keep up. — J. B. S. Haldane
Yet, most investors tend to forget this when they invest.
If you found this interesting, check out Salad Oil Scandal, American Express, & Warren Buffett