Note to Nanotech Speculators
I'm not an investment advisor and only have 32 years of professional financial, trading and investment experience, but I would call your attention to the totally illiquid stocks in the Lux Index that is now trading as a PowerShare ETF. Maybe I'm crazy; I'm sure I'm not the ONLY one who has thought of this, but consider what might happen to illiquid names like SKYE, OLED, ACCL, IMMC, NANX, BPA and ALTI if the ETF gains popularity.
I'm not giving advice here, just saying this is an interesting idea to consider.
Cool, huh?
A Cool Nanotech ETF or NOT?
The big news from my perspective is the announcement of The PowerShares Lux Nanotech Index ETF which will begin trading soon. The good news is that this will be the first way for average Joe's and Jill's to invest in a broad portfolio of nanotechish stocks. The bad news is that (as much as I like and respect the folks and work done at Lux) they have to use the Lux Index, which was, maybe, a great first draft two or three years ago!
It makes little sense as a true index of nanotech stocks, and even less as an index for the larger category, small technology.
I've been thinking about an international, small tech index for nanotechnology.com for more than two years, and our work should be completed in the first quarter of 2006. The Merrill Lynch Nanotech Index, which I like much more, doesn't really impress either, but we consider the Powershares to be a poor approximation at best – 3M? Headwaters? Hewlett Packard? GE? IBM? NEC? et al.?
Perhaps Lux can't be blamed for profiting from work they did a couple years ago, but the PowerShares folks sure look foolish.
C'mon – the public and professional investors deserve better – way better; and we're going to give it to them.
Welcome the NanoMasses and a Bit o' History
Today, it is hard to imagine two or three million Americans interested in nanotechnology. In Michael Faraday's time in the mid-19th Century, it would have been equally difficult to imagine a world full of electricity, but it was to be only a few decades later.
I was at my brother-in-law's friend's apartment in 1982 and witnessed the "internet" and "email" as they were then, and had a friend who was an early adapter in 1993. He was using Veronica and Mosaic in a flat world, not Google. Seven years later the world had been revolutionized.
About 30 years after Einstein announced that mass and energy were interchangeable (1905), Lisa Meitner and Otto Hahn proved it; a few years after that, the whole world knew its devastating effect.
More recently, transistors, which were invented/discovered in 1947 and integrated circuits in 1958 didn't popularize (made up word, I think . . ) into transistor radios, hand-calculators and personal computers until 1962, 1973 and 1981 (well, for me, anyway).
Since Feynman's talk, through the seminal work on what we now refer to as nanotechnology from the 1970's through the mid-1990s, until today, the nanotech-literate population is TINY. It's going to change dramatically, revolutionarily over the next 5 years.
In 2005, a few hundred or a few thousand may read these words. It won't surprise me if more than a million will have read them by 2010. (and, of course, they should have all read Nanotech Fortunes by then)
Wine, Aspirin and Nanotech Pseudo-Mergers
A couple interesting items across my desk this week.
One from the nanotech safety-mavens at Rice University made me smile. Seems that manufacturing buckyballs, quantum dots, carbon nanotubes and the like, is about as risky as making wine (I love wine) or aspirin (take a little one everyday) and much less dangerous to the environment than oil refining and other common industrial processes. Just remember, this study assessed manufacturing and raw material risks, not human risks associated with contact, inhaling or in vivo usage. EPA and NSF-funded Rice and the insurance industry, led by Swiss Re have been instrumental in driving research in this important area.
In the "things are not always what they seem" catalog, San Diego biotech powerhouse, Invitrogen took over not one, but two, small tech private companies, Quantum Dot and and BioPixels. Clearly, Invitrogen wants to dominate cutting-edge technologies related to fluorescent nanoparticles, and the nanotech community is greeting the news with hosannas. It speaks highly of the science, but I don't know if investors made any money on this; no one is talking $$$s or details. "Don't let the good news spoil all the fun." I see this (call me a cockeyed optimist, I guess) as more evidence that - A. private nanotech company valuations are coming DOWN - B. some good companies CAN'T get another VC round on their way to IPO-heaven (if they coulda, they woulda) and C. larger companies will buy good small technology companies at the right price - LOW.
How the Economy Affects the Development of Nanotechnology
WELL, it does; plenty!
It's silly to think that companies and labs and startups grow in a vacuum. While the 1990 Painted Cave fires in Santa Barbara (more than 900 homes burned to the ground, including those of 11 close friends) proved to me that disaster can act as a boost to the economy (contractors were in hog-heaven and my friends built brand new, tricked out 5,000 sq foot modern palaces where their 1,700 sq foot 40 yr old ramblers once stood), largely this was due to the fact that mostly (only?) insured (even household effects and living expenses while re-building), single family dwellings were destroyed.
Katrina and Rita not only destroyed businesses but rental properties. What do you say to a typical (read, not independently wealthy) landlord with a couple of 12 unit apartments when the mortgage payment is due and he or she has no tenants? . . . no, none, nada tenants.
A slowdown or mild recession starting sometime in the next 3-9 months will hurl already cash-starved small technology startups toward the abyss, and forget about IPOs. VCs and bankers don't want to hear it, and they are kindly, optimistic folks on the whole, but we are teetering towards the stagflation of the late 1970s (see 1980/81 recession) culminating in what I like to call "the day Paul Volcker saved the world" in mid-1982. It's deja vu all over again, and this is a movie you don't even want to rent.
I think we'll see something much milder, say a slowdown/recession between the normal one in 1990/1 and the super-mild one in 2001/2. But, that said, I think you should count on it. Not close to the end of the world, but bad enough to cost investors, speculators and nanotech companies cash and time.
The Killer App and Tipping Point for Nano
Since early 2002, it has seemed to me that the "tipping point" for nanotechnology - the point at which there is enough serious interest by investors to really start talking intelligently about "nanotech stocks" or small tech stocks as a group that could carry itself without an undercurrent of nervous giggling, was when 20% of the brokers and investors who identify themselves as "high-tech-oriented" (roughly 22% of all brokers and investors) were small technology-literate. This point would also mark the ability to begin the first of many "nanotech booms" and the opportunity to make a killing in related stocks.
That's 4-5% of the brokerage and investor community, or about 1 1/2 % of the adult population.
I estimate we're about 25-35% to that goal in October 2005. My and others' question has always been, what will trigger the tipping point? Time, a killer application, a nanotech-related movie or book, one or more hugely successful IPOs or an accumulation of nano-products? Until recently, I've been unsure, but now I have a prediction.
CNT (carbon nanotube) displays will likely trigger the first nanotech boom, as they beat all current HDTV displays in quality, energy consumption, cost to produce and own and become available at great prices at your local Circuit City in the mid 2006-end 2008 timeframe. By the way, this is exactly the same timeframe that I projected the first boom to start in Nanotech Fortunes As recently as eight months ago, after speaking with my Scientific Advisory Board member and one of the world's leading carbon nanotube research scientists, Dr. Ajayan, I was convinced that Motorola, Samsung, Toshiba, Dupont and the rest might be out of touch with the timeframes required to solve some physics and mass-manufacturing issues related to CNT-based display technologies. That changed for me this past Thursday when I received this cryptic message from the renowned scholar - "I would not be surprised if (an announcement that a commerical CNT-based display was available for purchase) . . became real. Let us hope so, for the sake of nanotubes . . " - and I might add, for the sake of the future of the public's positive orientation towards nanotechnology.
Within a few weeks or months of the successful launch of such a TV set, the clamor for nanotech investments will be deafening. The "tipping point" will be behind us.