Global Market Comments
January 20, 2023
Fiat Lux
Featured Trade:
(WILL SYNBIO SAVE OR DESTROY THE WORLD?),
(XLV), (XPH), (XBI), (IMB), (GOOG), (AAPL), (CSCO), (BIIB)
CLICK HERE to download today's position sheet.
Tag Archive for: (XPH)
Some 50 years ago, when I was a biotechnology student at UCLA, a handful of graduate students speculated about how dangerous our work really was.
It only took us an hour to figure out how to synthesize a microbe that had a 99% fatality rate, was immune to antibiotics and was so simple it could be produced in your home kitchen.
Basically, a bunch of bored students discovered a way to destroy the world.
We voiced our concerns to our professors, who immediately convened a national conference of leaders in the field. Science had outpaced regulation, as it always does. They adopted standards and implemented safeguards to keep this genie from getting out of the bottle.
Four decades later scientists have been successful at preventing a “doomsday” bug from accidentally escaping a lab and wiping out the world’s population.
That is, until now.
In 2010, Dr. Craig Venter created the first completely synthetic life form able to reproduce on its own. Named “Phi X174,” the simple virus was produced from a string of DNA composed entirely on a computer. Thus was invented the field of synthetic biology, better known as “Synbio.”
Venter’s homemade creature was your basic entry-level organism. Its DNA was composed of only 1 million base pairs of nucleic acids (adenine, thymine, cytosine, guanine, and uracil), compared to the 3 billion pairs in a human genome. Shortly thereafter, Venter one-upped himself by manufacturing the world’s first synthetic bacteria.
The work was hailed as the beginning of a brave new world that will enable biology to make the same dramatic advances in technology that computer science did in the 20th century. Dr. Drew Endy of Stanford University says that Synbio already accounts for 2% of US GDP and is growing at a breakneck 12% a year. He predicts that Synbio will eventually do more for the economy than the Internet and social media combined.
You may recall Craig Venter as the man who first decoded the human genome in 2003. The effort demanded the labor of thousands of scientists and cost $3 billion. We later learned that the DNA that was decoded was Craig’s own. Some five years later, the late Steve Jobs spent $1 million to decode his own genes in a vain attempt to find a cure for pancreatic cancer.
Today, you can get the job done for $1,000 in less than 24 hours. That’s what movie star Angelina Jolie did, who endured a voluntary double mastectomy when she learned her genes guaranteed a future case of terminal breast cancer.
The decoding industry is now moving to low-cost China, where giant warehouses have been built to decode the DNA of a substantial part of humanity. That should soon drop the price to $100. It’s all about full automation and economies of scale.
This technology is already spreading far faster than most realize. In 2004, MIT started the International Genetically Engineered Machine Contest where college students competed to construct new life forms. Recently, a high school division was opened, attracting 194 entries from kids in 34 countries. Gee, when I went to wood shop in high school, it was a big deal when I finished my table lamp.
This will make possible “big data” approaches to medical research that will lead to cures of every major human disease, such as cancer, heart disease, diabetes, and more within our lifetimes. This is why the healthcare (XLV), biotechnology (XBI), and pharmaceutical (XPH) sectors have been top performers in the stock market for the past two years. It’s not just about Obamacare.
The implications spread far beyond healthcare. IBM (IBM) is experimenting with using DNA-based computer code to replace the present simple but hugely inefficient binary system of 0’s and 1’s. “DNA-based computation” is prompting computer scientists to become biochemists and biochemists to evolve into computer scientists to create “living circuit boards.” Google (GOOG), Apple (AAPL), and Cisco (CSCO) have all taken notice.
We are probably only a couple of years away from enterprising hobbyists downloading DNA sequences from the Internet and building new bugs at home with a 3D printer. Simple organisms, like viruses, would need a file size no larger than one needed for a high-definition photo taken with your iPhone. They can then download other genes from the net, creating their own customized microbes at will.
This is all great news for investors of every stripe, and will no doubt accelerate America’s economic growth. But it is also causing governments and scientists around the world to wring their hands, seeing the opening of a potential Pandora’s box. What if other scientists lack Venter’s ethics, who went straight to President Obama for security clearance before he made his findings public?
If we can’t trust our kids to drink, drive, or vote, then how responsibly will they behave when they get their hands on potential bioterror weapons? How many are familiar with Bio Safety Level 4 (BSL) standards? None, I hope.
In fact, the race is already on to weaponize synbio. In 2002, scientists at SUNY Stonybrook synthesized a poliovirus for the first time. In 2005, another group managed to recreate the notorious H1N1 virus that caused the 1918 Spanish Flu epidemic. Some 50-100 million died in that pandemic within 2 years.
Then in 2011, Ron Fouchier of the Erasmus Medical Center in Holland announced that he had found a way to convert the H5N1 bird flu virus, which in nature is only transmitted from birds to people, into a human to human virus. Of the 565 who have come down with bird flu so far, which originates in China, 59% have died.
It didn’t take long for the Chinese to get involved. They have taken Fouchier’s work several steps further, creating over 127 H5N1 flu varieties, five of which can be transmitted through the air, such as from a sneeze. The attributes of one of these just showed up in the latest natural strain of bird flu, the H7N9.
The World Health Organization (WHO) and the Center for Disease Control (CDC) in Atlanta, Georgia are charged with protecting us from outbreaks like this. But getting the WHO, a giant global bureaucracy, to agree on anything is almost impossible unless there is already a major outbreak underway. The CDC has seen its budget cut by 25% since 2010 and has lost another 5% due to the US government sequester.
The problem is that the international organizations charged with monitoring all of this are still stuck in the Stone Age. Current regulations revolve around known pathogens, like smallpox and the Ebola virus, that date back to the 1960s when the concern was about moving lethal pathogens across borders via test tubes.
That is, oh so 20th century. Thanks to the Internet, controlling information flow is impossible. Just ask Muammar Gaddafi and Bashar Al Assad. Al Qaida has used messages embedded in online porn to send orders to terrorists.
Getting international cooperation isn’t that easy. Only 35 countries are currently complying with the safety, surveillance, and research standards laid out by the WHO. Indonesia refused to part with H5N1 virus samples spreading there because it did want to make rich the western pharmaceutical companies that would develop a vaccine. African countries say they are too poor to participate, even they are the most likely victims of future epidemics.
Scientists have proposed a number of safeguards to keep these new superbugs under control. One would be a dedicated sequence of nucleic acid base pairs inserted into the genes that would identify its origin, much like a bar code at the supermarket. This is already being used by Monsanto (MON) with its genetically modified seeds. Another would be a “suicide sequence” that would cause the germ to self-destruct if it ever got out of a lab.
One can expect the National Security Agency to get involved, if they haven’t done so already. If they can screen our phone calls for metadata, why not high-risk DNA sequences sent by email?
But this assumes that the creators want to be found. The bioweapon labs of some countries are thought to be creating new pathogens so they can stockpile vaccines and antigens in advance of any future conflict.
There are also the real terrorists to consider. When the Mubarak regime in Egypt was overthrown in 2011, demonstrators sacked the country’s public health labs that had been storing H5N1 virus. Egypt has one of the world’s worst bird flu problems, due to the population’s widespread contact with chickens.
It is hoped that the looters were only in search of valuable electronics they could resell, and tossed the problem test tubes. But that is only just a hope.
I have done a lot of research on this area over the decades. I even chased down the infamous Unit 731 of the Japanese Imperial Army that parachuted plagued infected rats into China during WWII, after first experimenting on American POWs.
The answer to the probability of biowarfare always comes back the same. Countries never use this last resort for fear of it coming back on their own population. It really is an Armageddon weapon. Only a nut case would want to try it.
Back in 1976, I was one of the fortunate few to see in person the last living cases of smallpox. As I walked through a 15th century village high in the Himalayas in Nepal, two dozen smiling children leaned out of second-story windows to wave at me. The face of everyone was covered with bleeding sores. And these were the survivors. Believe me, you don’t want to catch it yourself.
Sure, I know this doesn’t directly relate to what the stock market is going to do today. But if a virus escaped from a rogue lab and killed everyone on the planet, it would be bad for prices, wouldn’t it?
I really hope one of the kids competing in the MIT contest doesn’t suffer from the same sort of mental problems as the boy in Newton, Connecticut did.
I Think Woodshop Would Have Been Easier
Cause of the Next Bear Market, or the End of the World?
Global Market Comments
December 30, 2020
Fiat Lux
Featured Trade:
(WILL SYNBIO SAVE OR DESTROY THE WORLD?),
(XLV), (XPH), (XBI), (IMB), (GOOG), (AAPL), (CSCO), (BIIB)
Global Market Comments
December 30, 2019
Fiat Lux
Featured Trade:
(WILL SYNBIO SAVE OR DESTROY THE WORLD?),
(XLV), (XPH), (XBI), (IMB), (GOOG), (AAPL), (CSCO), (BIIB)
Global Market Comments
December 31, 2018
Fiat Lux
Featured Trade:
(WILL SYNBIO SAVE OR DESTROY THE WORLD?),
(XLV), (XPH), (XBI), (IMB), (GOOG), (AAPL), (CSCO), (BIIB)
Mad Hedge Technology Letter
June 8, 2018
Fiat Lux
Featured Trade:
(WILL SYNBIO SAVE OR DESTROY THE WORLD?),
(XLV), (XPH), (XBI), (MON), (IBM), (GOOG), (AAPL), (CSCO)
Some 40 years ago, when I was a biotechnology student at UCLA, a handful of graduate students speculated about how dangerous our work really was.
It only took us an hour to figure out how to synthesize a microbe that had a 99% fatality rate, was immune to antibiotics, and was so simple it could be produced in your home kitchen.
Basically, a bunch of bored students discovered a way to destroy the world.
We voiced our concerns to our professors, who immediately convened a national conference of leaders in the field. Science had outpaced regulation, as it always does. They adopted standards and implemented safeguards to keep this genie from getting out of the bottle.
Four decades later scientists have been successful at preventing a "doomsday" bug from accidently escaping a lab and wiping out the world's population.
That is, until now.
In 2010, Dr. Craig Venter created the first completely synthetic life form able to reproduce on its own. Named "Phi X174," the simple virus was produced from a string of DNA composed entirely on a computer. Thus was invented the field of synthetic biology, better known as "Synbio."
Venter's homemade creature was your basic entry level organism. Its DNA was composed of only 1 million base pairs of nucleic acids (adenine, thymine, cytosine, guanine, and uracil), compared to the 3 billion pairs in a human genome. Shortly thereafter, Venter one-upped himself by manufacturing the world's first synthetic bacteria.
The work was hailed as the beginning of a brave new world that will enable biology to make the same dramatic advances in technology that computer science did in the 20th century. Dr. Drew Endy of Stanford University says that Synbio already accounts for 2% of US GDP, and is growing at a breakneck 12% a year. He predicts that Synbio will eventually do more for the economy than the Internet and social media combined.
You may recall Craig Venter as the man who first decoded the human genome in 2003. The effort demanded the labor of thousands of scientists and cost $3 billion. We later learned that the DNA that was decoded was Craig's own. Some five years later, the late Steve Jobs spent $1 million to decode his own genes in a vain attempt to find a cure for pancreatic cancer.
Today, you can get the job done for $1,000 in less than 24 hours. That's what movie star Angelina Jolie did, who endured a voluntary double mastectomy when she learned her genes guaranteed a future case of terminal breast cancer.
The decoding industry is now moving to low cost China, where giant warehouses have been built to decode the DNA of a substantial part of humanity. That should soon drop the price to $100. It's all about full automation and economies of scale.
This technology is already spreading far faster than most realize. In 2004, MIT started the International Genetically Engineered Machine Contest where college students competed to construct new life forms. Recently, a high school division was opened, attracting 194 entries from kids in 34 countries. Gee, when I went to wood shop in high school it was a big deal when I finished my table lamp.
This will make possible "big data" approaches to medical research that will lead to cures of every major human disease, such as cancer, heart disease, diabetes, and more, within our lifetimes. This is why the health care (XLV), biotechnology (XBI), and pharmaceutical (XPH) sectors have been top performers in the stock market for the past two years. It's not just about Obamacare.
The implications spread far beyond health care. IBM (IBM) is experimenting with using DNA based computer code to replace the present simple, but hugely inefficient, binary system of 0's and 1's. "DNA based computation" is prompting computer scientists to become biochemists and biochemists to evolve into computer scientists to create "living circuit boards." Google (GOOG), Apple (AAPL), and Cisco (CSCO) have all taken notice.
We are probably only a couple years away from enterprising hobbyists downloading DNA sequences from the Internet and building new bugs at home with a 3D printer. Simple organisms, like viruses, would need a file size no larger than one needed for a high definition photo taken with your iPhone. They can then download other genes from the net, creating their own customized microbes at will.
This is all great news for investors of every stripe, and will no doubt accelerate America's economic growth. But it is also causing governments and scientists around the world to wring their hands, seeing the opening of a potential Pandora's box. What if other scientists lack Venter's ethics, who went straight to President Obama for a security clearance before he made his findings public?
If we can't trust our kids to drink, drive, or vote, then how responsibly will they behave when they get their hands on potential bioterror weapons? How many are familiar with Bio Safety Level 4 (BSL) standards? None, I hope.
In fact, the race is already on to weaponize synbio. In 2002, scientists at SUNY Stonybrook synthesized a polio virus for the first time. In 2005, another group managed to recreate the notorious H1N1 virus that caused the 1918 Spanish Flu epidemic. Some 50-100 million died in that pandemic within 2 years.
Then in 2011, Ron Fouchier of the Erasmus Medical Center in Holland announced that he had found a way to convert the H5N1 bird flu virus, which in nature is only transmitted from birds to people, into a human to human virus. Of the 565 who have come down with bird flu so far, which originates in China, 59% have died.
It didn't take long for the Chinese to get involved. They have taken Fouchier's work several steps further, creating over 127 H5N1 flu varieties, five of which can be transmitted through the air, such as from a sneeze. The attributes of one of these just showed up in the latest natural strain of bird flu, the H7N9.
The World Health Organization (WHO) and the Center for Disease Control (CDC) in Atlanta, Georgia are charged with protecting us from outbreaks like this. But getting the WHO, a giant global bureaucracy, to agree on anything is almost impossible, unless there is already a major outbreak underway. The CDC has seen its budget cut by 25% since 2010, and has lost another 5% due to the US government sequester.
The problem is that the international organizations charged with monitoring all of this are still stuck in the Stone Age. Current regulations revolve around known pathogens, like smallpox and the Ebola virus, that date back to the 1960's, when the concern was about moving lethal pathogens across borders via test tubes.
That is, oh so 20th century. Thanks to the Internet, controlling information flow is impossible. Just ask Muammar Gaddafi and Bashar Al Assad. Al-Qaeda has used messages embedded in online porn to send orders to terrorists.
Getting international cooperation isn't that easy. Only 35 countries are currently complying with the safety, surveillance, and research standards laid out by the WHO. Indonesia refused to part with H5N1 virus samples spreading there because it didn't want the western pharmaceutical companies that would develop a vaccine rich. African countries say they are too poor to participate, even they are the most likely victims of future epidemics.
Scientists have proposed a number of safeguards to keep these new superbugs under control. One would be a dedicated sequence of nucleic acid base pairs inserted into the genes that would indentify its origin, much like a bar code at the supermarket. This is already being used by Monsanto (MON) with its genetically modified seeds. Another would be a "suicide sequence" what would cause the germ to self-destruct if it ever got out of a lab.
One can expect the National Security Agency to get involved, if they haven't done so already. If they can screen our phone calls for meta data, why not high risk DNA sequences sent by email?
But this assumes that the creators want to be found. The bioweapons labs of some countries are thought to be creating new pathogens so they can stockpile vaccines and antigens in advance of any future conflict.
There are also the real terrorists to consider. When the Mubarak regime in Egypt was overthrown in 2011, demonstrators sacked the country's public health labs that had been storing H5N1 virus. Egypt has one of the world's worst bird flu problems, due to the population's widespread contact with chickens.
It is hoped that the looters were only in search of valuable electronics they could resell, and tossed the problem test tubes. But that is only just a hope.
I have done a lot of research on this area over the decades. I even chased down the infamous Unit 731 of the Japanese Imperial Army that parachuted plagued infected rats into China during WWII, after first experimenting on American POW's.
The answer to the probability of bio warfare always comes back the same. Countries never use this last resort for fear of it coming back on the own populations. It really is an Armageddon weapon. Only a nut case would want to try it.
Back in 1976 I was one of the fortunate few to see in person the last living cases of smallpox. As I walked through a 15th century village high in the Himalayas in Nepal, two dozen smiling children leaned out of second story windows to wave at me. The face of every one was covered with bleeding sores. And these were the survivors. Believe me, you don't want to catch it yourself.
For those who want to learn more about synbio, or participate in the discussion, please visit the BioBricks Foundation by clicking here.
Sure, I know this doesn't directly relate to what the stock market is going to do today. But if a virus escaped from a rogue lab and killed everyone on the planet, that would be bad for prices, wouldn't it?
I really hope one of the kids competing in the MIT contest doesn't suffer from the same sort of mental problems as the boy in Newton, Connecticut did.
I Think Wood Shop Would Have Been Easier
Cause of the Next Bear Market or the End of the World?
Some 40 years ago, when I was a biotechnology student at UCLA, a handful of graduate students speculated about how dangerous our work really was.
It only took us an hour to figure out how to synthesize a microbe that had a 99% fatality rate, was immune to antibiotics, and was so simple it could be produced in your home kitchen.
Basically, a bunch of bored students discovered a way to destroy the world.
We voiced our concerns to our professors, who immediately convened a national conference of leaders in the field. Science had outpaced regulation, as it always does. They adopted standards and implemented safeguards to keep this genie from getting out of the bottle.
Four decades later scientists have been successful at preventing a ?doomsday? bug from accidently escaping a lab and wiping out the world?s population.
That is, until now.
In 2010, Dr. Craig Venter created the first completely synthetic life form able to reproduce on its own. Named ?Phi X 174,? the simple virus was produced from a string of DNA composed entirely on a computer. Thus was invented the field of synthetic biology, better known as ?SynBio.?
Venter?s homemade creature was your basic entry level organism. Its DNA was composed of only 1 million base pairs of nucleic acids (adenine, thymine, cytosine, guanine, and uracil), compared to the 3 billion pairs in a human genome. Shortly thereafter, Venter one-upped himself by manufacturing the world?s first synthetic bacteria.
The work was hailed as the beginning of a brave new world that will enable biology to make the same dramatic advances in technology that computer science did in the 20thcentury. Dr. Drew Endy of Stanford University says that SynBio already accounts for 2% of US GDP, and is growing at a breakneck 12% per year. He predicts that SynBio will eventually do more for the economy than the Internet and social media combined.
You may recall Craig Venter as the man who first decoded the human genome in 2003. The effort demanded the labor of thousands of scientists and cost $3 billion. We later learned that the DNA that was decoded was Craig?s own. Some five years later, the late Steve Jobs spent $1 million to decode his own genes in a vain attempt to find a cure for pancreatic cancer.
Today, you can get the job done for $1,000 in less than 24 hours. That?s what movie star Angelina Jolie did, who endured a voluntary double mastectomy when she learned her genes guaranteed a future case of terminal breast cancer.
The decoding industry is now moving to low cost China, where giant warehouses have been built to decode the DNA of a substantial part of humanity. That should soon drop the price to $100. It?s all about full automation and economies of scale.
This technology is already spreading far faster than most realize. In 2004, MIT started the International Genetically Engineered Machine Contest where college students competed to construct new life forms. Recently, a high school division was opened, attracting 194 entries from kids in 34 countries. Gee, when I went to wood shop in high school it was a big deal when I finished my table lamp.
This will make possible ?big data? approaches to medical research that will lead to cures of every major human disease, such as cancer, heart disease, diabetes, and more, within our lifetimes. This is why the health care (XLV), biotechnology (XBI), and pharmaceutical (XPH) sectors have been top performers in the stock market for the past two years. It?s not just about Obamacare.
The implications spread far beyond health care. IBM (IBM) is experimenting with using DNA based computer code to replace the present simple, but hugely inefficient, binary system of 0s and 1s. ?DNA based computation? is prompting computer scientists to become biochemists and biochemists to evolve into computer scientists to create ?living circuit boards.? Alphabet (GOOG), Apple (AAPL), and Cisco (CSCO) have all taken notice.
We are probably only a couple years away from enterprising hobbyists downloading DNA sequences from the Internet and building new bugs at home with a 3D printer. Simple organisms, like viruses, would need a file size no larger than one needed for a high definition photo taken with your iPhone. They can then download other genes from the net, creating their own customized microbes at will.
This is all great news for investors of every stripe, and will no doubt accelerate America?s economic growth. But it is also causing governments and scientists around the world to wring their hands, seeing the opening of a potential?Pandora?s Box. What if other scientists lack Venter?s ethics? He went straight to President Obama for a security clearance before he made his findings public.
If we can?t trust our kids to drink, drive, or vote, then how responsibly will they behave when they get their hands on potential bioterror weapons? How many are familiar with Bio Safety Level 4 (BSL) standards? None, I hope.
In fact, the race is already on to weaponize SynBio. In 2002, scientists at SUNY Stonybrook synthesized a polio virus for the first time. In 2005, another group managed to recreate the notorious H1N1 virus that caused the 1918 Spanish Flu epidemic. Some 50-100 million died in that pandemic within 2 years.
Then in 2011, Ron Fouchier of the Erasmus Medical Center in Holland announced that he had found a way to convert the H5N1 bird flu virus, which in nature is only transmitted from birds to people, into a human to human virus. Of the 565 who have come down with bird flu so far, which originates in China, 59% have died.
It didn?t take long for the Chinese to get involved. They have taken Fouchier?s work several steps further, creating over 127 H5N1 flu varieties, five of which can be transmitted through the air, such as from a sneeze. The attributes of one of these just showed up in the latest natural strain of bird flu, the H7N9.
The World Health Organization (WHO) and the Center for Disease Control (CDC) in Atlanta, Georgia are charged with protecting us from outbreaks like these. But getting the WHO, a giant global bureaucracy, to agree on anything is almost impossible, unless there is already a major outbreak underway. The CDC has seen its budget cut by 25% since 2010.
The problem is that the international organizations charged with monitoring all of this are still stuck in the Stone Age. Current regulations revolve around known pathogens, like smallpox and the Ebola virus, that date back to the 1960s, when the concern was about moving lethal pathogens across borders via test tubes.
That is, oh so 20th?century. Thanks to the Internet, controlling information flow is impossible. Just ask Muammar Gaddafi and Bashar al-Assad. Al Qaida has used messages embedded in online porn to send orders to terrorists.
Getting international cooperation isn?t that easy. Only 35 countries are currently complying with the safety, surveillance, and research standards laid out by the WHO. Indonesia refused to part with H5N1 virus samples spreading there because it did want to enrich the western pharmaceutical companies that would develop a vaccine. African countries say they are too poor to participate, even though they are the most likely victims of future epidemics.
Scientists have proposed a number of safeguards to keep these new superbugs under control. One would be a dedicated sequence of nucleic acid base pairs inserted into the genes that would identify its origin, much like a bar code at the supermarket. This is already being used by Monsanto (MON) with its genetically modified seeds. Another would be a ?suicide sequence? that would cause the germ to self-destruct if it ever got out of a lab.
One can expect the National Security Agency to get involved, if they aren't already. If they can screen our phone calls for meta data, why not high risk DNA sequences sent by email?
But this assumes the creators want to be found. The bioweapons labs of some countries are thought to be creating n
ew pathogens so they can stockpile vaccines and antigens in advance of any future conflict.
There are also the real terrorists to consider. When the Mubarak regime in Egypt was overthrown in 2011, demonstrators sacked the country?s public health labs that had been storing H5N1 virus. Egypt has one of the world?s worst bird flu problems, due to the population?s widespread contact with chickens.
It is hoped that the looters were only in search of valuable electronics they could resell, and tossed the problem test tubes. But that is only a hope.
I have done a lot of research on this area over the decades. I even chased down the infamous Unit 731 of the Japanese Imperial Army which parachuted plague infected rats into China during WWII, after first experimenting on American POWs.
The answer to the probability of bio warfare always comes back the same thing. Countries never use this last resort for fear of it coming back on their own populations. It really is an Armageddon weapon. Only a nut case would want to try it.
Back in 1976 I was one of the fortunate few to see in person the last living cases of smallpox. As I walked through a 15th?century village high in the Himalayas in Nepal, two dozen smiling children leaned out of second story windows to wave at me. The face of every one was covered with bleeding sores. And these were the survivors. Believe me, you don?t want to catch it yourself.
For those who want to learn more about SynBio, or participate in the discussion, please visit the BioBricks Foundation by clicking the link:
http://biobricks.org.
Sure, I know this doesn?t directly relate to what the stock market is going to do today. But if a virus escaped from a rogue lab and killed everyone on the planet, that would be bad for prices, wouldn?t it?
I really hope one of the kids competing in the MIT contest doesn?t suffer from the same sort of mental problems as the boy in Newton, Connecticut did.
I Think Wood Shop Would Have Been Easier
Cause of the Next Bear Market or the End of the World?
Basking in the glow of the spectacular 22% profit by the Trade Alert Service so far in 2015, I sat down on a rock on a high mountain the other day to try and figure out what happened.
The last time I saw a move this healthy was back in 2013, when I clocked a 68% gain for the year.
During the 1990?s, we saw a perfect trifecta of the Internet going mainstream, cheap graphical user interface enabled personal computers, and an easy to use World Wide Web that conspired to create a Dotcom boom and send risk assets everywhere ballistic.
Sure, the advent of cheap domestic energy unleashed by the fracking and horizontal drilling of natural gas is a game changer of similar magnitude.
But that isn?t enough to suddenly convert every investor from a pessimist to an optimist, a Cassandra to a Pollyanna, or a bear to a bull.
So what else is helping to send stocks ever Northward?
Fortunately, I brought along an abacus with me to my high altitude retreat. So I ran a few numbers.
Approximately 18% of US GDP is derived from the health care industry in some form or another. In Europe they spend only 8%, live longer and certainly eat better food (I spent two months field testing it last summer).
So what happens when America?s Affordable Care Act, otherwise known as Obamacare, brings our spending down to European levels? The savings would amount to 10% of GDP, or $1.6 trillion. That is a handsome amount of change.
Where would all of this money go? The short answer is: to you and me. To be precise, I get half, and you get half, which works out to $800 billion for each of us, per year.
The reality is a little more complicated than that. We are not going to get our new found wealth in unmarked bills stuffed in a duffle bag left at a dead drop in the middle of the night.
Rather, the payoff will come in an indirect form. We will get better quality health care for less money, and more of us will get it, some 48 million to be precise.
Oh, and we get to live longer too.
What are we going to do with this windfall? Buy stocks, and lots of them. At least that?s what the stock market thinks. Hence, the ballistic move in equities. This year could be just as good.
In fact, we will be buying a lot of everything, which is why the auto industry is on fire, real estate is recovering, yet the bond market hasn?t crashed.
This amount of money hitting the financial system over the coming decade could well be the appetizer to an investment ?Golden Age? during the 2020?s.
This is fabulous news for asset owners of all stripes, and pretty good for everyone else as well. Companies with rising share prices are much more likely to hire and expand capital investment than those with falling ones, raising standards of living.
The way this happens is what makes Obamacare so interesting, unlike the purely government sponsored plans now in operation in Europe and Asia. It does this with a heavy reliance on the private sector to unleash free market capitalism on the health care industry for the first time in its history.
At last, they will be thrown into the merciless pit of dog eat dog, cutthroat competition where the rest of us have already been living for quite some time. They will be the losers, and we will be the winners.
I have been studying health care for about 40 years now. I was once destined to become a medical researcher at the Center for Disease in Atlanta. But the Defense Department found out I was pretty good with numbers, and I found myself in a bleak part of Northern Nevada now known as Area 51.
When improving relations with the Soviet Union wound things down there and all the aliens went home, there was nowhere else for me to go but the stock market. Suffice it to say, I still know which end of a test tube to hold up.
Health care is the last 19th century industry that operates in this country (except possibly for coal mining). It is fragmented into local monopolies spread amongst the country?s 3,141 counties.
I haven?t had health insurance myself for seven years. After paying on a Blue Cross of California policy for 20 years, they suddenly cancelled my policy claiming an alleged pre existing condition. My real pre existing condition was that I was a 55-year-old white male, and was not a great risk.
Since I was paying out of pocket for every trip to the doctor, I became an expert on what things cost. The first thing that I learned is that no one in a doctor?s office knows what anything costs. They deliberately don?t know. That way they can feign innocence when you get hit with a whopping big bill.
It was only with the greatest persistence that I was able to chase down the actual dollar cost of tests and procedures. Needless to say, my health care providers considered me a nut case and a pain in the ass and kindly offered a referral to a mental health professional. Some actually refused me care.
This is the land of the $100 plastic hypodermic needle, the $300 paper gown, and the $1,000 saline drip (its salt water). MRI Scans can cost $6,000, or $1,500 at the hospital down the street.
In fact, I?ve had friends show up for procedures at hospitals with a $3 gown they bought on Ebay, but were still forced to use the identical $300 version.
This is why the wealthiest guy in the county is often the one who runs the local hospital, or sells specialized prescribed treatments and procedures, to be reimbursed by the government.
From 1995 to 2012, dermatologists saw a 50% increase in annual incomes to an average $471,000 while most of America saw a steady decline in real take home pay. Oncologists and gastroenterologists did as well. This is especially true in rural parts of the country where there is a chronic shortage of doctors. Competition is anathema to these people.
What broke the health care system in this country is that there was a total absence of cost control, but an unlimited ability to get paid. If you?re having a heart attack, you don?t shop around for the hospital offering the best deal on surgery that week, as we might for a new set of tires (go to Costco) or a new computer.
Being the savvy consumers that we have become, if we don?t like the prices down at the mall we just go online. That?s tough to do with health care.
With insurers or the government picking up the tab whatever the cost, there was no incentive to do so anyway. Doctors excessively ordered tests to protect themselves from lawsuits, thanks to a tort system run amuck.
Drug companies kept inventing new diseases (do any of you male readers suffer from ?low T??). Indulgent lifestyles assured that ever-rising numbers of us got sick, driving prices skyward.
By creating national exchanges selling plain vanilla policies and setting rigorous standards on what they will pay for (?death panels? to opponents), American health care costs are now falling for the first time in history. 2013 saw the first year on year fall on record. This is only the beginning of that $1.6 trillion plunge in costs.
No one really knows what the marginal cost of an MRI scan is. But if you count the capital cost of buying a new $1.4 million machine, deduct the fee the specialist to read the scan, the $60,000 annual salary of the technician to run it, along with maintenance and depreciation, and I bet you get a number a hell of a lot less than $6,000. We are soon going to find out what the marginal cost really is.
This is why opposition to Obamacare has been so violent and vehement five years after it became law. Those who have been feeding off of the gravy train for so long will do anything to protect it. $1.6 trillion buys a lot of lobbyists in Washington DC. <
br />
Most opposing Obamacare in the media are being paid to do so. Ask them exact details about exactly why it is so bad and they either mumble some lame ideological explanation or go mute.
States that support Obamacare and set up their own exchanges, like California, New York, and Kentucky, are seeing dramatic reductions in the cost of health care costs and insurance, up to 50% in some cases. Those that oppose it, such as Texas, are not.
The great irony in all of this is that the states opposing Obamacare need it the most. The 13 states of the old southern Confederacy suffer the worst health in the country.
Take three states out of the national averages, Georgia, Mississippi and Alabama, and the average male life span jumps from 78 to 82. I?m told they eat pure lard down there, not exactly a health food.
So Obamacare is basically a giant federal program that shifts money away from the two coasts toward the South and Midwest, or out of blue states into red ones. This is the same pattern for all large government programs. Why they are against Obamacare one can only imagine, except possibly the name.
I have been pointing out to the administration for years that they have greatly underestimated the long-term impacts of Obamacare on the economy, most of which are positive.
This has led them to unintentionally undersell the program. The impact on the world?s large economy is so enormous that it was impossible to foresee all of the unintended consequences. The only way to find out was to do it.
I?ll give you a couple of examples. Take the ?Obama lied? issue, where the president promised voters they could keep their existing doctors and insurance.
By setting minimal coverage and care standards the government put out of business the ?junk insurance? industry, which provides questionable policies with deductibles of $8,000 or more, low lifetime maximums, and boots you off your coverage as soon as you sneeze.
They had a bad habit of taking in your premium income and disappearing as soon as you made a major claim, with denials at some companies running as high as 50%.
Banning these rip-offs from the industry is all well and good. But nobody knew there were so many such polices, over 5 million. It turns out that no research had been done on this ugly little backwater, as it was purely a private sector enterprise. Then the cancellation letters all went out at once, to the shock and surprise of everyone.
When you are living paycheck to paycheck, about 20% of the country, even $100 a month is too much to spend. Many just don?t like doctors or hospitals and will only sign up after they are seriously ill, probably at the prompting of a social worker. Then they go to the emergency room and don?t pay.
I can tell you from my journalist days that 40% of the population doesn?t read newspapers at all, either the online or hard copy kind. Unless something appears on ESPN or the Golf Channel, they have no clue that it exists. There are those who still can?t operate a computer, as unbelievable as that may seem in the 21st century.
Then there was the website fiasco, the most easily preventable error in the entire rollout. I would bet big money that the former Health and Services Director, Kathleen Sebelius, has never built her own website.
For her, I highly recommend Websites for Dummies (click here for Amazon), which helped me get Mad Hedge Fund Trader off the ground seven years ago.
I was outraged when I heard that the lead contract for the construction of the website was given to a Canadian firm. I raised my hand and said ?Hey, we out here in Silicon Valley know how to build websites too.?
They should have just given the whole thing to Google (GOOG). But that would have raised conflict of interest questions, as founders Larry Page and Sergei Brin were two of Obama?s largest donors.
Corporations will get, thankfully, out of the health care business completely, offloading coverage to Obamacare as fast as they can. Small companies are already doing this in large numbers because workers can get better coverage for less money. This will level the playing field with foreign competitors for the first time in more than half a century, whose own governments cover the health care costs of their employees for free.
Those in the hedge fund, banking and oil industry luxuriating in $30,000 a year formerly tax free Cadillac insurance plans now have to pay ordinary income tax on benefits worth more than $10,000 a year. With most of the tax subsidy gone, there is little reason for employers to continue with these perks.
What is the bottom line for the shareholders in all of this? A substantial reduction in costs that drops straight to the bottom line, creating surging profits and stock prices. That works for me!
All of the above is a major reason why health care has been a major plank in my trading portfolio for the past two years, and may remain so for the next decade.
Followers of my Trade Alert Service cashed in on my long in the Health Care Sector Select SPDR ETF (XLV) and hepatitis drug manufacturer Gilead Sciences (GILD) multiple times. Those who took my advice joyfully watched them run away to the upside.
Expect this to be a recurring theme in my equity coverage. The SPDR S&P Pharmaceutical Index (XPH), Celgene (CELG), Biogen (BIIB), and the SPDR S&P Biotech Index (XBI) are also on the menu and looking tasty.
Every country in the world that has implemented national heath care has been successful. We are the smartest people in the world, so there is no reason we can?t make it work as well, if not better. Only political obstacles stand in the way.
It could well be that the stock markets are the first to see these momentous changes, far ahead of we mere mortals. Such is the wisdom of markets. So far, your investment portfolio agrees.
It will be at least a decade before we can judge the results of Obamacare, it is so vast and complex an undertaking. Up for grabs are individual markets for over 10,000 different treatments and services. It is far too early to call it a failure or a success. In any case, the earliest it can be repealed is 2025, after Hillary Clinton completes her second term as president. So get used to it.
What about my own insurance? I am waiting for my Medicare to kick in, which is only a year off. Until then, they are going to have to come after me with handcuffs and a taser. I bet many other Americans plan on doing the same.
By then, the website should be working and the costs brought in line with reality. Then I?ll buy the cheapest possible policy, the popular ?Bronze? plan, because I never get sick.
Who has time for doctors?
After all, who needs health insurance if they are going to live forever?
They Said This Would Be So Easy
Some 40 years ago, when I was a biotechnology student at UCLA, a handful of graduate students speculated about how dangerous our work really was. It only took us an hour to figure out how to synthesize a microbe that had a 99% fatality rate, was immune to antibiotics, and was so simple it could be produced in your home kitchen.
Basically, a bunch of bored students discovered a way to destroy the world.
We voiced our concerns to our professors, who immediately convened a national conference of leaders in the field. Science had outpaced regulation, as it always does. They adopted standards and implemented safeguards to keep this genie from getting out of the bottle.
Four decades later scientists have been successful at preventing a ?doomsday? bug from accidently escaping a lab and wiping out the world?s population.
That is, until now.
In 2010, Dr. Craig Venter created the first completely synthetic life form able to reproduce on its own. Named ?Phi X 174,? the simple virus was produced from a string of DNA composed entirely on a computer. Thus was invented the field of synthetic biology, better known as ?SynBio.?
Venter?s homemade creature was your basic entry level organism. Its DNA was composed of only 1 million base pairs of nucleic acids (adenine, thymine, cytosine, guanine, and uracil), compared to the 3 billion pairs in a human genome. Shortly thereafter, Venter one-upped himself by manufacturing the world?s first synthetic bacteria.
The work was hailed as the beginning of a brave new world that will enable biology to make the same dramatic advances in technology that computer science did in the 20th century. Dr. Drew Endy of Stanford University says that SynBio already accounts for 2% of US GDP, and is growing at a breakneck 12% per year. He predicts that SynBio will eventually do more for the economy than the Internet and social media combined.
You may recall Craig Venter as the man who first decoded the human genome in 2003. The effort demanded the labor of thousands of scientists and cost $3 billion. We later learned that the DNA that was decoded was Craig?s own. Some five years later, the late Steve Jobs spent $1 million to decode his own genes in a vain attempt to find a cure for pancreatic cancer.
Today, you can get the job done for $1,000 in less than 24 hours. That?s what movie star Angelina Jolie did, who endured a voluntary double mastectomy when she learned her genes guaranteed a future case of terminal breast cancer.
The decoding industry is now moving to low cost China, where giant warehouses have been built to decode the DNA of a substantial part of humanity. That should soon drop the price to $100. It?s all about full automation and economies of scale.
This technology is already spreading far faster than most realize. In 2004, MIT started the International Genetically Engineered Machine Contest where college students competed to construct new life forms. Recently, a high school division was opened, attracting 194 entries from kids in 34 countries. Gee, when I went to wood shop in high school it was a big deal when I finished my table lamp.
This will make possible ?big data? approaches to medical research that will lead to cures of every major human disease, such as cancer, heart disease, diabetes, and more, within our lifetimes. This is why the health care (XLV), biotechnology (XBI), and pharmaceutical (XPH) sectors have been top performers in the stock market for the past two years. It?s not just about Obamacare.
The implications spread far beyond health care. IBM (IBM) is experimenting with using DNA based computer code to replace the present simple, but hugely inefficient, binary system of 0?s and 1?s. ?DNA based computation? is prompting computer scientists to become biochemists and biochemists to evolve into computer scientists to create ?living circuit boards.? Google (GOOG), Apple (AAPL), and Cisco (CSCO) have all taken notice.
We are probably only a couple years away from enterprising hobbyists downloading DNA sequences from the Internet and building new bugs at home with a 3D printer. Simple organisms, like viruses, would need a file size no larger than one needed for a high definition photo taken with your iPhone. They can then download other genes from the net, creating their own customized microbes at will.
This is all great news for investors of every stripe, and will no doubt accelerate America?s economic growth. But it is also causing governments and scientists around the world to wring their hands, seeing the opening of a potential Pandora?s Box. What if other scientists lack Venter?s ethics, who went straight to President Obama for a security clearance before he made his findings public?
If we can?t trust our kids to drink, drive, or vote, then how responsibly will they behave when they get their hands on potential bioterror weapons? How many are familiar with Bio Safety Level 4 (BSL) standards? None, I hope.
In fact, the race is already on to weaponize SynBio. In 2002, scientists at SUNY Stonybrook synthesized a polio virus for the first time. In 2005, another group managed to recreate the notorious H1N1 virus that caused the 1918 Spanish Flu epidemic. Some 50-100 million died in that pandemic within 2 years.
Then in 2011, Ron Fouchier of the Erasmus Medical Center in Holland announced that he had found a way to convert the H5N1 bird flu virus, which in nature is only transmitted from birds to people, into a human to human virus. Of the 565 who have come down with bird flu so far, which originates in China, 59% have died.
It didn?t take long for the Chinese to get involved. They have taken Fouchier?s work several steps further, creating over 127 H5N1 flu varieties, five of which can be transmitted through the air, such as from a sneeze. The attributes of one of these just showed up in the latest natural strain of bird flu, the H7N9.
The World Health Organization (WHO) and the Center for Disease Control (CDC) in Atlanta, Georgia are charged with protecting us from outbreaks like this. But getting the WHO, a giant global bureaucracy, to agree on anything is almost impossible, unless there is already a major outbreak underway. The CDC has seen its budget cut by 25% since 2010, and has lost another 5% due to the US government sequester.
The problem is that the international organizations charged with monitoring all of this are still stuck in the Stone Age. Current regulations revolve around known pathogens, like smallpox and the Ebola virus, that date back to the 1960?s, when the concern was about moving lethal pathogens across borders via test tubes.
That is, oh so 20th century. Thanks to the Internet, controlling information flow is impossible. Just ask Muammar Gaddafi and Bashar al-Assad. Al Qaida has used messages embedded in online porn to send orders to terrorists.
Getting international cooperation isn?t that easy. Only 35 countries are currently complying with the safety, surveillance, and research standards laid out by the WHO. Indonesia refused to part with H5N1 virus samples spreading there because it did want to make rich the western pharmaceutical companies that would develop a vaccine. African countries say they are too poor to participate, even though they are the most likely victims of future epidemics.
Scientists have proposed a number of safeguards to keep these new superbugs under control. One would be a dedicated sequence of nucleic acid base pairs inserted into the genes that would indentify its origin, much like a bar code at the supermarket. This is already being used by Monsanto (MON) with its genetically modified seeds. Another would be a ?suicide sequence? that would cause the germ to self-destruct if it ever got out of a lab.
One can expect the National Security Agency to get involved, if they haven?t done so already. If they can screen our phone calls for meta data, why not high risk DNA sequences sent by email?
But this assumes that the creators want to be found. The bioweapons labs of some countries are thought to be creating new pathogens so they can stockpile vaccines and antigens in advance of any future conflict.
There are also the real terrorists to consider. When the Mubarak regime in Egypt was overthrown in 2011, demonstrators sacked the country?s public health labs that had been storing H5N1 virus. Egypt has one of the world?s worst bird flu problems, due to the population?s widespread contact with chickens.
It is hoped that the looters were only in search of valuable electronics they could resell, and tossed the problem test tubes. But that is only just a hope.
I have done a lot of research on this area over the decades. I even chased down the infamous Unit 731 of the Japanese Imperial Army that parachuted plagued infected rats into China during WWII, after first experimenting on American POW?s.
The answer to the probability of bio warfare always comes back the same. Countries never use this last resort for fear of it coming back on the own populations. It really is an Armageddon weapon. Only a nut case would want to try it.
Back in 1976 I was one of the fortunate few to see in person the last living cases of smallpox. As I walked through a 15th century village high in the Himalayas in Nepal, two dozen smiling children leaned out of second story windows to wave at me. The face of every one was covered with bleeding sores. And these were the survivors. Believe me, you don?t want to catch it yourself.
For those who want to learn more about SynBio, or participate in the discussion, please visit the BioBricks Foundation by clicking the link:
http://biobricks.org .
Sure, I know this doesn?t directly relate to what the stock market is going to do today. But if a virus escaped from a rogue lab and killed everyone on the planet, that would be bad for prices, wouldn?t it?
I really hope one of the kids competing in the MIT contest doesn?t suffer from the same sort of mental problems as the boy in Newton, Connecticut did.
I Think Wood Shop Would Have Been Easier