Sons And Daughters Of BBCMF Nanotechnology Company/IndustryResearch

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2009 Nanotech & Advanced Technology Investment Insights

Friday, January 23, 2009
January 12, 2009


Dear Nanotech Insights Subscriber,

I have been looking for a way to be of service to our most loyal readers. Especially in this extremely difficult economy, we need trusted, experienced and knowledgeable advisors.
We are developing a way that I may be able to provide a unique service for a few of you: More on that later.

Let’s take a look back at 2008 and a look forward at 2009/2010 and see what we got right and what we missed, and how we should proceed in the coming years.


What we missed:

In March 2008, I suggested for the first time since 2002 that investors start investing 1/24 of their funds for advanced tech stocks on a dollar-cost-average basis, every month for the next 24 months. I fear I was a year or more early.
In May 2008, I proposed that the stock market and small-tech bottom would be in place before the end of 2009. While I now believe such a bottom may technically be put in place this year, I don’t see a significant advance beginning before 2011 at the earliest now.

I apologize if this cost you money. While negative on the economy, I now believe even I was too early on the markets and March-May 2008 was part of a different world that no longer exists. There were no bailouts. There were no multi-trillion dollar stimulus programs (yes, by the end of 2010 it will not be $775B it will be more like $2.5T). I just thought things were horrible and getting worse; I didn’t know the roof was about to cave in. This was a time when TARP was merely a flexible, waterproof covering.


What we got right:

We warned to sell all small-tech & advanced tech stocks in October 2006, and that turned out to be good advice, as the typical stock in this group was down more than 25% to May 2008.
We have been warning continuously since 2003 that the venture capital model is broken, and finally this month Forbes, in a major expose, noted that the top firms in VC (to say nothing of the average) have not returned profits to their limited partners in eight years while collecting ridiculous fees.
Despite the warnings, we managed to guide our subscribers to significant profits in trading nanotech and small-tech stocks from early 2006 through 2008, far exceeding the notable indices, which posted negative returns.
We warned of a recession and collapse in real estate in 2006 and in November 2007 warned that this would be the consensus view before September 2008.


Where we are today:

It pains me say this, but while we have spoken about passing the early 1980’s double recession and the 1973/74 recession a while back, we have now made enough of a mess to say we have passed the Panic of 1907 and are fast approaching the Panic of 1893. While I am not a scholar in the field, the Panic of 1893 is considered this country’s most damaging depression with the exception of the Great Depression. This depression is starting to look in many ways like and echo the 1893 -1898 depression. It is unlikely that we will find a “bottom” for the economy before mid 2010 and if we keep putting the day of reckoning into the future like Japan did in 1990 (to today, continuing), we may see 11-16% unemployment and a bottom in 2013 or later.

My biggest question mark is how long this deflationary period will last. My work cannot see whether it ends in 3 months or lingers for 3 years. Certainly, whenever it ends years of high inflation (hopefully not hyperinflation) will follow. The human costs, market costs and financing predicaments will be immense. Please don’t listen to those who think this is all going to pass by June to October of 2009. The next layoff response is still months away (and it may not be the last) and the best day for a laid-off person is the actual day they are laid-off. Months later, when jobs are still hard to find and money is scarcer, it is much worse.

We expect the markets to do better than the economy. There will be some significant rallies, and while we do not expect the November 2008 low in the stock market will hold, it might.

Without going into detail further detail on the economy and the markets, we encourage everyone to buy precious metals and precious metals mining shares with a portion of their portfolio. The dollar will be “toast” within 3 years. Those who want more on this should send a note to [e-mail] to be put on the mining, metals and natural resource stock list.

For small-tech and nanotech investments, there will be three clear roads to profits over the next 5 years:

Successful short-term trading (2 week to 2 month periods)
Long/Short portfolios
Long-term investments (3-6 year hold periods) made at low points over the next 1-3 years

Clearly, for the near future, I do not expect intermediate-term investments in the 4 to 24 month timeframe to have much profit potential.

For those of you who would like my assistance, I may be associating with a Registered Investment Advisor (RIA) over the next few months and hope to offer separately managed accounts (SMAs) through brokerage firms in each of the three winning strategy areas listed just above.

Please send a note to [e-mail] for further info in this regard, as it develops.


Best regards,

Darrell Brookstein


Managing Director

The Nanotech Company, LLC

www.Nanotechnology.com


[e-mail]


http://www.nanotechnology.com/blogs/blognano/