Friday, September 11, 2009

Where Will Growth Come From ?

Something we've touched on in a couple prior posts.* From The Big Picture:

...It would be a good few years before we enjoyed another Cambrian explosion like we did in the 1990s. Recall the full build out of cellular, PCs, semiconductors, software, CPUs (286/386/486) — the explosion of internet websites, and data storage. These were enormous job creators.

Now? I can name 10 niches, most of which have future growth potential, but few that can expand into something truly substantial, rising to the size of any of the giant sectors above.

My top 10 list (in order of biggest near term potential):

1. Nano Technology (Think of the line “Plastics” in The Graduate).

2. Green (low carbon) Energy (generation)

3. Battery technology (storage)

4. Genomics/Stem Cell Research

5. Web 2.0/3.0 — smaller, niche companies using increased bandwidth

6. Robotics — the continued replacement of humans by machine, for both labor and judgement

7. Life extension Technologies (not disease cures, but actual extension technology)

8. Bio-Agriculture (GMF, etc.) Feeding 15 billion people will require some technological breakthroughs.

9. Atmospheric Engineering — modifying Earth’s biosphere to keep it hospitable to Humans in the face of an ice age or global warming;

10. Terra forming/Extra Planetary Colonization (uh-oh, time to go)...MORE


Nanotech: The Key to Storing Carbon? And: Getting a handle on Expected Returns
In an April 15 post "Best strategy for long bear market 2010-2020" we said:
Mr. Farrell may be more bearish than necessary. We date the beginning of the secular bear* market to the first quarter of 2000 and use the DJIA's 11,722 close on Jan. 14 of that year. The Nasdaq hit it's all-time high on March 10.

We consider all of the time the market spent above that figure, starting with the Oct. 30, 2006 close at 11,727 through the all-time closing high 14,164.53 on Oct. 9, 2007 (coincidentally, five years to the day* from the low of the bust) and back down, to be an anomaly caused by Greenspan's loose-as-a-goose Fed policy. You could probably make the same argument for a portion of the 2004-2006 gains. One more factoid, the 2007 high did not exceed the 2000 high, on an inflation adjusted basis.

The last secular bear is dated 1966 to 1982, eighteen years, roughly equal in length to the 1902-1921 secular bear. For reasons I'll get into in a few months, we believe this cycle will be a bit shorter, call it approximately 15 years, which gets us to 2015 or so....
We re-referenced in a May Day post "Gail Dudack on What's Ahead for the Stock Market" with the last line highlighted. One of the reasons to expect a shorter secular bear is the growth that will come from nanotech. The possibilities are mind boggling. That's also the reason to pay attention to Feynman, he coined the word "nanotechnology"....