Wednesday, December 1, 2010

"Top Investment Trends For Futurists" (PXN; TINY)

John Ogg does a quick survey of some of the areas where future excess returns might arise.
I've included the sub-heads but only copied out one sector, nano-technology. The whole thing is worth a read.
The reason for highlighting nano is two-fold.

1) Since Feynman coined the word there has been a misconception among investors that there would be a nano-technology "industry". This has proven not to be the case and won't be in the future. Rather nano is a tool, an approach toward problem solving.

There will be some breakthroughs that make their discoverers instantly (after 10 years of research) wealthy but the real beneficiaries will be companies like Kyocera and 3M and Siemens. They will use the technology to do what they are already doing, just better, faster, cheaper, more.

2) In spite of the fact that there will be few pure plays we are convinced that nano combined with advances in materials science and manufacturing technology is what will spur the next secular bull market.
Some prognosticators say it will be 2020 before the next bull while we are more optimistic, looking for a 2014-2016 time-frame. Because the crystal ball gets foggy even in the short term it is impossible to forecast where the magic will land. The thing to do now is get a feel for the possibilities and spread your bets.
The entrepreneur's credo seems helpful: Fail fast, fail often, fail forward.

From 24/7 Wall Street:

Futurists are an odd lot.  Generally, they are authors, scientists,  consultants and economists.  What many people don’t know is that investors follow this philosophy as well.  Their goal is to pick winning investment  themes over the next decade or so.
Predicting markets and economic patterns is difficult over the next 20 years because there are many unknowns.  After all, who will be President in 2016?  What will tax laws be in 2020?  Which of today’s deadly diseases will be cured in 2020?  Which regions will experience wars by 2020?  This is why futurism may be one of the more unique approaches in investing. ETFs are often called the mutual funds of the future and our goal is to meld a futurist outlook into an investing strategies [sic].

A rule of long-term investing is that what investments feel good today, such as those in Chinese and Indian markets, may not generate returns tomorrow.  Investors will face short-term pain for long-term gain. Futurists are always thinking beyond the next recession and the next boom behind it....
...Beyond Emerging Markets… Frontier Markets
...Are You Ready For The International Water Wars?
...NANO-NANO… Take Me To Your InnerSpace
The word nanotechnology, or nanotech for short, is another futurist technology. Many aspects of nanotechnology are already in use today in chemicals and other products.  This may also be one of the most controversial issues in the world of technology.  Think about atomic and molecular scale systems comprised of compounds between 1 to 100 nanometers, or one billionth of a meter.  There have been fortunes made by investors and there have been many fortunes lost.Imagine machines so small that they could operate and move freely in your blood.  Imagine coatings that are comprised of molecules and materials small enough that they get a perfectly flat surface.  Unfortunately, you also have to consider toxicity, regulation, and the potential for a destructive use for such small products.  There is one ETF in the PowerShares Lux Nanotech (NYSE: PXN).
The PowerShares Lux Nanotech (NYSE: PXN) from Invesco seeks to track the the Lux Nanotech index.  It is comprised of some well-known companies and many companies have nanotech as a portion of their business.  The ETF has been around since the end of 2005 and has never recaptured its former highs.  It is also small at about $6 million in assets and trades under 25,000 shares a day on average.  Its 52-week range is $7.74 to $10.85.  Some of the companies in the fund include A123 Systems, Elan, 3M, GE, and Headwaters; but this ETF has some very risky and very volatile holdings as well...

Harris & Harris Group, Inc. (NASDAQ: TINY) is a nanotech venture capital fund whose website address tells what it is all about.  Its market capitalization is roughly $137 million, it trades close to 100,000 shares per day, and its 52-week range is $3.70 to $5.50.  While this is not a fund, it is close enough as the VC-company’s portfolio has more than 30 investment company holdings.  The company claimed a net asset value of $4.51 per share as of September 30, 2010, but founder Charles Harris also passed away at the end of September 2010.
...Advanced Batteries… High on Lithium
...Alternative Energy, In A Broader Sense
...Rare Earth… Not So Rare, But….
...Back to futurists and secular themes in general…
If you want to learn more about futurist thoughts and ideas, one source I have used for some time is the World Future Society.  This is not an investment web site.  It has offered insight for futurists and those who think beyond the next month for years and years.  It publishes The Futurist magazine, has free email newsletters, conferences, books, blogs, and links to many local chapters throughout the U.S. and around the world.
Predicting markets and sectors is a tricky game, and most forecasting models have a hard enough time getting the next week or month accurate.  Modeling for a decade or a generation is that much harder.