Tuesday, August 05, 2008


As high interest rates from Columbia to Russia bite, the world economic news is going to be "bad". There should be a steady flow of stories about slowing growth in China or recession in one country or another. Please note that this type of "bad news" will turn out to be good news for non resource related stocks. It will be good news for long bond rates, good news for mortgage rates, good news for real estate (even bad news about real estate will be good news for real estate), good news for airlines, good news for autos, good news for semi-conductors and good news for all sorts of new technology. Have you noticed the up-tick in big pharma? New drugs are changing the world.

One benefit of the decline in energy prices will be that we can stop wasting so much money on wind and ethanol subsides, making capital available for all sorts of innovations. A minor innovation example, the Segway was billed as a world changing transportation system. It is. Toyota has joined the club with the production of the Winglet. It is a "mini-Seaway". Even though the Segway has been a big yawn so far, in the not so distant future, millions of people will scoot around on these types of "vehicles". So far, this is a chicken or the egg situation but the production of low cost Winglet's will bring new vision to many. The idea of living within a short distance of ones work will become all the more attractive. A major innovation example is nuclear power, I believe I have made a strong case for nuclear power (the costs have gone down dramatically while the efficiency has gone up dramatically). If one chooses to invest in nuclear, he should invest in the builders, not the fuel. There are many tons of nuclear waste available that is good fuel for some of the reactors.