The late John D. Rockefeller is the richest man in modern history. That could change soon…
Even if you’re not a history buff, you’ve probably heard of John D. Rockefeller. He was the business magnate behind the Standard Oil monopoly.
Rockefeller founded Standard Oil in 1863. By 1890, the company controlled nearly 90% of the U.S. oil market… making it one of the country’s biggest monopolies ever.
In 1913, Rockefeller’s estimated net worth was $350 billion (inflation-adjusted). That made him the richest man in the world at the time—a title he still holds.
Today, there’s another American magnate who could dethrone Rockefeller’s place in history.
He’s Jeff Bezos, the CEO of Amazon. According to Forbes, Bezos is worth nearly $100 billion. That makes him the richest man alive.
And he’s getting richer.
I’ve predicted in the past that Amazon could be the first U.S. company to reach a $1 trillion market cap. If that happens, we could see Bezos catch or surpass Rockefeller in net worth. If not, he’ll come close.
There’s a reason Bezos is following in the footsteps of Rockefeller—monopolies make a lot of money.
Today, the biggest companies in the world are “modern monopolies.” And they’re all growing. I’ve been pounding the table about these companies since May.
If you haven’t bought into them yet, here’s why you should…
What Are Modern Monopolies?
In May, I told you the five largest U.S. companies by market cap were Facebook, Apple, Amazon, Microsoft, and Google.
All five have one thing in common: They’re platform companies.
Alex Moazed and Nicholas Johnson coined the term in their groundbreaking book Modern Monopolies.
They define platform companies as ones that “allow consumers and producers to connect with each other and exchange goods, services, and information.”
Although they are similar in size and market dominance, Moazed and Johnson say platform companies have little in common with their predecessors.
Since they don’t own the “means of production” like old monopolies, platform companies don’t have the ability to shut out competitors.
What they do own is the “means of connection.” That gives them indirect control over producers and consumers. And that’s what makes them modern monopolies.
Bezos’ Amazon is the best example of this.
Anyone who wants to sell something can post their product to Amazon’s website. Then, millions of customers come to Amazon to buy those products.
The company routinely sells 300-plus items per second. No other business can boast those types of connections. That’s why Amazon controls 90% of the online retail market.
Facebook dominates the “means of connection” between people in the social media sphere. And Google dominates the “means of connection” between users searching for information online and information providers.
This is the business model of the future. And it’s going to make investors a lot of money.
Since I wrote about platform companies back in May, their prices have soared.
As you can see, these companies are up between 12% and 21%.
And they really took off in the past two weeks as they reported stellar earnings.
These platforms are increasing profits at astounding rates. Apple is the laggard… and it’s still growing profits by 25%.
Analysts expect these stocks to grow profits by 70% this fiscal year. And profits aren’t the only thing growing… so are revenues.
Except for Google (which stagnated this year), the other four platform companies are growing the top line by an average of 28%. That’s unheard of for companies of their size.
The next two biggest U.S. companies are Berkshire Hathaway and Johnson & Johnson. They’re only growing sales by an average of 8%.
These modern monopolies will continue to outperform the market for the remainder of the bull run. Just buy them… You’ll be glad you did in a couple years.
Nick Rokke, CFA
Analyst, The Palm Beach Daily
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