Dana Blankenhorn

Buy Tech Today

You now have the best opportunity in 13 years to buy technology stocks.

Amazon is now selling for just over three times its annual sales. Paypal is in the toilet. Nvidia is priced below where it was after it split 4:1. Chinese stocks are down for the count.

Now is the time to get in. Here’s why.

The reason tech fell is inflation. Rising prices lead to rising interest rates. Money costs money. That means growth and even earnings are discounted.

But tech can whip inflation now. Tech has been whipping inflation for over 40 years. Wall Street thinks Paul Volcker did it by raising interest rates in the late 1970s.

It was tech.

Boomers Win Again

A lot of folks are complaining about the U.S. economy right now, but there’s one group that has no right to kick.

Baby Boomers. My people.

I was born in 1955. That was the center of the Baby Boom for males. My dear wife was born two years later, its center for females.

Like other Boomers we’ve had our share of problems. Housing was even more unaffordable when we bought our place in 1984 than it is today. The interest rate on our mortgage was 12%. We’ve lived through three stock market collapses, and dozens of mini-crashes. We’ve had to constantly adjust as Moore’s Law eliminated jobs. Even white collar workers were not safe.

Now, after a decade of free money, money costs money again. It’s happening just in time.

OPIC

My one fault with the Biden Administration so far has been its leniency toward its enemies.

Republicans aren’t the loyal opposition anymore. Vladimir Putin isn’t just an adversary. Those who still support Putin are domestic enemies, and it’s there in the oath of office, that you protect against both foreign AND domestic enemies.

The spike in oil prices may be another opportunity lost.

The opportunity is to create what I call an Organization of Petroleum IMPORTING Countries (OPIC). While the U.S. is nominally an exporter, we are the natural leader of this group, which could include India, Japan, Europe, South America, most of Africa and even China.

The first task of OPIC would be to account for the elimination of Russian supply from the market. Each member would agree to a specified reduction in imports, or an import maximum. Each member government would deal with this shortfall however it saw fit. But if no one breaks the agreement, then you can go toe-to-toe with OPEC in the oil markets, searching for price stability.

Saudi Arabia and other OPEC members want price stability. They like price spikes, but they know they’re a short-term thing. Over time, over the next 10 years, they know that their net production will rise, while demand will fall. The Sun shines, the wind blows, rivers, and tides, roll, we live on a molten rock, and there’s also efficiency. Today’s cars, trucks, appliances, and computers all use much less energy than they did before. The increase in time between charges for your phones is all due to their becoming more efficient. The batteries are the same.

I Know Things Look Bleak Now But…

I didn’t think Vladimir Putin was stupid enough to invade Ukraine.

I was wrong.

He’s just that stupid.

While most of the Internet (and all of Ukraine) is either fighting or cowering in fear right now, I want to offer some reasons for hope.

The Electric Car Bowl

While after-action stories about Super Bowl ads focused on cryptocurrency exchanges, electric car ads got more minutes.

That’s important because, if anything, electric cars are more imaginary than Bitcoin.

General Motors, Ford, Volkswagen, and a host of start-ups in the U.S. and China are all rolling out electric cars for 2022. They’re going after Tesla, now worth more than the rest of the industry despite representing less than 10% of the U.S. car market.

But while crypto is garbage, electric cars are real. And important.

On TV just now, I just heard someone ask why Russia is attacking Ukraine now, for the first time since 2014. The reason is the same. Oil and gas prices are near record highs. Russia is a huge exporter. The more Putin can control the market and scare the West that he might cut off supplies, the more money he makes. Ukraine isn’t costing him money. He’s making money on it.

But there’s a sell-by date, as the electric car ads show. The more we can drop demand for oil, by using electricity for cars, and devices like windmills and solar panels to generate it, the bigger the thumb we have on the price. U.S. shale oil producers cut production in response to falling prices, and banks aren’t backing any play to use debt to increase it, because they know what’s coming.

The next oil crash will be the last one.

Putin and the Saud family have no incentive to cut America a break, and every reason to boost the price. American producers have every reason to produce what they can now, but no incentive to invest in their long-term future.

The reason was all over your TV yesterday. Electric cars already dominate the luxury market. They’re headed directly for the mass market. Orders for electric vans and delivery vehicles continue to pour in. None of yesterday’s advertisers think things will be any different for them. Make all you can, make it today, and make money. Demand looks unlimited.

This is the most hopeful thing I can write for Valentine’s Day. Today’s crisis is going to pass. The war won’t be won on the battlefield, or at the negotiating table. It will be won as all wars are won, on the production line.

Real vs. Real

Analysts, and investors, are always fighting the last war.

The last war was the asset bubbles of the 1990s and 2000s. The first was in tech. The second was in housing.

Both fell after the bubble hit. Both times the government responded by juicing demand, first with the “forever wars,” then with a domestic stimulus and helicopter money.

Both times, this worked because the problem wasn’t related to what happened during the 1970s. Back then, resource inflation was to be feared. There was no substitute for oil. Now it’s just speculation and its aftermath.

The same kind of blow-off is happening now. There’s a fear that money will cost money, so speculators are pulling back, selling everything else to raise cash. (Cash is doing fine.) So far, it’s not nearly as bad as what came before. But fear is gripping the market because, this time, it’s accompanied by inflation.

Correction?

We’re not seeing a crash, but a correction in real assets.

There is a crash for garbage. Garbage cryptocoins. Garbage stocks. Garbage assets of all types.

Here’s why.

When money costs money, even a little money, things that were bought with free money are worth less. The punch bowl has been taken away. Those who benefitted from the party are throwing a hissy fit.

Inflation, they scream. Crash, they cry.

Uh, no. Markets adjust.

A Non-Standard Story of Solar Shingles

When I first covered renewable energy a decade ago, solar shingles were the Holy Grail. It was what everyone said they wanted to make. A solar shingle would be as efficient at creating electricity as a solar panel but would go on just like a regular roof, with a nail gun.

A lot of people tried and failed to create the product. Home Depot tried selling homeowner-installed solar panels. Elon Musk built a billion dollar “Gigafactory” in Buffalo, New York, supposedly to make solar shingles.

But at the truncated Consumer Electronics Show (CES) in Las Vegas this year, a game-changing solar shingle finally debuted. Its story is almost as interesting as the technology.

The shingle is called Timberline. Sandia Labs helped develop it. The manufacturer is GAF Energy.

The shingles are slightly bigger and much heavier than conventional roof shingles, but they go on the same way, with a nail gun. GAF says it has invested $1 billion into the product, which converts 22.3% of solar energy hitting it into electricity. 

GAF itself may be more interesting than its shingle. It was once the U.S. arm of I.G. Farben, the Nazi chemical company seized after World War II.  Under Jesse Werner, it became a big roofing company in the 1980s. This included an outfit called Rubberoid, which owned an asbestos mine in Vermont. (Oops.) Under the name G.I. Holdings, it went bankrupt in 2001 but was still paying out to victims in 2011.

Electric Scion

I am keeping my 2005 Scion xB. (I tell everyone it stands for eXtra Boxy.)

The xB gets 30 miles to the gallon, which was sweet in 2004. For the first year I had it, so many people wanted to check out the interior I felt like a dealer.

The Scion now has 168,000 miles on it. As I have aged, I have started to notice the lack of seat padding. The inside feels tinny because it is – it’s all sheet metal and plastic to get the best mileage from a Corolla chassis.

Point is I should be in the market for an electric car. But I’m not.

I blame the car companies.

There’s no good reason an electric car should cost what it does. There is a reason, however. The reason is Tesla. They started with the luxury end of the market and have gradually moved down toward the mass market. But a Tesla is still pricey. So is every other electric.

Mini-Kitchen

About 25 years ago, we re-did our kitchen.

Technology is now making that re-do look obsolete.

Kitchens are still being built as ours was. They’re energy hogs. There’s a big oven, a four-burner cooktop, and a dishwasher standard. These are built into the walls and counters. They take up a lot of space.

Meanwhile, there are a host of new mini-appliances that can replace all that. It’s going to be a hot niche this Christmas. We’re talking about air fryers, sous vide devices, “Instant Pot” devices and grill-griddle-air fryers. Plus, there are those ubiquitous Keurig machines and multi-purpose microwaves.

Two things are happening. One is that counterspace is now at a premium. So is shelf space for that matter. The other is that people are saving both money and energy. An electric oven like my Dacor can cost $3,000. All the devices I’ve mentioned above cost $1,000, total. They also use a lot less electricity.