Friday, December 3, 2010

The Future of Metabolic Engineering – Designer Molecules, Cells and Microorganisms « Berkeley Lab News Center

Today's paradigm of rapidly advancing technology is not only accelerating, but converging, self-reinforcing and merging. Metabolic Engineering is an excellent example of information technology, biotechnology, materials science and nanotechnology being blended to achieve an end result that none on an individual basis would likely achieve. We have been creating hybrid crops with desireable characteristics for many decades (if not centuries), but the difference here is that the intervention is much more direct, the end result more pre-defined and the organisms used go well beyond crops and different breeds of livestock. While there are certainly risks, and there will likely a multitude of unforeseen and undesireable results, we are entering an age where "hit & miss" will be increasing replaced with "aim & fire". Please see the following link for more background on metabolic engineering:

The Future of Metabolic Engineering – Designer Molecules, Cells and Microorganisms « Berkeley Lab News Center

From Citigroup, a New Volatility-Linked ETN

The below article is promising in that the available VIX-related shares are issued as "ETNs" and are therefore subject to the creditworthiness of the issuer (unlike ETFs), but the article indicates that there are more issuers coming to market and, as a result, some of the credit risk can be mitigated via usage of more than one VIX sensitive ETN within a portfolio. The Citigroup offering is particularly interesting, but I think we need to see some trading history to get a better feel for how this hybrid structure should be used.

From Citigroup, a New Volatility-Linked ETN

Good News & (less obvious) Better News

Good News:

• DECEMBER 2, 2010, 10:42 A.M. ET
US Stocks Rise On Pending Home Sales, Hope In Europe
By Steven Russolillo

“NEW YORK (Dow Jones)--U.S. stocks extended gains Thursday after pending home sales unexpectedly soared and investors mulled whether European officials can help stop the spread of the euro zone's debt crisis.”

The combination of the two issues mentioned above will be supportive of the US Dollar should they continue their recently established trends.

What I always find interesting is how things evolve in front of everyone’s eyes yet their perceptions are so slow to respond. Occasionally, I like to offer those who I communicate with an opportunity to win a friendly bet with their favorite “victim”. Ask your “target” the following question:

“How much has the S&P Homebuilders ETF underperformed the Emerging Market Index ETF over the past 3 years in terms of price?”

a) The Homebuilders ETF has underperformed the Emerging Market Index ETF between 15-24%
b) The Homebuilders ETF has underperformed the Emerging Market Index ETF by over 25-34%
c) The Homebuilders ETF has underperformed the Emerging Market Index ETF by over 35%
d) None of the above

The answer: None of the above

Below is a 3-year chart showing how the S&P Homebuilder ETF is effectively tied with the Emerging Market Index despite the “Rapid Rise of China” and the “Worst Real Estate Crisis Since the Great Depression!”:

(less obvious) Better News:

"Breakthrough Chip Technology Lights the Path to Exascale Computing"
December 2, 2010 by Editor

IBM CMOS Integrated Nanophotonics (IBM)

IBM scientists Wednesday unveiled a new chip technology that integrates electrical and optical devices on the same piece of silicon, enabling computer chips to communicate using pulses of light (instead of electrical signals), resulting in smaller, faster and more power-efficient chips than is possible with conventional technologies.
The new technology, called CMOS Integrated Silicon Nanophotonics, is the result of a decade of development at IBM’s global Research laboratories.
The patented technology will change and improve the way computer chips communicate — by integrating optical devices and functions directly onto a silicon chip, enabling over 10X improvement in integration density than is feasible with current manufacturing techniques."

Now you have probably never heard of “nanophotonics”, and if you haven’t , don’t feel bad. It isn’t exactly holiday season cocktail chatter.

The reason why this breakthrough is important is that the technology, and those similar to it, will enable the continuation of the rapid advancement in the computing power which in turn is vital to advances in many areas, but especially in the area of life sciences (i.e. healthcare).

The greatest promise for curing the many diseases we are faced with comes in the form of enhanced molecular diagnostics, molecular synthesis and genetic information processing. These are all fantastically computationally demanding activities, but the bulk of healthcare costs come from the treatment of chronic diseases rather than actual cures. The breakthroughs in genetic sequencing, RNAi (a means to suppress undesirable genetic expression), and molecular analysis via digital means during the past decade are all just first steps in overcoming the healthcare & quality of life challenges we will face as we age.

This development is not only good for the “N” (nanotechnology), the “B” (biotechnology) and the “I” (information) in my phrase “N.ew B.R.I.C.”, but also the “R” (robotics) and “C” (cognitive). As we improve our computer technology by the next 10-100 fold, we will start to approach the needed levels to achieve broader forms of artificial intelligence that will in turn propel both robotics and cognitive technologies to the next level. As we age as a species, we will not only have increased health issues, but also we will need assistance from robotics to overcome physical impairments, as well as cognitive innovation to treat/manage dementia related challenges.

Most should not invest in “science projects”, and no, I am not recommending IBM as an investment, but it is important to remember our problems will not be truly resolved by easy money, government intervention or political debate. Our future is bright because of the same essential ingredient that Edison used to create the light bulb: curiosity, vision & innovation.

So hopefully, as people take advantage of the house bargains that are available today they will have the option of living in that home for many years to come with little medical assistance and perhaps a very loyal “robo-dog” that not only doesn’t need to be walked, but can also prepare their tax return!

Saturday, November 27, 2010

How Wealthy is America?

"How wealthy is the USA?" This is a critical question as it lies at the heart of so many other issues:

"Can the US service its debt?"
"Can we afford health care for the Boomers?"
"What backs the US Dollar?"
"Is the US becoming a "banana republic"?"
"Should the US Dollar remain the world's reserve currency?"
"Will the US remain an economic superpower?"

You could answer all of these questions in countless ways, but here is at least one quick perspective that may help those who are riddled with concern about the future of America:

Per the most recent date from the Federal Reserve, U.S. Household Net Worth (assets less all mortgage, credit card or other debt) totals over $53 trillion.

Interestingly, per the World Federation of Exchanges, the total market capitalization of global equities is $52.7 trillion.

So, the people of the U.S. collectively, theoretically, have sufficient wealth to buy all the publicly traded stocks in the world!

Further, foreign currency reserves of China total under $3 trillion. U.S. households possess over $7 trillion in deposits.,19&id=4

When was the last time you heard someone say: "the citizens (not the government) of the US have more economic power than China." ?

Friday, November 26, 2010

10 Questions for Ray Kurzweil

At the below link, Kurzweil answers a number of the key questions asked by those unfamiliar with the Singularity literature in a very brief form:

10 Questions for Ray Kurzweil

Friday, November 19, 2010

Growth in China is Self-Defeating; Growth in Innovation is Self-Reinforcing

The perception that growth can only be found in the emerging markets is slowly eroding. China is increasingly faced with high inflation, infra-structure challenges, a weak consumer segment, political pressures, environmental threats, unfavorable demographics and it is bidding against itself in the commodity markets. Technology/innovation ( nanotechnology, life sciences and information technology in particular ), on the other hand, is accelerating, converging and reinforcing itself. The below chart shows that the NASDAQ 100 (a proxy for innovation) has outperformed the Emerging Market Index (very sensitive to economic activity in China) over the past 3 years and I believe this will continue for several years to come:

The above is not a recommendation of any particular security or investment strategy. It is simply a statement of personal opinion.

Explore Nanotechnology !

Thursday, November 18, 2010

Advantages in All-Cap Investing

Advantages in All-Cap Investing

The above link should be read in conjunction with the "Is Domestic Really Domestic?" link. Together, the concepts they put forth, form a foundation for dismantling the dysfunctional, consultant-driven "style-box" mentality of the investment industry. If you want "true" growth, go small and/or to the emerging markets. If you want dividend income, go to the developed coountries (Europe in particular). If you want a value/contrarian play, go where the negative signs in front of the trailing, multi-year returns lead you, regardless of geography, size of company or newspaper headlines.

Life Technologies Launches EZValidation™ Online Tool for Clinical Laboratory Market

EZValidation is an example of how information technology is assisting in molecular diagnosis and helping to make costly research more efficient:

Life Technologies Launches EZValidation™ Online Tool for Clinical Laboratory Market

Many times the contribution from advances in one technology can have a profound impact on the profitability of another. For example, while it is great when a new compound is discovered that can cure a deadly disease, significant contributions can result from bringing the often cited "$1 billion and 10 years" investment to create a new drug down to say "$800 million and 8 years". This may not seem so dramatic as a cure for AIDS, but any improvement in the calculus of ROI on health care R&D serves to attract more investment dollars and increased potential for innovation. So, something as simple as simplifying work flows and coordinating clinical work can have profound benefit on the effort to improve the state of mankind as a result of that marginal dollar of investment that "tips" the odds toward a radical discovery.

Please note: The above entry is not a recommendation of Life Technologies as an investment. It is an illustration of how technologies reinforce each other. I currently hold a position in the stock of the above company. I also owned the predecessor companies, Invitrogen and Applied Biosciences, which merged into Life is a small world in many ways.

Is Domestic Really Domestic?

Is Domestic Really Domestic?

Quote from above link:

"Gauged according to underlying sales, after all, the S&P 500 isn't a domestic-stock index. It's an international benchmark, one whose companies streamed in 46.6% of their revenue from foreign shores last year, according to S&P's estimates. Approximately a third of that sum, moreover, was rung up in emerging markets."

Saturday, September 11, 2010

False Enemies & The Pursuit of Intelligence

The possession of knowledge is not intelligence, but intelligence is essential to turning information into knowledge. Knowledge is the "storage" of experience, facts and patterns. We mistake the ability to quickly recall this type of information and to synthesize it in some productive way as being "intelligent". Intelligence is the dynamic and robust acceptance and understanding of that which is most basic, timeless and immutable. As a result, there is very little difference between the quest for scientific knowledge and a spiritual journey. They differ in terms of approach, and perhaps ostensible motivation, but I believe they both lead to the same place ultimately. As their expeditions reach the pinnacle, they might very well be met by the "opposing team" coming up the other side of the mountain.

Knowledge is just a database, intelligence is more akin to Linux, Wikipedia or other ever-evolving software and/or information "hubs". Intelligence is not the number or size of entries in Wikipedia, or the lines of code in Linux, at a given time, rather it is the constant process of organizing, rationalizing and inter-connecting of insights and capabilities. Intelligence is the process itself and therefore quite fragile, much like life itself. Life and intelligence are more defined by energy than matter, but while energy is never lost, it can transform into forms not supportive of intelligence. It is the degree of order or chaos that defines energy as being intelligent or merely possessing the potential for intelligence.

The internet can be perceived as the natural result of scientific development, or it can be part of God's "grand design" (you can choose your desired phraseology), but I do believe it is part of the sequence of events leading to our becoming more intelligent as a whole. Presently, the internet is better at gathering and providing access to information, but the process of well-intentioned cooperation, "truth distilling" and "co-educating" is just being.

Man is not remotely "intelligent" at present, and we are laughably arrogant to think that we are. At present, our rudimentary intelligence is housed in a culturally-conflicted, biochemical/hormonal laden, reptilian brain-based "House of Mirrors". We don't know where we are, we don't know where we are going, we don't know if what we see is real or just a reflection of our own imaginations. Worse yet, we are paying for the experience and even if we successfully navigate the maze of our own self-delusions, we will likely just end back on the thoroughfare of the carnival. Yet, if you take a step back and observe the progress of mankind over many centuries, you will see that the internet is not just a technological milestone, but an evolutionary one that marks the initiation of the stage of development where individuals, and civilizations as a whole, can learn about each other, share knowledge and generate the momentum required to achieve the critical velocity needed for man's potential for higher order intelligence to take flight.

Intelligence is the motion towards the core of existence, creation and universal purpose. Intelligence is not a state of being, it is the intense and committed struggle to maintain objectivity, increase one's awareness of all things, to discard no scenario without fair and informed investigation. Human intelligence is not just motion, but commitment and sacrifice. The sacrifice comes in the form of having to abandon that which is most familiar and comforting, and the pain of having to admit that past decisions were made out of ignorance.

The pursuit of knowledge, in all of its forms, and the commitment to a better understanding of God, is not at odds, mutually exclusive or contradictory. If God is the creator of all things, then to know more of all things is to better appreciate and understand God. So the bickering between atheists and "believers" is really quite juvenile and counterproductive. The more we learn about the universe and the phenomenon that constitute its existence, the more fascinating and visibly intricate it becomes. The "creationists" try to use this information to "prove" the existence of God and the "secular rationalists" take the same information and support the notion that God had no hand in it. I truly hope the "rational secularists" and the "faithful fundamentalists" can reconcile their adolescent grievances and just accept the fact that we know very little, but we are learning, and that the "truth" will be revealed in due course. We can all carry our personal "hunches" in our backpacks, but let's agree that the exploration is worthwhile and that we can help each other along the path even while we are trying to prove how "right" we are.

If God exists, and nothing pre-existed God, and he created the universe, then thought must have surely preceded physical existence as God must have been aware of his own existence and had a notion of what he intended to create before he created it. So from a faith-based perspective, in the beginning there was God and his thoughts, and from that all matter and energy emerged. While we humans need "energy" to think, God's thoughts may not have needed such a device and I suspect that one of the greatest surprises that lies before us is the realization that thought has more "substance" than we can ever imagine. Man was supposedly created in "God's image" and so it should not be surprising that despite the many earthly desires and distractions that we, and every generation before us, grapple with each day, that we always find time to think, wonder and ponder as thought is the ultimate primordial substance and the primary thread that is woven into the fabric our very being. We are most "with God" at those moments of reflection, even if we do not believe in him. If there is in fact a God, I believe him to be a "loving" God because true love has order, promotes order and has a lasting quality and beauty, much like the physical universe, but like aspects of the universe, it appears at times to erupt in violence, explode, and/or dissipate, only to re-emerge in another elegant form. Hate is chaotic, destructive and transitional. Hate is the "evil" emotion, but only through it can the power and persistence of love be demonstrated. Love appears to be the name we assign to the unique quality that energy possess, indestructibility. Perhaps our intellectual "restlessness" is a form of "hate" born out of intellectual immaturity. Perhaps our efforts to know more will just result in us returning full circle to the realization that true intelligence is not based in knowledge, but is "movement" in thought without physical dimension or energy dissipation, the ultimate perpetual motion machine.

I am not taking either side of the argument as to the existence of God. What I am maintaining is that the differences of view may be much more subtle that most would believe and that our current differences of opinion should not be used as a rationale to obstruct each other from seeking knowledge, refining our intelligence and/or rising above our current limitations.

I believe knowledge conquers hate and we live in a world where information, a key ingredient to knowledge, is becoming more abundant and accessible. Yes, it isn't always used for the most virtuous pursuits and the shear quantity of information is making the location of the "right" and most useful information difficult, but it is getting harder and harder to keep anything secret or to avoid global scrutiny. Perhaps our journey is all about truly understanding that biting into the "apple of knowledge" will never sustain us for an eternity. Perhaps it is gaining the wisdom to understand the difference between intelligence and knowledge. Perhaps the reference to man as "children" of God is not just about lineage, it is about our humble intellectual beginnings and our destiny of intellectual growth and evolution into beings that can have the capability to grasp the greatness of the Creator or of the Cosmos, wherever your loyalty or interests reside.

The real question is the whether genuine "purpose" truly exists. For now, we have a lot of work to do just to become adequately intelligent, and part of that process is finding purpose in promoting cooperation, tolerance and understanding between scientific, religious, business and political leaders and their constituencies. These categories have no universal purpose or meaning. They are "earthly" and therefore of little relevance in the context of the full dimension of time or space. Human energy needs to be conserved and focused on achieving a better understanding or our world, our universe and our existence, as well as addressing the problems that prevent many from having the luxury of pondering such abstract goals.

Knowledge can only strengthen those that know the "real truth" so even though we disagree on what that is exactly, the end result of a successful effort would be to prove one side correct and enlighten the other. Either way, a worthwhile or sought after goal would be achieved by everyone.

Monday, September 6, 2010

Debate is Not Dogma

I just added the link for the trailer to "Transcendent Man" ( ) to, not because I think Kurzweil is either a prophet or infallible, but because the implications of just the possibility of a Singularity are profound enough that people need to begin the process of understanding the phenomenon and how they and their children may choose to adapt, especially if certain milestones are achieved (i.e. robust artificial general intelligence, orders of magnitude improvement in computing technology, highly effective means of human intelligence enhancement, etc.). I have heard Kurzweil speak several times and he is not "demanding" anyone to abandon their current belief system or way of life. He is simply stating his vision of how he thinks the future may play out and how the scenario many vary. He openly admits the uncertainty and dangers that the rapid progress of technology may present.

Sunday, September 5, 2010

Football Season Is ALMOST Over

"Football Season Is Over"

"No More Games. No More Bombs. No More Walking. No More Fun. No More Swimming. 67. That is 17 years past 50. 17 more than I needed or wanted. Boring. I am always bitchy. No Fun -- for anybody. 67. You are getting Greedy. Act your old age. Relax, This won't hurt."
- The words of Hunter S. Thompson written just prior to his suicide.

Yes, Hunter, the Football Season is almost over, but as you should have remembered, spring soon follows. You once searched for the American Dream. You once trained a dog to hate Nixon. You oftentimes sought to escape the real world, or at least to be in a "medicated" state to see the world for what it was, or what it wasn't...or was it to see the world in the way you wanted it to be, or was it to see something no one else had seen. I have read many of your words, but I am still unsure what you were really trying to accomplish in that regard. Were you striving to be the "Picture of Dorian Gray" for the American Dream. Did you think that by pushing the limits of Freedom of Speech, by elevating the "Ugly American" to an art form, by causing havoc with guns and explosives, by exposing the Hell's Angels and then by living a life similarly hedonistic, by attacking politicians and then becoming one, or by mourning the impending death of the American Dream that you could in some way suck the venom out of its faltering soul? Were you a written and real-life caricature of what made America great as well as desperate?

I miss you Hunter. I did not agree with much of your political views or your pessimism. I did not much care for the way you treated people at times, especially near the end. Yet, you brought us virtual reality before X-Boxes, HD 3-D and the Internet, and you did it in a way that made you think, question and thirst for adventure and experience. I learned your lessons well and I have the regrets to prove it, but I owe you much. I have moved on from fast cars, masochistic poor choices and existentialist self-absorption, but you always made me ask three questions: 1) Is the American Dream dead?; 2) Am I living by self-imposed boundaries that are counter-productive?; and 3) Is the ugliness that is just beneath the surface in all of us render us hopeless, or is there a beauty and purpose in what we are and have done?

Not much has changed, and everything has changed, since you left us. We have a President that I think you would have liked, but the doubts about the continued existence of the American Dream are as intense as they have ever been and he is struggling to restore confidence, much less optimism. The "Ugly American" is now truly an art form and we call it "reality TV". Many claim to have originated the idea that the ugliness within us can be entertaining, but we both know you were offending people and bringing chaos wherever you ventured to many people's delight long before cable.

I referenced "The Picture of Dorian Gray" earlier and within it Oscar Wilde wrote:

"The only way to get rid of a temptation is to yield to it. Resist it, and your soul grows sick with longing for the things it has forbidden to itself, with desire for what its monstrous laws have made monstrous and unlawful."

I know you yielded to many temptations during the course of your life, but I fear your soul was sick nonetheless as you raised the barrel to your head and soon after took the gift that was your life from us. I hope you found peace.

As for me, I believe we are in the fourth quarter of the last game of football season. Up till now, I believe man has been playing a game against himself and nature, but the real business of deciding the future of human society, the human race and the purpose for our very existence is about to begin.

Hunter, the American Dream is not dead, it was never even sick. It was just metamorphosizing. The chrysalis is a tomb for the caterpillar, but a womb for the butterfly. Just as it is surprising to see what a caterpillar really is once it is fully evolved, it is similarly surprising to learn that the American Dream is not even American, it is a Human Dream. The "shell" of American culture is in the process of being shed from the distilled essence of what was once known as the America Dream. America was always just the mechanism by which the virtue and purpose of our species could be cultivated, nurtured and shared. I know it was hard to see at times what with all the violence, discrimination, waste and excess, but freedom, democracy, education, wealth and tolerance is spreading well beyond US borders. It is far from perfect, and the next 50 or so years are going to be challenging, but compared to where we came from, and what we endured over the last few thousand years, the next few dozen shouldn't be so bad.

Wish you were here to see it happen. Believe it or not, the "bad craziness" is going to become quite good.

Monday, July 19, 2010

The Power & Purpose of Volatility

Volatility is not to be feared, but respected, as one should all the most powerful forces of nature. For to understand the nuances, power and purpose of volatility is to master the very essence of life itself.

The motto of Pashfiata Strategies is "...action conceived in balanced thought..." and the reason that I described volatility as I have in my opening entry is that in order to even begin the process of "balanced thought", one must acknowledge and learn to control their primal response to volatility. Volatility is not "wrong", "bad", "crazy" or "unhealthy." It is the necessary by-product of evolution, progress, creativity, and if observed from the correct perspective, it is one of the greatest aspects of life for it provides new opportunities, new insights and an opportunity to "re-tune" our personal values around what is truly important. Historically, and presently, scarcity drives value, and volatility is a constant reminder that all things are in constant peril, subject to obsolescense and/or decay. So, it is through volatility that all things gain value in the current paradigm. (Note that I said "volatility", not "death". This blog will serve as a companion to my website , which deals with nanotechnology and the Singularity which are intertwined with issues surrounding radical life extension and Transhumanism. I do not believe death is necessary to give value/purpose to life. I will address in future blogs the impact of a possible reduction/elimination of scarcity and how that will change the nature of volatiltity in both the pre- and post- Singularity eras).

Much has been written about the fall of great empires and how the US is appraoching its final curtain call, but I don't believe that that is true. In fact, I believe our current sources of political, economic, capital market, energy/environmental and cultural volatility are what are going to allow the US to continue to exist, and dominate, not only as a global power, but as a continually self-adjusting/correcting ideal.

The Obama administration offered something new. Our political system allowed those ideas to be introduced, debated and to a certain extent implemented. It appears that some of the new approaches are "too new" for a large segment of the voting public and even before the national mid-term elections, state level elections moved the political power dial back in the other direction and slowed the speed towards the new vision. I don't think that this "balance of power" volatility is a bad or unproductive process. If this shifting of power back & forth had not occurred, would we have:

1) Such vigorous debate around what type of healthcare system we really want.

2) Would we have seen the significant rise in political will to address our longer-term fiscal challenges.

3) Would there have been as many people going back and asking "What did the Founding Fathers really try to weave into the Constitution? Is it still relevant?"

4) The rise of new political voices on both sides.

5) A resurgence in people's interest in our political process.

Whether through revolution, civil war, protests, economic crises, natural/man made disasters, culture clashes or hotly debated political campaigns or issues, we have adapted to/overcome many challenges and have been the better for it.

This is not a blog dedicated to addressing political issues, but rather the interplay between business, capital markets, innovation and life. Politics just happens to be the process by which we resolve our differing, oftentimes conflicting, selection of goals within each of those categories, as well as the weights we place on them with regards to importance.

May America continue to experience and learn from volatility in all its many forms, and from that, continue to earn its place in history.