I'm Right Again Dot Com

                               A new commentary every Wednesday — October 14, 2015


DISRUPTION, TECHNOLOGY and THE STOCK MARKET

    First, before I get into the topic, I am prompted to use an old, old rejoinder..older than me, after watching the Republican and Democratic Parties' debates: "Talk is cheap." 

    Disruption: The word has taken on a new meaning and become a "hot" new word in this decade. Webster says to "disrupt" is to "cause disorder or turmoil." That always has seemed to me a negative connotation. Now, a Disrupter is considered a visionary, the producer of breakthrough, beneficial technology— the word that epitomizes that which has benefited humankind—and more so in the most recently couple of decades, than in any prior period. 

    Historically, Gutenberg, inventor of movable type, was an early disrupter, as much later was Watt and his steam engine that brought about the industrial revolution, Marconi and the radio, Morse with his telegraph, Bell the telephone and Ford, who conceived the production line. There were numerous others, but I can only think of one: Edison, the intuitive, self-taught genius, who can be credited with a handful of marvelous disruptions, among them, the incandescent light, the motion picture and the phonograph. Upon the appearance of these technical wonders, an irrevocable change in humankind's lives took place. Only one, Alfred Nobel's super explosive dynamite, meant to dig mines, to break rocks on mountain passes and dig tunnels, was perverted by the engineers of war. 

    Some of the disruptions were centuries apart. One was fortunate if two disruptions occurred in their lifetime. Now, the disruptions in technology come into being at the speed of electricity and in a volume and frequency akin to the rate of fire of the Gatlin-gun cannon in the A-10 Warthog aircraft.

    This epiphany was triggered by an article in Vanity Fair magazine by Andrew Ross Sarkin titled "Year of the Unicorn." (?) Yes, I wondered, "What could this be about?" Well, a Unicorn is the name given to the rarest of new-blooming companies in Silicon Valley that "goes viral," after its birth is attended by a group of venture capitalists. 

    Here's one: Uber, the idea that people who need a ride somewhere can connect immediately with a driver who will take one wherever they wish to go for a price far less than a regular taxicab company will. If I had a chance to invest in this idea (and that's all it was) and I was in a Shark (investor) Tank when 39 year old Travis Kalanick presented it, I would have refrained from investing a penny.  It is now operating (very well, thank you) in 60 countries and estimated by a conservative estimate to be already worth $51-billion, based on income verses expense of operation. What's next for Uber? Self driving Ubers. You rent one and it takes you where you want to go... automatically. No, I'm not kidding. Carnegie Mellon University's Robotics Department has been commissioned to solve the problem. Uber is expected to go public in a couple of years, meant to make all of small group of venture capitalists, including the modest computer programmer Kalanick. multi-billionaires.

    According to Vanity Fair, the Number One Disrupter in America is now Mark Zuckerberg, thanks to 300-million users of Facebook, Instagram. Whatsapp and Messenger applications. Zuckerberg has just barely begun to build an international empire worth $Trillions. That is, if something very dramatic does not occur

    There is that little thing in Economics called "The Bubble." It appears to be a cyclic phenomenon, but of course is not.  It is "man-made." but it occurs, with overwhelming regularity. Once upon a time, tulips were insanely valuable. During the administration of Calvin Coolidge, the traders on Wall Street believed that "the trees will grow to the skies." In 1929, for a great variety of reasons, the worldwide economy collapsed.  Couldn't happen again? Then you need to look at the ups and downs of the New York Stock Exchange since it was founded, more or less, under a butternut tree, in 1792.

    How long has it been since you saw a real steam engine working?  Sent any telegrams lately, or bought anything with the "Edison" brand name on it? 

    I am always fearful when stocks reach an all time high. I'm like the proverbial cat on a hot tin roof. What can possibly harm my Coca Cola stock? The fundamentals say, "Nothing." Its sales will just keep on expanding and it will never fail to pay dividends, forever. One more drop on a rounding top of the Dow-Jones Industrial Average and I'm going to run for the door, and take that yellow brick road to the Land Where Cash is King.  Whoever said that "Money is just for Banks to keep score with," is wrong.

-Phil Richardson, Observer of the human condition and storyteller. "He goes doddering on into his old age, making a public nuisance of himself" -  Joseph L. Menchen. 

 

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