Terrorist Technology

This one has to make one chuckle.

"A "Black Widow" suicide bomber planned a terrorist attack in central Moscow on New Year's Eve but was killed when an unexpected text message set off her bomb too early, according to Russian security sources.  The unnamed woman, who is thought to be part of the same group that struck Moscow's Domodedovo airport on Monday, intended to detonate a suicide belt near Red Square on New Year's Eve in an attack that could have killed hundreds.  Security sources believe a message from her mobile phone operator wishing her a happy new year received just hours before the planned attack triggered her suicide belt, killing her at a safe house."
Source: Leader Post

Huxley On Technology

"Technological progress has merely provided us with more efficient means for going backwards."
Aldous Huxley

Pruning The Late Bloomers

"Here in 2010, a few late bloomers are making new all-time highs. I never thought the long term inflationary topping process would take this long, but it has. At each of these peaks, investors have focused on one area or another. Every time it’s happened, the area of focus has reversed trend, plummeting in price by 50% or more.  This latest credit reflation is the weakest yet, so it hardly inspires confidence that today’s isolated bull markets will end any differently. Each time a bull market matures, investors are sure it can’t reverse. They said that about technology and internet stocks; they said it about real estate; they said it about oil. Now that a couple of markets are at all-time highs, we hear the same argument about them. This is natural, because investors always want to own markets that are way up. But investors in those previous booms are never going to get back to breakeven. Many of them were ruined."
Robert Prechter, Elliott Wave International

Cascading Bubbles

For reasons unknown, I've never really liked the term "bubble", but due to a lack of a better term, I'll use it today to illustrate a point.  I've always liked the phrase "overshoot and collapse" which is used in the biological realm to explain the rapid growth and subsequent crash in the population of a given species.  That's a subject for a later post.

I thought it would be interesting to analyze the impact of the money supply through time on various "bubbles".  The chart below illustrates quite beautifully how the money supply (M3-black dash) impacts the rise and fall of all markets.  The chart compares 5 asset types: technology, financials, oil, homebuilding, and wheat.  These all have experienced drastic "rise and falls" since the mid to late 90's.  Many commodities followed the exact pattern, but I used oil and wheat as two examples.  Click on the chart for a larger view.

Observations that can be made:

1. 
   
   M3 (money supply) rises in the early 80's (Reagan), flattens in late 80's (Bush I), rapidly accelerates in 1995 (Clinton), and keeps rising rapidly after 2000 (Bush II).
2. 
   
   Reagan pulls us out of the doldrums not by magical things called "trickle down" or "supply side", but by turning on the "money supply accelerator" in the early 80's.  Note the M3 Rate of Change curve on the bottom.  A trending up curve indicates a rapidly increasing money supplly while the downtrend is decelerating.
3. 
   
   The Great Maestro, Alan Greenspan, pulls off the accelerator in 1988 and Bush I loses re-election.
4. 
   
   Note that during the "flat" M3 from 1988-1995, the markets are aligned and flat. 
5. 
   
   In 1995, Clinton leads the public to believe that he magically makes the deficit disappear and balances the budget.  Meanwhile, the money supply starts a significant upward climb.  Note the M3 Rate of Change on the bottom of the graph.  It rises rapidly.
6. 
   
   Subsequent with the rapid rise in M3 in 1995, the markets go into "chaos" mode.  The money supply drives the financials and technology through the roof.  Note the steepness of the curves after 1995 in all sectors.  The end result is the DotCom mania.  Now we understand where all of that crazy investment and venture capital money came from!
7. 
   
   DotCom crashes only to see the "credit bubble" move into financials, homebuilding, and commodities (oil/wheat).  2001 marks a "new beginning".  Same game, but different sectors.
8. 
   
   The markets all align in late 2008 subsequent with the steepest rise in M3 Rate of Change.  Then they ALL come crashing down.  As Robert Prechter with Elliott Wave International has stated, "all the same".  Equities and commodities crash together in perfect synchrony.
9. 
   
   Money supply has significant impact on the markets.  While the Federal Reserve was supposedly created to help "nudge" the market when it needed assistance, the contrary is presented from this 30 year history.  After 1995, it looks more like a heroin junky flying up and down.

An Apple Flash Mob

A few weeks ago I made a post regarding the emerging phenomenon known as "flash mobs".  It appears that Apple is dealing with a different type of "flash mob".  The Flash Mob in this case wants Flash technology displayed on Apple products.  Steve Jobs recently wrote a missive on why they won't adopt Adobe's technology.

My perspective on why Apple failed to be the dominant PC of the 80's was the fact that "it didn't play well with others".  Apple has always focused heavily on "proprietary technology" and a "must be invented here" mentality.  That cost them dearly in the 80's and 90's.  Proprietary formats for their music on iTunes is another example.  Technology is about integration.  Time will tell if it bites them again.

An entire article about the saga:
http://www.pcworld.com/article/195264/steve_jobs_thoughts_wont_shut_up_the_flash_mob.html

Technology Trends

A new year and decade are here. CNN provided a nice summary of 2009's top 10 technology trends:
1) Smartphone craze
2) Facebook grows up
3) Bloggers threaten regime
4) Books go digital
5) Info in an instant
6) App mania
7) Games leave the living room
8) Government gets techie
9) Search engine wars
10) "Smart" electricity use

The entire article:
http://www.cnn.com/2009/TECH/12/22/top.tech.trends.2009/

So what does the next decade hold for us??

"The first 10 years of this millennium have been bewildering. Unbelievably complex. Globally destabilizing. Anxiety provoking. As well as Sept. 11 and the two wars that followed in its fiery aftermath, the shakedown we’ve gone through has been shaped by the wildly expanding power of technology. Many have suffered because of it. But this decade’s explosion of political, economic, cultural and technological change has been a little exciting, too. Even though relocations have downsides, they can have upsides as well. It’s crystal-clear more big surprises are in store as we continue to gaze into our future, as readers will realize as they check out the 20 trend-line pieces The Vancouver Sun begins publishing Thursday. When all is said and done, what can we hope for by the time we reach 2020, the end of the next decade? At the least, let’s work toward the possibility that humans can more creatively and responsibly respond to both the difficulties and opportunities produced by raging change. After all, our lives depend on it."
The Vancouver Sun

The entire article...A really interesting read:
http://communities.canada.com/vancouversun/blogs/thesearch/archive/2009/12/02/20-powerful-trends-go-with-us-into-next-decade.aspx