Accelerating Change Means Accelerating Returns

Technologically, the times have truly changed.

The last half-century has seen transoceanic flights become commonplace, humans walk on the face of another world… What is truly astonishing is that this happened mere decades after the Wright brothers first managed to get their ramshackle Flyer a few feet into the air under its own power.

On the medical front, vaccines have wiped out infectious diseases that would prematurely end the lives of millions of people each year. Cancers that would normally kill people are now regularly stopped in their tracks. There are, of course, far too many medical advances to list here.

For the most part, human beings are used to thinking of technological change as occurring in a linear, not exponential, fashion. Over most of history, we could expect the world to be pretty much the same on our last day of life as it was on the day we were born. This is no longer true…

Most people, including investors, do not understand the transformation we are experiencing.

As investors, however, we must account for it. Those who do understand the unstoppable acceleration of technological improvement are in a position to profit from the ongoing transformation.

In fact, if we look at technological human history, we can conclude that we are in a multimillennial bull market.

Yes, there have been wars, famines, plagues and depressions, but the long-term trend line is always up.

Accelerating technological change sets the stage for accelerating returns. On the other hand, those long-term investors that go into dinosaur industries doomed to replacement by breakthrough innovations will see their returns “sink like a stone.”

That is why I don’t worry about the current market uncertainty. We’ve been here before. The most recent extended period of economic depression occurred in the 1930s… yet technologies pioneered in that down decade set the stage for the torrid growth of the postwar era. Of course, this did not seem obvious to the people of that time. Those that invested in the pioneering technologies of that era, however, saw fantastic long-term returns.

The scientific breakthroughs are intense these days… and it is important to stay up-to-date with the technological transformations so that we grasp the big picture and invest wisely.

Here are two worth keeping an eye on:

Immortalized Adult Stem Cells Open Therapeutic Vistas

Researchers at the University of Buffalo have modified adult stem cells so that they can be grown in culture in far-larger volumes. Since adult stem cells are biologically aged, they are good for only a short number of cell divisions. This means that fresh stem cells acquired from donors are frequently needed to maintain viable cultures. This is expensive and time-consuming.

The new, genetically modified mesenchymal stem cells could prove useful not only for research, but as a possible source of cells for repair of damaged tissues. Since mesenchymal cells can differentiate into bone, cartilage, muscle and pancreatic cells, development of regenerative therapies for these tissues could accelerate.

Carbon Nanotubes Help Batteries “Bend It Like Beckham”

Stanford University researchers have harnessed the properties of carbon nanotubes to create ultra-thin, lightweight, bendable batteries. Beckham, of course, is the well-known English soccer player currently with the Los Angeles Galaxy. His “bend,” or powerful curveball kick, inspired a movie by that name. Returning to batteries, the new design, published in ACS Nano, could enable a new generation of lithium batteries. The battery is a sandwich of paper, carbon nanotubes and a metallic film containing lithium. The lithium layers serve as battery electrodes, while the nanotube layer acts as a current collector. The paper serves as an insulator separating the positive and negative electrodes.

The battery exhibits a higher energy density than other thin designs and is only 3/100ths of a centimeter thick. The prototype has also undergone 300 recharge cycles without degrading. Such flexible, lightweight, powerful batteries could kick-start a new generation of portable devices. Wouldn’t it be nice if an e-book reader could flex like the original dead-tree version? You could roll your reader up like a newspaper.

As investors it is important to continually keep an eye on these exciting breakthroughs that will change the technological landscape.

Ad lucrum per scientia (toward wealth through science),
Ray Blanco
Penny Sleuth

January 10, 2011

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