I’m not one for partying. But I am very much into tradition.
And I have one tradition that makes New Year’s Eve one of my most favorite days of the year.
You see, every New Year’s Eve – before we head out to dinner – my wife and I sit by the fire as I review the paradigm-shifting events and exciting discoveries of the prior 12 months.
We’ve come to refer to this exercise as my “annual report.”
And now I’m going to share that “report” with you.
On a personal note, one of the most exciting events of 2012 was the launch of the Era of Radical Change. As it turns out, the year that just concluded proved to be perfect for the introduction of a newsletter that sifts through world-changing innovations in search of the ones that can bring you life-changing gains.
Like the financial markets, the world of technology is moving faster than ever. In the world of science, what was formerly fiction has become fact.
Commercial Space Travel Blasted Off
Scientists have been talking about “commercial” space travel – you know, buy a ticket and ride a rocket – for years. But I believe 2012 will go down as the birth of the age of space tourism. The proof came back in May when startup SpaceX launched one of its Falcon 9 rockets and then had its Dragon spacecraft dock with the International Space Station.
SpaceX is the brainchild of CEO Elon Musk, who founded the firm in 2002 and plowed $100 million of his own money into it. You may know him as a co-founder of electronics payment firm PayPal.
When it comes to high-tech, Musk has the Midas touch. He also cofounded Tesla Motors (NasdaqGS: TSLA), the maker of electric luxury cars and a company whose shares gained more than 25% last year.
And Musk wasn’t the only space mogul pushed the whole commercial space travel concept into a higher orbit: Sir Richard Branson’s firm, Virgin Galactic, announced in June that it intends to ferry passengers on a commercial space flight later this year.
Bionic Humans Strut Their Stuff
Last August, I told you about two firms that revealed their hope to begin selling bionic eyes in the U.S market next year. The first is Second Sight Medical Products.
It’s a venture-funded firm that has already begun selling its Argus II system in Europe. (The device is named after Argus, a Greek mythology giant with 100 eyes. But tech experts don’t get that romantic. They just called it a “bionic eye.”)
Here’s how it works. Doctors install an antenna behind a patient’s eye. They connect that to a special set of eyeglasses containing a video camera capable of capturing a scene.
The second firm, which hails from Israel, is Nano Retina Inc. Talk about cutting edge: The firm’s Bio-Retina system is laser-powered. Little wonder the system received a five-start review from Popular Science.
Surgeons can insert the system in just 30 minutes. The implant captures images directly in the eye; the laser powers the implant remotely.
Meantime, Google Inc. (NasdaqGS: GOOG) showed off a new device that can turn almost anyone into something of a “bionic” human.
I’m referring to Google Glass.
Technically speaking, this isn’t true bionics – it’s not wired directly to humans. But when you put these eyeglasses on, you have instant access to your email, traffic updates, maps and weather. You can even make wireless video calls. Google expects to have spectacular spectacles on the market by the end of this year – making this a “bionic” profit play you can invest in today.
Lastly, don’t forget about Zac Vawter. On Nov. 4, Vawter made history by scaling 103 floors of the Chicago Willis Tower using a prosthetic limb that he controlled with his mind – making it the first real “bionic” leg.
And you thought Steve Austin was cool …
New Approaches “Rescued” Alzheimer’s Treatments
At first glance, 2012 seemed to be the year of the setback in the Alzheimer’s field. Three big drug firms had to drop plans to field new drugs because they simply didn’t work.
There’s still no cure for this dreaded disease that affects millions around the world. But last August I told you about three new breakthroughs that offer hope that we will at least be able to keep this memory-robbing condition at bay.
The drug contains antibodies that may help remove amyloid, the sticky plaque that clogs patients’ brains, clouds memories and stymies clear thinking. Baxter plans to test the treatment on 400 patients as early as the end of this year.
In the second initiative, a clinical trial at MIT found that a “cocktail” of nutrients known as Souvenaid can improve memory for those with an early form of Alzheimer’s. Souvenaid is a mixture of three compounds found in a healthy diet – choline, uridine, and the omega-3 fatty acid DHA. You get them by eating meat, nuts, eggs, fish, and flaxseed.
The substance combats Alzheimer’s by stimulating the growth of new synapses, which pass signals from one brain cell to another. It comes from the healthcare division of Danone. Here in the U.S. market, you may know it better as The Dannon Co. Inc., and may even enjoy its yogurt.
The third Alzheimer’s advance came from the Washington University School of Medicine. A team there looked at families with a genetic risk of the disease. Some 128 subjects received blood and spinal fluid tests as well as brain scans and a check of their thinking skills.
Researchers found clear signs of how Alzheimer’s progresses as much as 25 years in advance. A second team found that something as simple as the way people walk could be an early warning of Alzheimer’s.
This marked the first time doctors linked a physical symptom to the condition. Spotting the disease early means doctors could begin helping patients much earlier – even starting at age 40, for example.
Robotic Walking Suits Got Into High Gear
Last year, Brian Shaffer became the “poster boy” for the rapidly growing field of robotic walking suits. In early November, I told you how this father of four is helping develop cutting-edge technology to let paraplegics walk again.
He’s part of a test program for a new powered “exoskeleton” that functions like a robotic walking suit. The advanced device allows people with severe spinal cord injuries to sit, stand, walk, and even climb stairs on their own. Designed with ease-of-use in mind, the relatively light and compact system is worn over top a patient’s clothes.
And this development shouldn’t take anything away from another company I told you about last May. This company, Ekso Bionics, already has a device on the market. That offers new hope to more than 125,000 people in the U.S. alone who are paraplegics, meaning they are paralyzed from the waist down.
Ekso boasts some truly great tech. Its battery-powered bionic devices employ sensors and motors that allow patients to walk safely and avoid falling.
The advances made in these four fields last year will affect – and hopefully help – millions around the world. At the very least, these advances promise change.
And with change comes opportunity – the opportunity for profit that I hope will make your life better.
And it’s these kinds of opportunities that I will continue to bring you in the New Year.
So 12 months from now, when I bring you my “annual report” for 2013, my wish is that we’ll also be talking about some of the windfall profits that you’ve made … in the Era of Radical Change.
How many times have you studied the stock charts of Google Inc. (Nasdaq: GOOG), Apple Inc. (Nasdaq: AAPL) or Amazon.com (Nasdaq: AMZN) – and wished you could travel back in time to become an early stage investor in just those sorts of king-making companies?
We can’t, of course, but I can offer the next best thing: I can tell you about the brand-new industry where the next stock like this will likely come from.
I’m talking about 3D printing.
Folks who’ve been following my work know that I’ve been predicting this sector’s emergence for some time. Back in March, I told readers of our sister newsletter Money Morning that 3D printing was a $1 trillion industry in the making. In October, in a note to all of you, I followed up with a roundup report on the newest breakthroughs.
In every piece I’ve written, my key message was always the same: 3D printing will give tech investors the next real shot at windfall profits.
In 2012, U.S. stocks (as measured by the Standard & Poor’s 500 Index) gave investors a 14.5% gain – a pretty nice return in the face of the Eurozone Crisis and the Fiscal Cliff debacle.
But mid-cap leader 3D Systems Inc. (NYSE: DDD) smoked the broad market – gaining 270% to earn honors as one of the hottest stocks of 2012.
A few great picks like that would make any of our retirement years a lot more rewarding.
Now you can see, once again, why I say that it pays (literally) to follow the big tech trends that are helping reshape the world around us. By the end of the year, it seemed that every major financial publication had jumped on the 3D bandwagon.
Not only that, but a number of advances in the field drew a lot of attention from the general public. Ditto for both savvy individual investors and market pros.
Online video helped spread the word as several clips went viral. On YouTube alone, the Top 10 videos on this subject were viewed nearly seven million times. That’s a whole lot of street-level promotion.
Maybe it’s because of the Graying of America, but the public and investors alike found themselves thrilled by how 3D printing is having a major effect on medicine.
Take the case of how an 83-year-old woman in Europe had received a new jaw doctors printed with titanium powder. News junkies found the story riveting.
And investors quickly grasped the implications of this advance. Soon, if you need a new hip or shoulder, your doctor can just “print” one up in no time – and to your exact specifications down to a “T.”
Add all this up and you have the key ingredients for some real stock-market magic …
Strictly speaking, you don’t really “print” a new product. But it is a similar process. Rather than putting ink on paper, the system creates the product by adding thin layers of special polymers and some powdered metals.
I’ve focused on 3D Systems because it is my favorite “pure play” in this field. Of course, its stock did well partly because there really are only two publicly traded firms focused on the broad market for these cutting-edge printers.
The other is Stratasys Ltd (NasdaqGS: SSYS).
And the performance of that company’s stock bolstered my argument that 3D printing has arrived.
I say that because SSYS returned a whopping 160% over the past year, more than 10 times the S&P’s return. As strong as that performance was, it was still about 100 percentage points less than 3D Systems.
Don’t get me wrong, Stratasys is a great company. But its approach differs from that of 3D Systems. In simple terms, Stratasys is focused on the upper end of the market – more on the Fortune 500 than small firms.
But 3D Systems wants those entry-level buyers. And the way I see it, this strategy makes a heck of a lot of sense. After all, the market for small companies and solo inventors is much larger than it is for major corporate buyers.
So, the company’s decision to release its hallmark product – the Cube, with a price of $1,299 – enticed a lot of new buyers into the field. Of course, 3D Systems has plenty of other products to sell them, either supplies or more pro-level printers.
3D Systems also was smart to take a lot of competition out of the market. The firm has gone on a merger tear over the last two years and has done a good job of translating that into new profits.
Let me close by noting that it’s difficult to predict how long the good times will last for this stock. At some point, every great equity loses its steam.
And yet … as of right now, the chart just looks great. It shows a lot of solid buying and the balance of power is clearly in favor of the bulls on rising volume.
So, while I doubt it will return another 270% this year, the fundamentals are still very much in this stock’s favor.
And just think … once you’re in on the ground floor of a $1 trillion industry, you’ll never have to stare wistfully at Google’s stock chart ever again. After all, we’re in the earliest stages of the 3D printing revolution – here in the Era of Radical Change.
There’s good news for Alzheimer’s patients after all…
This news comes at an opportune time. Just last summer, the whole effort suffered a major setback.
That’s when three Big Pharma firms said they were halting development of Alzheimer’s compounds because the medicines simply didn’t work. No doubt, that was a blow for both patients and investors in Eli Lilly & Co. (NYSE:LLY), Pfizer Inc. (NYSE:PFE), and Johnson & Johnson (NYSE:JNJ).
But this month we learned that a research team at Johns Hopkins has for the first time implanted a promising device into the brain of a U.S. Alzheimer’s patient. It seems to combat the effects of Alzheimer’s by providing deep-brain stimulation. It works very much like the pacemaker that’s normally used in the heart.
Over the next year or so, a total of 40 patients will receive the implants under a federally funded trial.
This is a big move with very promising potential. You see, doctors have used a similar device to control Parkinson’s disease for about the past 15 years, with some 80,000 patients receiving the implants. They report having fewer seizures and needing less medication.
I believe this very well could be the bridge technology we need until a true “cure” for Alzheimer’s is found. Right now, the chances look good that this interim step will succeed.
“This is a very different approach, whereby we are trying to enhance the function of the brain mechanically,” says Dr. Paul B. Rosenberg. “It’s a whole new avenue for potential treatment for a disease becoming all the more common with the aging of the population.”
As high-tech investors, we need to keep an eye on this research and be ready to pounce when a medical-device maker gets it to market.
I don’t know just when that will happen. But when it does, you can bet that I’ll drop you a line.
Invasion of the Mini Transformers
It’s almost like a scene out of Hollywood. A group of robots can change their shape – on demand – to take on any task asked of them.
But this isn’t part of the “Transformers” movie franchise, where a car might change into a killer “bot.” Instead, this is the real-life work of a research team at the Massachusetts Institute of Technology (MIT) working with funds provide by the U.S. Pentagon.
Using the way proteins fold as their model, team members created a series of mini-robots that can change their shape on demand. To make the world’s smallest chain robot, the team had to invent a new kind of motor. It’s small, strong, and can hold its position firmly – even with power switched off.
The result is “effectively a one-dimensional robot that can be made in a continuous strip, without conventionally moving parts, and then folded into arbitrary shapes,” says team leader Neil Gershenfeld. He likens it to having a wrench in your tool bag that can become a pair of pliers.
MIT didn’t list a practical market application for the invention. However, funding came from a research arm of the Pentagon that wants to build a series of small bots that can move autonomously to get intel on the enemy, especially in urban terrains.
“Fountain of Youth” Rejuvenates Aging Stem Cells
Back in early October, I predicted the field of adult stem cells would have a huge impact on medicine – really the whole human race, for that matter.
Turns out a team from the University of Toronto has already scored another major breakthrough. They created a “fountain of youth” that can make adult stems cells young again. Team members believe the first practical will be to grow replacement heart tissue that an older patient’s body won’t reject.
This is key, because a major way doctors avoid tis sue rejection is to use cells derived from the patient’s own body. Sounds good on paper, unless you’re dealing with the Graying of America.
See, aged cells tend not to function as well as those from young patients, so even testing this on the elderly wasn’t feasible in the past. The answer: Take the cultures of aging cells and infuse them with a cocktail of growth factors and grow healthy new tissue.
“We saw certain aging factors turned off,” says team leader Ren-Ke Li. “We can create much better tissues which can then be used to repair defects, such as aneurysms.”
Invisibility Cloak and See-Through Fish
One key element of global fantasy franchise Harry Potter may not be as farfetched as you might have thought.
Scientists recently showed off a real-world “invisibility cloak.”
Known as “Quantum Stealth” camouflage, the material makes its wearers seem to disappear by bending light waves around them. It can even foil military-grade night vision goggles, its makers say.
Hyperstealth Biotechnology Corp. has released photos of the material in action, but has refused to show it in actual operation to the media. However, the firm says its process can be used as a coating for NextGen submarines, tanks, and aircraft – which the enemy won’t be able to see.
Meantime, a German team just tweaked the gene code of zebrafish so scientists could literally see through the test subject. They call it the Mitofish.
Turns out zebrafish are popular to study for a wide range of diseases and possible treatment. Making them transparent allows researchers to track their research subjects in a non-invasive way.
Now You Can Have Eyes in the Back of Your Head
For untold millennia, people have been limited to their natural ability to see 180 degrees horizontally. Until now.
A French team has created a new helmet with onboard optics and electronics that gives wearers a 360-degree view of the world around them.
The investors of the FlyVIZ say the device could work well for virtual reality games and entertainment. But the big market may be in surveillance.
“In safety and security applications, soldiers, policemen or firemen could benefit from omnidirectional vision to avoid potential dangers or locate targets more rapidly,” they say. “In less critical situations, some surveillance applications with a high visual workload, in all directions of space for instance, could also be concerned, such as for traffic regulation.”
And, in another advance for visual electronics, a Belgium team has invented a pair of contact lenses that can display text messages, road maps, and more.
The team at Ghent University says the device is the first full-spherical LCD screen that fits inside a contact lens. They believe these could be on the market in as little as five years, and noted that the lenses will eventually be able to display movies and shows with the same clarity as a TV.
I hope you enjoyed this month’s fascinations. And remember to share what’s fascinating you by leaving a comment below or writing to me at email@example.com.
At one time or another, I’m sure that we’ve all been outraged by stories of rampant government waste – especially in areas of aerospace- and defense-related research.
But today I’m going to tell you about a NASA-related tech program that led to a big payoff. In fact, investors who knew what to look for could’ve turned $10,000 into $41,900 – a 319% return – in just 29 months.
I’m relating this story for a couple of reasons. It shows you why I spend so much time looking at the research that’s underway in labs at both the university and national level. And it also explains why I write to you so frequently about cutting-edge science where I believe there’s a big potential payoff.
My ultimate goal, you see, is to tell you about profit opportunities like this one before they occur.
And one of the best ways to do that is by keeping a sharp eye on federal tech programs.
Fortunately, that’s an obsession of mine – and one that I developed long ago.
You see, I grew up in a military family. My dad is a highly decorated U.S. Marine Corps captain who retired from the service to join Aviation Week & Space Technology, where he became its award-winning senior military editor.
Starting when I was a senior in high school (which was more years ago than I’d like to admit), my dad and I have talked often about government research and the huge payoffs for the civilian economy. I later went to work for him covering government technology during the Reagan Star Wars program.
I’ve talked with scores of scientists, business leaders and government officials about this field for more than 25 years. It’s a great way for me to stay abreast of key trends and investment opportunities.
The bottom line is that I know what to look for. And I know what’s on the cutting edge.
Take “cloud computing,” which transforms hardware and software into a service that can be delivered over the Internet.
Seeing NASA get involved with this hot new trend was a signal that a particular program warranted a closer look. It was also a stamp of approval on an emerging technology.
By lending its help to this fast-growing slice of the high-tech sector, NASA helped savvy investors reap big gains from one specific company. The spinoff effects would lead to billions in new wealth across the high-tech sector.
The company in question is cloud-computing pioneer Rackspace Hosting Inc. (NYSE:RAX). Founded in 1998, Rackspace now boasts nearly 200,000 clients in more than 120 countries.
Clearly, NASA can’t claim it made the company the success it is today. But it did give a huge stamp of approval for both Rackspace and its mission of providing open-source cloud computing.
That was the main thrust behind the OpenStack Foundation that the company and the agency launched with $10 million in funding. Today, that program is a global collaboration of developers and cloud-computing experts. They have created an open-source platform for public and private clouds used around the world.
Cloud computing is a loose term that simply means more of the huge amounts of data the world needs are now hosted on “virtual” servers. This software component allows the data servers to handle far more traffic and storage. This helps users avoid spending time and money starting and running their own computer networks.
For NASA, the OpenStack program really began in 2008 when it launched Nebula. That was a project to unify the ocean of data the agency has to manage across what is very much a far-flung organization. NASA soon found that Rackspace was working along similar lines and had already written quite a bit of code.
Here is how Ray O’Brien, former head of Nebula, described the joint effort between NASA and Rackspace in a blog post last May:
“Our hope was that a community would form around these two pieces of software toward the construction of an open source cloud operating system. To say that our greatest hopes in this regard were met would be an understatement. OpenStack today has the support of hundreds of individuals and organizations around the world, all set on realizing the original vision for the project.”
When OpenStack launched in July 2010, Rackspace shares traded at $17.14 (based on the closing price set on July 6). Yesterday, the stock closed at $73.53 – a 319% run.
Some analysts have questioned whether Rackspace can continue its rapid growth, since open-source software means anyone can tweak it and then sell a competing cloud package. A piece in Thursday’s Investor’s Business Daily made that very point.
Despite the threat, or perhaps because of it, Rackspace shows zero intent of changing to a closed format. But that doesn’t mean the stock is headed for a rout. It does mean that Rackspace has to focus like a laser beam on its core business if it wants to continue its heady growth.
Also, I think doubters are missing the big picture. As I see it, Rackspace has helped make cloud computing a key high-tech ecosystem. That means more overall opportunities for tech investors.
Consider that Dell Inc. (NasdaqGS:DELL) Hewlett-Packard Co. (NYSE:HPQ) and Intenational Business Machines Corp. (NYSE:IBM) are all OpenStack members. The first two are stock laggards. But IBM has returned roughly 60% to investors since early July 2010, a figure that doesn’t include the benefit of a roughly 2% dividend.
Web-retailer Amazon.com (NasdaqGS:AMZN) is a major cloud-computing firm that bumps up against Rackspace. It even does business with NASA. In the same period, it has returned 136% to shareholders – an example of the “spinoff benefit” that I mentioned above.
Let me close by noting that I see a lot of major trends ahead that will mean big gains for investors in the Era of Radical Change. As our case-study look at Rackspace and OpenStack makes clear, it pays – and I mean that literally – to keep track of federal support for high tech.
Rest assured that I intend to let you know about more cutting-edge programs that I think will offer investors the chance to score big gains. Stay tuned…
P.S.: We won’t be publishing next Tuesday because of the Christmas holiday. So, I hope you have a great one. We resume next Friday with December’s “Fascinations of the Month.”
If you could find a way harness the speed of light – 299,792,458 meters per second – in computer processing, processors could handle massive amounts of data at mind-numbing speeds.
At the very least, it could lead to computer speeds that are up to 100 times faster than those in use today.
That’s why industry leaders have been pursuing the promise of optical computing for decades now.
Indeed, we’ve figured out how to pump light through fiber optics for super-high-speed communications in computer networks and the Web. That’s become routine today.
But still, no one could find a way to solve the challenge of focusing light in tiny spaces like computer chips. It’s a brick wall known as the “diffraction limit.” Simply stated, it means that once you get into tiny spaces – like the postage-stamp size of a semiconductor – you can no longer focus a light beam.
Two teams of computer researchers have just announced major advances that promise to make optical computing a reality in the very near future.
One comes from a famous tech leader whose shares are publicly traded; the other out of academia. Of course, major advances in the lab often make it to market in ways that mean profits for early investors. This is one of those rare cases where a breakthrough happens at a prestigious university… and you could literally invest in the field today.
So let’s start with the breakthrough from Caltech. A team there has made a device that can focus light to a point several times smaller than the end of a human hair.
The California Institute of Technology team got around the diffraction limit by building a new “waveguide” that can channel light as though it were moving inside tiny tunnels. This is just plain brilliant. They took a material that’s much like glass and topped it with a thin layer of gold.
The result is a device built on a semiconductor using nanotech methods that are standard in industry today. Team members said this means the new device should integrate easily with current technology and could have a strong impact on at least two major fields.
- First is biotech. Caltech says the device can also function as a high-res microscope that can peer inside of cells to better study disease and new drugs.
- Second, it also could lead to computer memory that is 50 times larger than today’s 1,000 gigabytes per square inch.
Of course, team leader Hyuck Choo can think of one other application that could have a big impact on the world. Said Choo, “Don’t be surprised if you see a similar kind of device inside a computer you someday buy.”
And that brings us to the related news from International Business Machines Corp. (NYSE:IBM). Big Blue is turning the world on its ear with a new device that uses light to transfer data – but with a big twist.
See, IBM engineers found a way to combine optical components side-by-side with electrical circuits on a single silicon chip. This is the first time anyone has pulled this off using standard 90-nanometer chip making techniques.
They call the new process silicon nanophotonics. (Don’t let the name bother you. It’s the results we’re after.) And IBM says it could do for computer optics what transistors did for chips.
In other words, a veritable revolution.
Today, we can put billions of transistors on a single piece of silicon. This has allowed us to double computing power roughly every two years for decades. That in turn has driven the pace of innovation throughout the whole economy.
IBM’s process uses pulses of light to transfer data. Think of this as a superhighway for large volumes of information, everything from tracking hundreds of satellites to trading thousands of stocks at once. The company says the new process will move information quickly between computer chips used in servers, large data centers, and supercomputers.
“This allows us to move silicon nanophotonics technology into a real-world manufacturing environment that will have an impact across a range of applications,” said John E. Kelly, IBM’s director of research.
At this point there is no “pure play” in this area of optical computing. IBM is a huge, $216-billion-cap company with hands in almost every segment of the computing market. It made waves last year when its Watson super computer beat humans on the quiz show Jeopardy.
But once IBM opens the market, smaller companies will get into this field and give investors more chances to profit from optical computing.
I’ll keep you in the loop.
And the Era of Radical Change will continue to bring us a steady stream of innovations that will line our pockets.
Futurist Ray Kurzweil is one of the world’s busiest people.
And that’s no surprise. A best-selling author and subject of a major documentary, Kurzweil has an unmatched talent for explaining how cutting-edge technology is going to change our lives. That means this “A-list” speaker is always on the go, traveling the globe as he spreads his futurist technology gospel.
That’s why I made sure to buttonhole Kurzweil at the recent Singularity Summit technology conference. As he headed into the San Francisco lecture hall to share the newest insights into how the brain works, I was able to walk along with him and have a quick chat.
As we talked, little did I know that Kurzweil was working on something that would stun the tech world in a manner that’s usually reserved for one of his predictions.
No, I’m not talking about the buzz that’s been generated by his new book, How to Create a Mind, the Secret of Human Thought Revealed.
Kurzweil, as it turned out, had accepted a major position at none other than Google Inc. (NasdaqGS: GOOG), the Web giant that is to search what the tech futurist is to prognostication.
And Monday was Kurzweil’s first day on the job as the company’s new Director of Engineering.
A lot of investors have glossed over this news. That’s a big mistake. As I see it, this single hire speaks volumes about how Google views itself, and how it intends to keep building shareholder value.
If you’re interested in Google, this is a bit of strategic intelligence that you absolutely have to know. Here’s why: With this single move, the world leader in Web search is telling investors like you that it intends to remain a growth company. This also tells us that Google wants to invent the types of technology that will change the world and make money for investors – even if it means breaking free of the Web itself.
I defy anyone to identify another leader in the tech field who will have more of an impact on the world in the Era of Radical Change. I’ve followed his career for years now and know firsthand that many of his predictions that people dismissed as crazy have actually come true.
Kurzweil began pushing the tech envelope as a teenage inventor and has literally never looked back. Along the way, he has invented dozens of new products, penned groundbreaking books on the technologies of the future, and altered our view of what is possible and even probable in the Era of Radical Change.
I can guess what the naysayers are already saying – that Kurzweil won’t fit in at Google because the company is so darn huge. Or that Google, with a market cap of $235 billion, can never recapture its free-wheeling days as an early-stage startup.
That’s high-tech balderdash.
Fact is, Google prides itself in pushing the boundaries of cutting-edge tech. For instance, I’ve told you about Google Glass, a pair of spectacles that can display maps and text messages, connect smart phone calls and capture video, among other things.
Combine that with Google’s intense focus on machine learning (as evidenced by the way it does searches) and you can clearly see how Kurzweil and Google are made for each other.
Kurzweil, 64, has stayed ahead of the curve since he was 14. That’s how old he was when he designed software that wrote original music. Later, he created the first print-to-speech reading machine for the blind.
Back in 1999, he predicted that in about a decade we would see such breakthroughs as self-driving cars and mobile phones that could answer questions posed by voice.
People criticized these predictions as “unrealistic.” Google now has both.
“It’s easy to shrug our collective shoulders as if these technologies have always been around, but we’re really on a remarkable trajectory of quickening innovation,” Kurzweil says. “Google is at the forefront of much of this development.
“I’m thrilled to be teaming up with Google to work on some of the hardest problems in computer science so we can turn the next decade’s “unrealistic’ visions into reality.”
As I see it, by heading up these kinds of projects that will lead to new sales, Kurzweil could indeed have a big – and direct – impact on Google’s future cash flow.
And the indirect benefits could be even bigger: His presence alone will act as a recruiting magnet, helping to attract the visionary engineering talent that will help create other new sources of revenue – while also blocking out threats to Google’s core business.
His name alone opens doors at tech firms and research labs around the world. If Google wants to raid talent from other companies or major universities, all Kurzweil has to do is pick up the phone.
More to the point, he is an expert in machine learning and intelligence. And that’s basically become a big part of Google’s core product. Machine learning (in which computers better “understand” human intentions) has created much more relevant Web searches that also help support ad sales.
Kurzweil has worked in this field for decades. Now that he has joined Google, he has a built-in global infrastructure that can roll out his ideas and new products on a scale he could never have achieved on his own.
This is also is a marketing coup for Google. Tech writers all over the world want to talk with Kurzweil about the radical changes coming to the human race.
Now, rather than simply making his own predictions, Kurzweil will be telling the world about “the future according to Google.”
We’ll stay on top of this story as it develops, and will keep tabs on the investment opportunities – direct and indirect – that we believe will spin out of the Kurzweil-Google betrothal.
That fact alone reminds us of a point that bears repeating here: Just because the Era of Radical Change focuses a lot on the future, that doesn’t mean it can’t help you make money today. And we’ll continue to show you how to do just that.
With the world going through so much fast-paced change, high-tech execs need to keep their eyes clearly focused on the future.
Sadly, some are still looking in the rearview mirror.
Take the case of Intel Corp. (NasdaqGS:INTC). The world leader in PC chips has just announced it’s borrowing another $6 billion.
Of course, borrowing money isn’t necessarily a bad thing. It’s the purpose of the debt that matters most.
Here’s the thing. Intel is taking on more debt to help it buy back more of its flagging stock. See, the senior brass think that at $20 a share, this is a great value. And on paper, they’re right.
After all, Intel has strong profit margins. Not only that, but its 15% return on assets is solid. It means that for every dollar the firm invests in assets, it earns 15 cents.
Try getting that rate on a bank CD. Or a T-bill, for that matter. Pretty much, it’s impossible.
No, the problem for Intel and its shareholders is the stock has become a “value trap.” In other words, investors buy the stock because they see they only have to pay nine times earnings and think it’s a great bargain.
But, as I like to remind tech investors, a $20 stock that goes down is a lot more expensive than a $200 stock that goes up. Look at it this way, if you had simply bought an index fund tied directly to the S&P 500 you would have made a nice 12% return so far this year.
Holding Intel, however, would have cost you more than 19% as of the market’s close yesterday. By buying its own stock, Intel isn’t getting anywhere near the return it could by simply buying a basket of equities.
And it’s actually much worse than it seems. This next number will blow your mind…
$45 billion. That’s the total amount of money Intel is willing to buy back to support the stock.
As I see it, this is a bad use of money for one of the world’s leading high-tech firms. We’re talking about a storied Silicon Valley leader whose history mirrors that of the entire computer world. It still plays an integral role in the global supply of personal computers.
No doubt, it is investing heavily in making its chips ever smaller and more robust. And for that we should be grateful.
But Intel faces a crucial question: is it making enough of the right moves to prepare for the Era of Radical Change? I believe the answer is no.
The world is now moving at warp speed. What was once science fiction is becoming science fact. Those high-tech firms that stand still will just get flattened.
Don’t underestimate the threat here. On the very same day that Intel announced its new debt issue, Investor’s Business Daily issued what should be a wake-up call. The story said a leading designer of mobile chips has entered Intel’s PC market.
Turns out U.K.-based ARM Holdings plc (NasdaqGS:ARMH) is now working with Microsoft Corp. (NasdaqGS:MSFT). In fact, Microsoft is using ARM chips on the new Windows RT operating system. So much for the so-called strong “Wintel” alliance.
As I see it, Intel needs to refocus the firm. Just treading water as a chip maker won’t prepare it to deal with the challenges coming from all the new tech players popping up every day.
But don’t take my word for it. There’s another high-tech giant that saw it needed to change to prepare for the future. This firm could have just stayed with its core computer franchise.
Had it done that, International Business Machines Corp. (NYSE:IBM) wouldn’t be half the company it is today.
Or should I say 85%?
Because that’s how much of Big Blue’s pre-tax income last year came from software and services. Yet, IBM still makes waves with powerful computers.
Just look at Watson. Brimming with artificial intelligence, Watson stunned the world last year by beating humans on the quiz show Jeopardy.
And did I mention that IBM’s stock sells for $189 a share, or more than nine times that of Intel’s? Over the past five years, IBM has returned more than 70% to shareholders. But Intel cost investors more than 25% over the same period.
The comparison of the two is apt for this reason. Last April, IBM said it will buy back another $7 billion of its stock. Clearly, IBM is getting a much better return on its money.
Some of you may say that Intel’s recent decision to make a line of mobile phones is a step in the right direction. Well ask yourself these questions: 1) does the world really need yet another Android phone, and 2) is this the best use of Intel’s money?
To me, it’s no on both counts.
Let me close by noting that Intel has a great chance to set a new course. CEO Paul Otellini retires next May.
Intel needs to make sure its next CEO has a battle plan to deal with the tough challenges that await it in the Era of Radical Change.
Synthetic biology is now set to have a major impact on the whole biotech industry. And that’s just for starters.
You see, creating artificial genes in the lab or factory also will at the very least play a role in the development of new drugs and the bioengineered fuels of the very near future. And all three of these areas could mean big profits for tech investors.
Here’s the thing. Drug, chemical, and biofuel firms are relying more than ever on artificial fragments of DNA — the building blocks of life — to invent new products. Trouble is, the process is so complex that it can take days to synthesize these man-made genes, usually in small batches.
Not only is it time consuming, but it requires the use of costly robots and other advanced gear. Simply stated, if someone came along with a breakthrough that greatly speeded up the development of synthetic genes, it could affect several industries at once, not to mention its own value in the market.
Allow me to introduce you to Gen9 Inc. The company is blazing a trail in the development of scalable technologies for synthesizing genes. Gen9 formed last summer around a unique new device that greatly speeds up the process, while at the same time cutting the costs of synthetic biology.
A Huge Breakthrough in Synthetic Biology
Known as BioFab, the Gen9 system can quickly and cheaply produce tens of thousands of double-stranded DNA fragments. Talk about economies of scale — it’s this bulk processing that gives Gen9 such a huge advantage over other firms.
It works like this: BioFab can produce tens of thousands of double-stranded DNA fragments that are between 500 and 1,000 base pairs in length. Gen9 says it can produce the synthetic DNA for less than 10 cents per base pair, which the company says is as little as 20 percent the cost of other firms.
No wonder, the small company is attracting so much buzz from scientists and professional investors. As such, it is the type of firm we want to make money on the Era of Radical Change.
The world is moving at warp speed, and it is firms like Gen9 that are pushing the pace of scientific and medical breakthroughs. Of course, this field will play a big role in the future of the human race.
And more to the point, there also will be a payoff for us investors as well. That’s why I think Gen9 needs to be on your radar screen. I predict this company will go public in the next few years. Failing that, I believe it will license its technology to other publicly traded firms.
In the meantime, I expect both biotech and drug firms to work with Gen9. Doing so will increase profit margins for those firms and their investors.
Gen9 is Poised to Make Investors Serious Money
Of course, great tech alone is no guarantee of success. But Gen9 has three bases covered that are critical for making money in this sector:
- It’s a leader in a breakthrough field that is part of a major trend with strong global demand that will continue for at least two decades.
- Gen9 is attracting high-profile professional investors who know what steps a startup must take to have a profitable IPO and to succeed in the long run.
- The company has great management.
We’ve covered much of the first item already. But let me add this — the field has grown by leaps and bounds just since 2010. That’s when a team at the J. Craig Venter Institute created the first living cell controlled completely by synthetic DNA.
Teams all over the world are now in their labs looking to create novel biotech compounds or drugs by inserting synthetic DNA into cells, either living or artificial. They also are growing new microorganisms that yield biofuels to be used in lieu of oil.
Second, Gen9 has not disclosed its total venture funding, but it has received money from Draper Fisher Jurvetson (DFJ), which has a great track record. DFJ has backed dozens of tech stars like Skype, athenahealth Inc. (NasdaqGS:ATHN), Baidu Inc. (NasdaqGS:BIDU) and Tesla Motors Inc. (NasdaqGS:TSLA).
And for the third item on the success list, two of its top leaders have deep experience at publicly traded firms. CEO Kevin Munnelly joined Gen9 last July from Life Technologies Corp. (NasdaqGS:LIFE). COO Martin Goldberg spent 17 years with small-cap biotech leader Affymetrix Inc. (NasdaqGS:AFFX).
The cofounders are no slouches, either. Check out their credentials:
- Joseph Jacobson is an associate professor at MIT. He has won several major awards and authored 70 peer-reviewed articles for scientific journals.
- George Church is a professor at Harvard Medical School. He has a long track record of commercializing human genomes.
- Drew Endy is a noted associate professor of bioengineering at Stanford University.
Let me close by noting that Gen9 also shows why the U.S. remains at the forefront of cutting-edge technology. As I often tell investors, the U.S. has so many bright minds working in cutting-edge fields that we just can’t help but succeed in the long run.
And Gen9 promises to be one of the firms leading the way.
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