Bear Stearns Says NanoBubble Yet to be Blown

In a recent Barron's interview, Francois Trahan, Bear Stearns' chief investment strategist, said the next hot areas (after the housing bubble bursts) to look at for the next major "bubble" include China, nanotechnology, water purification, genomics, voice recognition, homeland security, pandemic treatments and emerging markets.

Looking a year or two down the road, he said, "It's never too early to start thinking about where money will flow once we see another wave of easy credit."

Let's look at this. Bear Stearns is a great, respected, risk-taking, entreprenuerial firm.

China and emerging markets? Quite possible . . . again . . . but a bit of "been there; done that."

Voice recognition - - nanotechnology may have some impact and related stocks may rally sharply, but this is too small a space to support any kind of bubble that you or I would note in the history of finance.

Genomics, pandemic treatments, homeland security, water purification and nanotechnology??? Nanotech is likely to impact ALL of these in a significant way.

I think what Trahan is really saying is that Nanotechnology is the next major Bubble, that it will START to inflate in the next 30 months (mid-2006 to end of 2008) and that is exactly what I've been saying since early 2002!

The guy's obviously a blooming genius.

AMAT Acquires AFCO, da. Luna Innovations IPO, nyet.

Semi manufacturing equipment giant, Applied Materials, announced the proposed acquisition of Nanotechnology.com Small Technology Index member and thin-films maven, Applied Films for about $450 million.

This is a good thing for all concerned and it demonstrates the way most small tech companies are going to grow over the next 3-7 years. They are going to be acquired or merged out of existence.

On the other hand, a few investment banks and Luna Innovations of Virginia announced an IPO (normal timeframe expected would be 3-10 months after the February 2006 press release.)

We believe the window of opportunity in 2006 for small tech-related IPOs is long closed and would be surprised to see it come this year . . . we would also not be surprised if it didn't come in 2007 either.

Between Sarbanes-Oxley, a steadily weakening stock, tech and small-cap marketplace, there is very little to recommend an IPO exit strategy into the public markets anytime soon. Note to VCs and bankers: Just because Nanosys couldn't go public in July 2004 is no reason to think the worst is over here in mid-2006.

It isn't.