November 17, 2025 | Global Equity
Chief Investment Strategist
Strategy Analyst
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The recent shifts in the global economy have left many people feeling shaken. Will artificial intelligence (AI) take our jobs? Will large budget deficits and high interest rates erode our standard of living? Will deglobalization lead to nations that are poorer, inefficient, and isolated? Will climate change disrupt our economies and uproot us from our homes? Underlying each of these questions is a quest for economic growth, a quest for improving one’s lot in life, an ongoing process as old as humanity.
We call humanity’s quest for improvement—to ensure better harvests, more comfortable homes, easier ways to make a living—the Perpetual Growth Machine, or PGM for short. More than a set of economic principles, the PGM is a mechanism that alchemizes needs into opportunity. We put resources toward building tools to address our needs, thereby producing innovation—which creates new needs, which then drive further innovation. In short, a perpetual cycle.
Viewed through the lens of the PGM, economic growth is a highly diffuse, organic, and continuous process. Most people have an innate desire to better their condition in life and that of their loved ones. Our individual and collective appetite for improvement is constantly bumping up against others’ vested interest in the status quo, misaligned incentives, or just plain unwillingness to change. The sum of this continuous tug-of-war can be measured as economic growth.
The Perpetual Growth Machine is a tool for investors.
Economic growth is central to investing; even fixed-income investors are preoccupied with growth. After all, if a business does not make more money tomorrow from borrowing today, how can bond investors expect to be repaid for lending?
The PGM explains why and how economic growth happens. It enables investors of all stripes to identify and estimate investment opportunities accompanying economic growth. It also provides a framework for analyzing conflict between people and businesses that are hungry for improvement and their competitors fighting to maintain the status quo.
The PGM can be applied to virtually all socioeconomic questions, whether historical or current. It can be used to make sense of international conflicts, national and regional policies, political agendas, and more.
As growth investors, we view the PGM as offering a solution to the challenge of understanding and profiting from growth. It is a key to recognizing when and where economic growth will come from next—whether in a new geography or a new industry—and what conditions are necessary to perpetuate this growth.
To illustrate how we, as investors, apply the PGM to our portfolios, we will describe the process in detail, identify the conditions that support growth, respond to objections, and provide examples. After explaining the PGM—how and why economic growth happens—we dwell on the central role of institutions in promoting or stifling the Perpetual Growth Machine and explore why this cycle is indeed perpetual.
Next, we apply the concepts inherent in the PGM toward investing. We will show how the PGM can help formulate the right questions for uncovering the next profitable investment opportunity, demonstrate the role of institutions and financial support in promoting innovation and maximizing investment returns, and, finally, point to the PGM’s implications for active versus passive investing strategies.
You can read our paper by clicking on the image below.
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