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Guest Writer - Gastautor - Gast Schrijver
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Another Nanotechnology Index…
And the Nanotech Hype Beat Goes On…

 

 

On March 17, 2005, Lux Research, an affiliate of Lux Capital, launched a nanotechnology index (LUXNI) to list on the American Stock Exchange. The first questions is, “Do we really need another nanotechnology index?” With the way things are going, is there going to be a need for an Index of Nanotechnology Indices?

However, as far as nanotechnology indices goes, this one looks more balanced than the Punk Ziegel and Merrill Lynch which goes to show you that people do learn. The exclusion of some of the larger companies that do much nanotechnology research internally in the previous indices, such as BASF, DuPont, HP, IBM, 3M, NEC, GM, and Air Products, was a pet peeve and has been addressed in this index.

In the meantime, Merrill Lynch has been adding nanotech companies to their index since its inception, such as with Lumera, pSivida, and Arrowhead Research Corp. to name a few. At this rate, I am not sure with how many companies this index finally ends up to have an accurate reflection on nanotechnology business value. It also lists on the American Stock Exchange at NNZ.

However, no one has based a mutual fund based on these indices yet. Has anyone put their money where their mouths are? Lux Capital at least invests in some nanotech startups. Merrill Lynch’s venture capital group has yet to move in this area yet. Out of the pack, Merrill Lynch should at least start a fund since it is a major investment banking firm. The question is the index more for marketing reasons than anything else? So again, as in a previous article, what is the point of the nanotechnology indices if none of these entities is really investing the picks as the index seems to recommend?

At this point, it seems the indices act as nothing more than a glorified hype meter or measure of the public markets’ interest in nanotechnology. Chances are, if there is any major news, it will result in price fluctuations in the index that day. If nanotech value is based on public sentiment, then it is not a real measure of the value of these nanotechnology companies. This argument can also be extended into the tracking of stock prices and their correlation to perceived value as opposed to the real value that most assume stock prices measure.

However, public market reaction and sentiment towards nanotechnology can be better assessed by following what the media is thinking. Positive reactions to nanotechnology and its perceived value can be confirmed by tracking the number of articles and programs that have a positive assessment of nanotechnology’s future. This is important since in the couple of years before, the mass media largely demonized nanotechnology. Lee Gomes of the Wall Street Journal was one of the fiercest skeptics of nanotechnology’s value to the people in the future.

However, if anybody has read “The Tipping Point” by Malcolm Blackwell, the nanotechnology tipping point may have arrived. In the past six months, there has been an increase in articles and programs in the mass media that are positive. USA Today has featured several articles since December 2004, such as by Kevin Maney, which talks about how nanotechnology is going to turn us all into the Japanese teenage girls flashing the latest in modern consumer electronics technology so you can impress all your friends along with high performance nanotech sports accessories and socks you never need to wash. In contrast, September 2004, Dan Vergano was still talking about Grey Goo and Michael Crichton’s book “The Prey” but Liz Szabo was talking about how The National Cancer Institute is launching $144 Million project to investigate how nanotechnology will help fight cancer better by being able to find and target and deliver drugs to just the cancer cells and leave the healthy cells alone. This could reduce the side effects from chemotherapy significantly since healthy cells are not killed along with the tumor cells.

The Economist started the year 2005 with a nanotech bang in their first issue out January 1, 2005 devoted to nanotechnology in their Nanotechnology Survey. Business Week soon followed suit discussing the business of nanotech in the February 14, 2005 issue.

The BBC (British Broadcasting Corp) regularly reports on nanotechnology, and not just focusing on the UK, with a nicely balanced piece involving UK and US experts on December 30, 2004. (For some reason, the program link is hard to find when searching under “nanotech” so the link is provided here. http://news.bbc.co.uk/1/hi/programmes/analysis/4122285.stm)

CBS’s Sunday morning show on January 23, 2005 was probably the only major U.S. network to air a television segment on nanotechnology interviewing the likes of Steve Jurvetson and Ralph Merkle though the commentator closed with the thought that anything important to come out of nanotechnology was still at least 50 years away. The History Channel is also including nanotechnology in a program called "Modern Marvels: Future Tech."

All in all, a better sense and assessment of public sentiment on nanotechnology can be obtained now by following mainstream media by picking up the paper or a magazine at the doctor’s office than by following a nanotechnology index. Of course, the media is in business for itself to make money and the media has and will change its position again to suit its financial needs. That is not to say that nanotechnology is above all that because its directions also follow the money. However, the mass media influencing the public perception of nanotechnology in turn influences performance of publicly traded companies stock prices like those on the nanotechnology indices.

Hence the mass media can control the markets and the future of nanotechnology much more than we would like to believe. Whoever controls or know how to influence the mass media can determine the outcome of nanotechnology in our lives and what entities become nanotechnology power brokers. For instance using the mass media can significantly influence the valuation of an IPO and we have seen this happen in the past. The power of the press should be recognized and acknowledged because there is a lot of money to be made in nanotechnology.

So beware. Seems the hype is on again. Let’s learn from the past and prevent a nanotech bubble, shall we?


Seraphima Ventures
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The contents of this page, including the views expressed above, are the responsibility of the author. They do not represent the views or policies of Nano Tsunami Dot Com, except where explicitly stated.

 

Dr. Pearl Chin
PhD, MBA

 


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