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Welcome back to the Mind Over Money podcast. I’m Kevin Cook, your field guide and story teller for the fascinating arena of behavioral economics.
This episode is all about how fast the future is coming at us.
I’ve talked before about the book Bold by Peter Diamandis and Steven Kotler. Diamandis is friends with futurist Ray Kurzweil who describes the advance of science and technology with the word “exponential.” And so that’s why in Bold, they describe these 6 “exponential technologies:"
Virtual reality (VR) and augmented reality (AR) would fall within and between technologies 2, 4, and 5. A recent Bank of America research report forecasts that AR-related sales will grow more than 30 times to $160 billion in the year 2020.
And some analysts believe that Apple (AAPL - Free Report) will be at the forefront of many of these AR applications as they seek to answer the question "What's after the iPhone?"
To grasp why we should call these exponential technologies, think of elements in your lifetime that have rapidly changed your work, travel, education and entertainment from amazing computing tools and super advanced cars to on-demand videos and programming on just about every topic you could want to learn, or just be entranced by.
You might be wondering why I didn’t emphasize the smartphone and its dramatic impact not only on economics but on our behavior. I talk about that addictive gadget and its predecessor, television, in the podcast that accompanies this article.
Future Shock
Now let’s honor another futurist ahead of his time (as if they could be anything but), the late great Alvin Toffler. For you youngsters who don't know the Tofflers, let me cite this excellent intro from Wikipedia...
Alvin Toffler (October 4, 1928 – June 27, 2016) was an American writer, futurist, and businessman known for his works discussing modern technologies, including the digital revolution and the communication revolution, with emphasis on their effects on cultures worldwide.
Toffler was an associate editor of Fortune magazine. In his early works he focused on technology and its impact, which he termed "information overload." In 1970 his first major book about the future, Future Shock, became a worldwide best-seller and has sold over 6 million copies.
He and his wife Heidi Toffler, who collaborated with him for most of his writings, moved on to examining the reaction to changes in society with another best-selling book, The Third Wave in 1980. In it, he foresaw such technological advances as cloning, personal computers, the Internet, cable television and mobile communication. His later focus, via their other best-seller, Powershift, (1990), was on the increasing power of 21st-century military hardware and the proliferation of new technologies.
I am very interested to find out what Alvin and Heidi were thinking even 5 years ago when Google, Apple, Amazon, Facebook, and Chinese web giants like Alibaba were either surpassing or on their way to surpassing the size of GE, Microsoft, Intel and IBM. Were they ever surprised or simply amazed at the way the Internet created massive wealth and massive disruption in industry after industry in such a short time?
I imagine they were occasionally in shock, or simply in awe. But they also understood the exponential nature of these changes and the compound growth of wealth that could feed new innovation – especially in the R&D labs of these new nation-states of the cyber-sphere.
Everyone can grasp the exponential advance of population growth, technology patents, and transistors on microchip processors. The latest NVIDIA (NVDA - Free Report) GPU systems for advanced machine learning/AI applications, and for only a few thousand bucks, have 21 billion transistors.
Hardly anyone I know is impressed by that because we just take the relentless march of computing power and miniaturization for granted.
But you have to ask yourself, if even the smartest futurists like Toffler and Kurzweil could only get about half of their predictions right, how can you or I really know what’s coming, in what time frame and in what combinations?
I think we have to be prepared for a world 10 years from now that could be very different from the one even 5 years ago.
Finding Cassandras to Stop Catastrophes
That’s the subtitle of a new book I’m reading called Warnings by Richard A. Clarke and R.P. Eddy, both well-known national security advisors. Their goal is to highlight how very smart and prescient experts from various fields must be sought out and listened to when they have warnings for us.
In short, the authors believe in the power of the expert to prevent disaster.
In the first half of the book, they describe seven prior “catastrophes” where Cassandras were ignore, like Hurricane Katrina, the rise of ISIS, and Bernie Madoff’s Ponzi scheme.
Then they identify seven current warnings and their expert voices, from fields such as artificial intelligence, pandemic disease, and rising sea levels.
In the podcast, I chose to share some excerpts from two chapters in particular...
The Engineer: The Internet of Everything (details coming up).
And…
The Biologist: Gene Editing
The Cassandra for biology is actually the scientist who helped discover the gene editing technology known as CRISPR, biochemist Jennifer Doudna.
CRISPR stands for Clustered Regularly Interspaced Short Palindromic Repeats, which are part of the structure of a bacterial defense system that forms the basis for CRISPR-Cas9 genome editing technology. It can be programmed to target specific stretches of genetic code and to "edit" DNA at precise locations.
The primary technology that makes it possible to edit genes uses a naturally occurring enzyme called Cas9 that can "cut" DNA. Cas9 helps protect good bacterial cells by cutting the DNA of invading viruses, thus creating the microbial immune systems dubbed CRISPR.
With these systems, researchers can permanently modify genes in living cells and organisms and, in the future, may make it possible to correct mutations at precise locations in the human genome in order to treat genetic causes of disease.
In Warnings, Clarke and Eddy tell Doudna's story of her early science career and the discovery of CRISPR very well in just a few pages. At Harvard in the 1990s, she became fascinated with RNA, DNA's so-called secretary...
"But there was a growing belief that RNA did more than just run DNA's errands and fetch its coffee, and Doudna's doctoral and post-doc work focused on this new theory."
In 2002, she became a professor at the University of California at Berkeley, continuing her work by investigating the RNA of viruses. In 2005, her colleague Dr. Jill Banfield approached her regarding some work she had been doing with unique bacteria found in a highly acidic abandoned mine.
The genetic material of many of these bacteria contained "clustered, regularly-interspaced, short, palindromic repeats" or CRISPR for short. In essence, some of the DNA repeats itself.
Scientists had learned over the years that there are "spacers" between these repeated sections, and that the spacers consist of sequences of DNA from viruses that had previously invaded the bacteria. The genetic code stored between these repeats plays a special role in some sort of bacterial immune system, allowing the cell's defense mechanisms to quickly identify a re-invading virus and "cut up" its genetic material.
Two Women Who Just Changed the World
In 2012, Doudna's research really took off when she met French microbiologist Emmanuelle Charpentier, who was studying flesh-eating bacteria and using CRISPR sequences to protect cells from viral invasion.
The two worked together for about a year and soon realized "that their exploration had transcended basic research and had become a genetic tool with the power to reshape and engineer any known DNA-based life form."
Their collaboration to discover CRISPR as a gene editing tool is being hailed as a great medical achievement because it opens the door ways to altering and preventing inherited diseases. But it also raises the specter of bio-engineering "custom" babies and super humans.
In 2013, several of the scientists credited with discovering and developing CRISPR joined forces to establish what is now called Editas Medicine (EDIT - Free Report) . Those scientists – Feng Zhang, George Church and Jennifer Doudna – along with fellow founders Keith Joung and David Liu, were focused on translating the new technology into therapies that enable precise and corrective molecular modification to treat people with a broad range of diseases at the genetic level.
In November 2013, Editas Medicine secured a $43 million Series A financing led by Flagship Pioneering, Polaris Partners and Third Rock Ventures, with participation from the Partners Innovation Fund, and assembled a strong leadership team and board of directors.
“The way to think about [CRISPR] is molecular surgery,” said Dr. J. Keith Joung, director of the molecular pathology unit at Massachusetts General Hospital and a cofounder of Editas Medicine. “The idea is you can go in and make changes to the DNA, the component that makes up all of our genes. If there’s a defect, you can fix it; if there’s a missing piece, you can put the missing piece in.”
There were always concerns from the beginning about this brand new technology, as Callum Borchers described for the Boston Globe four years ago this month when the company was new in Cambridge, MA...
But while the emerging field of genome engineering holds tremendous potential, it presents ethical questions. If doctors can someday modify genes to prevent an unborn child from developing Down syndrome, for instance, what’s to stop them from engineering made-to-order babies with Olympic-caliber athleticism and the hair and eye colors their parents request?
A Crack in Creation
There are many moving pieces to the CRISPR story, including strained friendships between Doudna and Charpentier, two public companies competing with the technology, and two research labs competing over patent rights.
Editas Medicine was the first CRISPR-focused company to go public in February of 2016. Then CRISPR Therapeutics (CRSP - Free Report) had its IPO in October of 2016.
The competing research houses are UofC-Berkeley and the Broad Institute.
But the most interesting part of the story may be what our Cassandra, Jennifer Doudna, is concerned about. And I just found the next book I'm reading to learn more about it. In June, Houghton Mifflin Harcourt published her tale of discovery and caution titled A Crack in Creation: Gene Editing and the Unthinkable Power to Control Evolution.
The Cyber Espionage Threat
In the podcast, the other chapter I read from in Warnings profiles engineer Joe Weiss and his deep experience with the energy grid -- and its attackers. I had read some research earlier this year about the growing sophistication of "cyber espionage" where nation-states could take warfare into new digital territory.
Part of the problem as we hurtle into the future is that every new technology advance brings with it new problems to solve. Having billions of devices connected in the Internet of Everything sounds great for communications, speed, and security. This trend made me an eager investor in Skyworks Solutions (SWKS - Free Report) the company that makes most of the RFID chips for thousands of uses.
But this trend only sounds great until something gets hacked and money, property, and even lives are at stake.
On top of cyber attacks that get the headlines, like the Equifax breach and more recently Uber, the possibility of state cyber terror inspired me to get more familiar with companies like FireEye and Cyber-Ark Software (CYBR - Free Report) .
Be sure to listen to the podcast to hear more about today's Cassandras like Joe Weiss.
Disclosure: I own shares of AAPL, NVDA, and FEYE for the Zacks TAZR Trader portfolio, and EDIT for the Zacks Healthcare Innovators portfolio.
Kevin Cook is a Senior Stock Strategist for Zacks Investment Research where he runs the TAZR Trader and Healthcare Innovators services.
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Don't Fight the Gravity of Exponential Change
Welcome back to the Mind Over Money podcast. I’m Kevin Cook, your field guide and story teller for the fascinating arena of behavioral economics.
This episode is all about how fast the future is coming at us.
I’ve talked before about the book Bold by Peter Diamandis and Steven Kotler. Diamandis is friends with futurist Ray Kurzweil who describes the advance of science and technology with the word “exponential.” And so that’s why in Bold, they describe these 6 “exponential technologies:"
1. Robotics
2. Infinite computing
3. Synthetic biology
4. Artificial intelligence
5. Networks and sensors
6. 3-D “printing” (more accurately additive manufacturing)
Virtual reality (VR) and augmented reality (AR) would fall within and between technologies 2, 4, and 5. A recent Bank of America research report forecasts that AR-related sales will grow more than 30 times to $160 billion in the year 2020.
And some analysts believe that Apple (AAPL - Free Report) will be at the forefront of many of these AR applications as they seek to answer the question "What's after the iPhone?"
To grasp why we should call these exponential technologies, think of elements in your lifetime that have rapidly changed your work, travel, education and entertainment from amazing computing tools and super advanced cars to on-demand videos and programming on just about every topic you could want to learn, or just be entranced by.
You might be wondering why I didn’t emphasize the smartphone and its dramatic impact not only on economics but on our behavior. I talk about that addictive gadget and its predecessor, television, in the podcast that accompanies this article.
Future Shock
Now let’s honor another futurist ahead of his time (as if they could be anything but), the late great Alvin Toffler. For you youngsters who don't know the Tofflers, let me cite this excellent intro from Wikipedia...
Alvin Toffler (October 4, 1928 – June 27, 2016) was an American writer, futurist, and businessman known for his works discussing modern technologies, including the digital revolution and the communication revolution, with emphasis on their effects on cultures worldwide.
Toffler was an associate editor of Fortune magazine. In his early works he focused on technology and its impact, which he termed "information overload." In 1970 his first major book about the future, Future Shock, became a worldwide best-seller and has sold over 6 million copies.
He and his wife Heidi Toffler, who collaborated with him for most of his writings, moved on to examining the reaction to changes in society with another best-selling book, The Third Wave in 1980. In it, he foresaw such technological advances as cloning, personal computers, the Internet, cable television and mobile communication. His later focus, via their other best-seller, Powershift, (1990), was on the increasing power of 21st-century military hardware and the proliferation of new technologies.
I am very interested to find out what Alvin and Heidi were thinking even 5 years ago when Google, Apple, Amazon, Facebook, and Chinese web giants like Alibaba were either surpassing or on their way to surpassing the size of GE, Microsoft, Intel and IBM. Were they ever surprised or simply amazed at the way the Internet created massive wealth and massive disruption in industry after industry in such a short time?
I imagine they were occasionally in shock, or simply in awe. But they also understood the exponential nature of these changes and the compound growth of wealth that could feed new innovation – especially in the R&D labs of these new nation-states of the cyber-sphere.
Everyone can grasp the exponential advance of population growth, technology patents, and transistors on microchip processors. The latest NVIDIA (NVDA - Free Report) GPU systems for advanced machine learning/AI applications, and for only a few thousand bucks, have 21 billion transistors.
Hardly anyone I know is impressed by that because we just take the relentless march of computing power and miniaturization for granted.
But you have to ask yourself, if even the smartest futurists like Toffler and Kurzweil could only get about half of their predictions right, how can you or I really know what’s coming, in what time frame and in what combinations?
I think we have to be prepared for a world 10 years from now that could be very different from the one even 5 years ago.
Finding Cassandras to Stop Catastrophes
That’s the subtitle of a new book I’m reading called Warnings by Richard A. Clarke and R.P. Eddy, both well-known national security advisors. Their goal is to highlight how very smart and prescient experts from various fields must be sought out and listened to when they have warnings for us.
In short, the authors believe in the power of the expert to prevent disaster.
In the first half of the book, they describe seven prior “catastrophes” where Cassandras were ignore, like Hurricane Katrina, the rise of ISIS, and Bernie Madoff’s Ponzi scheme.
Then they identify seven current warnings and their expert voices, from fields such as artificial intelligence, pandemic disease, and rising sea levels.
In the podcast, I chose to share some excerpts from two chapters in particular...
The Engineer: The Internet of Everything (details coming up).
And…
The Biologist: Gene Editing
The Cassandra for biology is actually the scientist who helped discover the gene editing technology known as CRISPR, biochemist Jennifer Doudna.
CRISPR stands for Clustered Regularly Interspaced Short Palindromic Repeats, which are part of the structure of a bacterial defense system that forms the basis for CRISPR-Cas9 genome editing technology. It can be programmed to target specific stretches of genetic code and to "edit" DNA at precise locations.
The primary technology that makes it possible to edit genes uses a naturally occurring enzyme called Cas9 that can "cut" DNA. Cas9 helps protect good bacterial cells by cutting the DNA of invading viruses, thus creating the microbial immune systems dubbed CRISPR.
With these systems, researchers can permanently modify genes in living cells and organisms and, in the future, may make it possible to correct mutations at precise locations in the human genome in order to treat genetic causes of disease.
In Warnings, Clarke and Eddy tell Doudna's story of her early science career and the discovery of CRISPR very well in just a few pages. At Harvard in the 1990s, she became fascinated with RNA, DNA's so-called secretary...
"But there was a growing belief that RNA did more than just run DNA's errands and fetch its coffee, and Doudna's doctoral and post-doc work focused on this new theory."
In 2002, she became a professor at the University of California at Berkeley, continuing her work by investigating the RNA of viruses. In 2005, her colleague Dr. Jill Banfield approached her regarding some work she had been doing with unique bacteria found in a highly acidic abandoned mine.
The genetic material of many of these bacteria contained "clustered, regularly-interspaced, short, palindromic repeats" or CRISPR for short. In essence, some of the DNA repeats itself.
Scientists had learned over the years that there are "spacers" between these repeated sections, and that the spacers consist of sequences of DNA from viruses that had previously invaded the bacteria. The genetic code stored between these repeats plays a special role in some sort of bacterial immune system, allowing the cell's defense mechanisms to quickly identify a re-invading virus and "cut up" its genetic material.
Two Women Who Just Changed the World
In 2012, Doudna's research really took off when she met French microbiologist Emmanuelle Charpentier, who was studying flesh-eating bacteria and using CRISPR sequences to protect cells from viral invasion.
The two worked together for about a year and soon realized "that their exploration had transcended basic research and had become a genetic tool with the power to reshape and engineer any known DNA-based life form."
Their collaboration to discover CRISPR as a gene editing tool is being hailed as a great medical achievement because it opens the door ways to altering and preventing inherited diseases. But it also raises the specter of bio-engineering "custom" babies and super humans.
In 2013, several of the scientists credited with discovering and developing CRISPR joined forces to establish what is now called Editas Medicine (EDIT - Free Report) . Those scientists – Feng Zhang, George Church and Jennifer Doudna – along with fellow founders Keith Joung and David Liu, were focused on translating the new technology into therapies that enable precise and corrective molecular modification to treat people with a broad range of diseases at the genetic level.
In November 2013, Editas Medicine secured a $43 million Series A financing led by Flagship Pioneering, Polaris Partners and Third Rock Ventures, with participation from the Partners Innovation Fund, and assembled a strong leadership team and board of directors.
“The way to think about [CRISPR] is molecular surgery,” said Dr. J. Keith Joung, director of the molecular pathology unit at Massachusetts General Hospital and a cofounder of Editas Medicine. “The idea is you can go in and make changes to the DNA, the component that makes up all of our genes. If there’s a defect, you can fix it; if there’s a missing piece, you can put the missing piece in.”
There were always concerns from the beginning about this brand new technology, as Callum Borchers described for the Boston Globe four years ago this month when the company was new in Cambridge, MA...
But while the emerging field of genome engineering holds tremendous potential, it presents ethical questions. If doctors can someday modify genes to prevent an unborn child from developing Down syndrome, for instance, what’s to stop them from engineering made-to-order babies with Olympic-caliber athleticism and the hair and eye colors their parents request?
A Crack in Creation
There are many moving pieces to the CRISPR story, including strained friendships between Doudna and Charpentier, two public companies competing with the technology, and two research labs competing over patent rights.
Editas Medicine was the first CRISPR-focused company to go public in February of 2016. Then CRISPR Therapeutics (CRSP - Free Report) had its IPO in October of 2016.
The competing research houses are UofC-Berkeley and the Broad Institute.
But the most interesting part of the story may be what our Cassandra, Jennifer Doudna, is concerned about. And I just found the next book I'm reading to learn more about it. In June, Houghton Mifflin Harcourt published her tale of discovery and caution titled A Crack in Creation: Gene Editing and the Unthinkable Power to Control Evolution.
The Cyber Espionage Threat
In the podcast, the other chapter I read from in Warnings profiles engineer Joe Weiss and his deep experience with the energy grid -- and its attackers. I had read some research earlier this year about the growing sophistication of "cyber espionage" where nation-states could take warfare into new digital territory.
Part of the problem as we hurtle into the future is that every new technology advance brings with it new problems to solve. Having billions of devices connected in the Internet of Everything sounds great for communications, speed, and security. This trend made me an eager investor in Skyworks Solutions (SWKS - Free Report) the company that makes most of the RFID chips for thousands of uses.
But this trend only sounds great until something gets hacked and money, property, and even lives are at stake.
On top of cyber attacks that get the headlines, like the Equifax breach and more recently Uber, the possibility of state cyber terror inspired me to get more familiar with companies like FireEye and Cyber-Ark Software (CYBR - Free Report) .
Be sure to listen to the podcast to hear more about today's Cassandras like Joe Weiss.
Disclosure: I own shares of AAPL, NVDA, and FEYE for the Zacks TAZR Trader portfolio, and EDIT for the Zacks Healthcare Innovators portfolio.
Kevin Cook is a Senior Stock Strategist for Zacks Investment Research where he runs the TAZR Trader and Healthcare Innovators services.