Awakening in Investments - 2007

Investment Analysis Clubs Saul’s Investing Discussions
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I am reading a book by Thomas Friedman called “The Optimists Guide to Thriving in an Age of Accelerations”:

https://www.amazon.com/Thank-You-Being-Late-Accelerations/dp…

In this book, he queries how many people missed the radical accelerations of technological change that occurred in 2007…changes that had enormous impact on your technology investments…some which many of you benefited from this past year.

What were those major accelerations?

  1. The IPhone
  2. Twitter
  3. Facebook goes global and scales
  4. Utube brought to you by Google along with Android
  5. Kindle brought to you by Amazon
  6. ATT brought software enabled networks
  7. Airbnb was founded
  8. Computer Storage capacity exploded courtesy of Hadoop
  9. Cognitive computing with Watson - first AI version launched
  10. INTC introduced non-silicon into chips to massively increase speed
  11. DNA sequencing costs dropped to $1000 from $100 million previously.

Had one been able to see these seminal events in realtime in 2007 and invested accordingly, what an amazing run you would have had in those subsequent 10 years!

GOOG a 5 multiple. APPL a 16 multiple! AMZN a 30 multiple!

Truly amazing runs from 2007…but why didn’t everyone see these events…they were everywhere to see and numerous as listed above? Obviously, in retrospect, much easier to appreciate the magnitude of pace of technology change…but could learn from this, step back and see the next wave if it were right in front of you?

But don’t feel bad if you missed it…so did Michael Dell…so did Thomas Friedman himself…until 2-3 years later.

I bring this up because you had a great year in 2017…investing in predominantly high tech stocks…many without earnings but instead with promise of better times ahead and expanding TAM’s. In your process of identifying unique companies suited for investments, it is clear that a premium is being placed on YoY revenue growth and that has been very predictive of stock appreciation this past year.

But it has perhaps also led to some overlapping themes that may indicate a more global “seminal event(s)” like we had in 2007. For example, consider artificial intelligence and look at what role NVDA, WIX, AYX, TLND, AMZN, and many others play in that rapidly adopting technology paradigm shift.

There were countless of times over the past 10 years that GOOG, AAPL and AMZN were “finished, too expensive, in danger of disruption”…but it didn’t happen as yet…and their stocks soared. Where are those new seminal events and how can we as a community exploit them for better long term investments?

Are we seeing new tectonic technology shifts that would be equally investable themes…maybe some that you have perhaps inadvertently stumbled on indivually but by looking at groupings of the stocks that were so successful in 2017…might we see patterns or themes that could point us to a larger “awakening”?

What might some themes be?

  1. Artificial Intelligence - massive shift to AI
  2. Data Storage - billions of sensors and massive data accumulation on-prem and cloud
  3. DNA sequencing and interventions
  4. Blockchain technology in financial and storage
  5. Robotics
  6. Energy storage

Now there are lists produced all the time suggesting what the next AMNZ will be…like this one with 21 candidates:

https://www.investors.com/news/top-ipo-stock-gems-which-new-…

And then some food for thought at the NPI:

http://discussion.fool.com/technology-food-for-thought-32903098…

But perhaps this would be a worthy discussion to provide a framework to explore and identify individual candidates rather than identify individual candidates in a vacuum without consideration to greater theme.

As Thomas Friedman suggested in this book…sometimes it helps to be “late”…and give time to just thinking about what is happening around us…that we otherwise might not even be noticing.

Best:
Duma

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But perhaps this would be a worthy discussion to provide a framework to explore and identify individual candidates rather than identify individual candidates in a vacuum without consideration to greater theme.

My three favorite themes are high tech, healthcare, and finance because they are the three fastest growing sectors of the economy. I realize that you are suggesting more granular themes, sub-themes of my three macro-themes.

Denny Schlesinger

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I think often change doesn’t equate directly to profits. Also, it isn’t unusual for an investor to nail
the trend but miss the company who benefits most in the end.

  1. Artificial Intelligence - massive shift to AI
    Maybe any huge beneficiary/ies is/are yet to come?

  2. Data Storage - billions of sensors and massive data accumulation on-prem and cloud
    Look how many data companies we all own. Are we missing the sea-change winner? (I don’t know, it’s a
    real question.) And when do we have enough data? Not to mention, I want my personal data out of all
    companies’ databases.

  3. DNA sequencing and interventions
    Bingo! Not only will diseases be swept into history, but a few companies will strike it rich. Tell me which ones and
    I’m all in. I don’t know who they are.

  4. Blockchain technology in financial and storage
    Again, I think the huge beneficiary/ies is/are yet to come and have not been identified. I could be wrong.

  5. Robotics
    It didn’t help union workers. It didn’t help millennials who can’t afford college. It helped China and we gave them
    almost all of our technology so they could build all the bots. The rest of the tech, they reverse-engineered. What’s
    In it for us?

  6. Energy storage
    I charge my Google Pixel once every 3 days now. Wake me up when cars can cruise through more than 1 state.

As for myself, I know I’m missing something (many somethings) in medtech, but all my reading hasn’t helped me yet
to identify the slam dunk (although I appreciate the lead on KITE!) and medical news articles are starting to sound
like investing advertising. And I know this won’t make me any friends on a fast-track investing board, but wouldn’t it
be nice if, just once, there were a horrible disease wiped out by some geneticist genius who said, “My fellow citizens
of Planet earth, this is legacy, my gift to mankind. No charge.” Okay, that won’t happen and genetic research is super
expensive, I get that. But you know and I know, someone will be charging hundreds of thousands of dollars - or
millions - for that cure, and the next one and the next one too. And still I can’t identify that scientist or the
company he works for.

Methinks reviewing history is easy. Making history is harder and requires foresight and a whole lot of luck.

The Optimists Guide to Thriving in an Age of Accelerations is added to my reading list. It’s an interesting topic.
Thanks for the spark.

Dan

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There were so many things launched in 2007:

EBay launched a microfinance site https://www.wired.com/2007/10/ebay-owned-micr/

Microsoft launched silverlight and also the search site that would become Bing https://searchengineland.com/microsoft-launches-experimental…

CNN Money did a piece on top 25 start ups that you needed to keep a close eye on:
https://web.archive.org/web/20070224110334/http://money.cnn…

There were the next big social sites like StumbleUpon and Slide, next big media companies MetaCafe and Blip.tv, the next mobile productivity Soonr and other companies nobody gives a damn about.

I don’t know the book, but does it provide a way how you could have told the youtubes and airbnbs apart from the metacafes and stumbleupons back in 2007?

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I don’t know the book, but does it provide a way how you could have told the youtubes and airbnbs apart from the metacafes and stumbleupons back in 2007?

For that visit the New Paradigm Investing (NPI) board.

http://discussion.fool.com/Messages.asp?mid=32948380&bid=114…

Denny Schlesinger

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Thanks, Duma - this is interesting.

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I think the winners in emerging technologies, whatever those may be, will be the ones that look ridiculously overvalued. They will be too obvious and too well known to a lot of investors. About all you can do is buy several in a category before they become well known or just wait for the winners to rise to the top and be happy with extraordinary gains over several years time. Most people don’t have the patience for waiting years though. At least, that’s been my perception.

Peace,
Dana

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RaptorD2,

but wouldn’t it be nice if, just once, there were a horrible disease wiped out by some geneticist genius who said, “My fellow citizens of Planet earth, this is legacy, my gift to mankind. No charge.”

The “once” was in 1955. The horrible disease was polio. The genius was Jonas Edward Salk.

Details here: https://en.wikipedia.org/wiki/Jonas_Salk

Bombora

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except polio has not been quite wiped out

https://www.reuters.com/article/us-polio-eradication/analysi…

7 years later same story

https://www.npr.org/sections/goatsandsoda/2017/10/20/5587344…

and yes Salk and his crew are real world heroes.

small pox (a far greater killer) is now non existent in the population . But culture are kept alive at 3 centers just in case. So it isn’t really extinct.

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True about smallpox having been eradicated.

And, as far as I know, Edward Jenner didn’t claim a patent on the smallpox vaccine. How could he? The vaccine was just a naturally occurring virus - the cowpox virus - that conveniently happened to be similar to the smallpox virus, but much less harmful. Actually, that cowpox protected against smallpox was known before Jenner’s work (Jenner got the idea from “folk wisdom”); Jenner just introduced the idea to formal science.

Bombora

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https://en.wikipedia.org/wiki/Vacciniae

original vaccine for smallpox, and the origin of the idea of vaccination, was Cowpox, described by Edward Jenner in 1798. The Latin term used for Cowpox was Variolae vaccinae, Jenner’s own translation of “smallpox of the cow”. That term lent its name to the whole idea of vaccination.[18] When it was realized that the virus used in smallpox vaccination was not, or was no longer, the same as cowpox virus, the name ‘vaccinia’ was used for the virus in smallpox vaccine either a mutation or merger with another virus . Not cowpox, not smallpox, but close enough to cause immunity

<
before that pus from smallpox victims was used, Risky but after then getting smallpox naturally

http://www.heraldextra.com/lifestyles/catherine-the-great-me… At least six people are known to have used cowpox to generate smallpox immunity before Jenner did it. And it seems that the practice of inoculation itself had been going on for centuries, though not with cowpox. Rather, one took pus from people with very light cases of smallpox and used that to inoculate others. The recipients usually got very light cases themselves but were subsequently immune to further attack.

and led to what may have been the most expensive house call ever by a Dr. Dimsdale traveling from England to Russia to inoculate Catherine the Great .A long, uncomfortable and somewhat risky trip in those days. No doubt with a very generous fee involved.

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What might some themes be?
1) Artificial Intelligence - massive shift to AI
2) Data Storage - billions of sensors and massive data accumulation on-prem and cloud
3) DNA sequencing and interventions
4) Blockchain technology in financial and storage
5) Robotics
6) Energy storage
Don’t forget simple gene editing: EDIT, CRSP, NTLA

VR, AR, Wearable computers.

Autonomous vehicles.

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–As for myself, I know I’m missing something (many somethings) in medtech, but all my reading hasn’t helped me yet to identify the slam dunk

Buy a basket of EDIT, CRSP and NTLA. The simple gene editing machine could well change the world and explode. They already created a malaria restance mosquito (but have not released it) and it is 100% gene dominant, so it would breed and only have offspring with the resistant gene. Scary, but the could just as easily reverse it if needed. Working and a cure for a certain blindness. So much more to come. NTLA is specializing in agricultrual gene editing.

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