Dana Blankenhorn

The Time to Buy

The time to buy a bear market depends on your time horizon and your risk appetite.

If you’re in your early 30s, for instance, it’s a great time to buy the U.S. stock market. Stocks are at pre-pandemic levels, including some companies that still have great growth prospects. Most of the Cloud Czars fall into this category, as well as cloud applications like Salesforce.

If you’re in your late 60s, like I am, you should probably hold off. You still want to maintain enough cash to get through if things turn south, as the ultra-bears insist that they must. But ultra-bears are wrong. Markets do bottom, and they do go back up. If we’re about to have nuclear winter, cash won’t save you.

Beyond the PC

I’m surprised more people didn’t anticipate this year’s tech wreck.

Once computing mastered video, as it did early in the last decade, there were no obvious new horizons. What resulted was crap without application. Crypto has no application. The metaverse has no application.

Without new files to deal with, this year is featuring a shakeout in how to deal with them. PCs were already being hurt by Chromebooks, which move most workloads to the cloud. PCs even accepted it. Most of my own PC’s files are now cloud-based.

But what I didn’t anticipate (and should have) was the death of writing.

The Next Health Crisis

Drug companies keep pushing America toward its next health care crisis.

Biogen is the primary offender. Last year they delivered an Alzheimer’s drug called Aduhelm, pricing it at $56,000/year. If Aduhelm cured Alzheimer’s, a high price would be justified. But it doesn’t. It isn’t even proven to reduce symptoms.

Now they’re back, with a new medicine mainly developed by Eisai, the Japanese company that developed Aduhelm. This claims to improve cognition about 20% in people with early signs of the disease. That’s good. But it’s nowhere near a cure. There is every indication Biogen will demand a huge price on this medicine too.

There are two problems here, one business and one scientific.

The Three Big Challenges Boiled Into One

Nearly three years ago, after attending the Heidelberg Laureate Forum honoring great mathematicians and computer experts, I wrote a three part series on the big technologies of this decade:

• The End of Oil 
• The Machine Internet 
• DNA as a Programming Language 

This is a good time to revisit the trends. A recession is also the best time to start a new tech company. Incumbents are faltering and you get a clean sheet of paper to write the future on.

One Medium, Extra Large

When I was at Northwestern’s Medill School, 45 years ago, I was pursued by a singular idea. That was, all the media we studied would eventually become one.

At the time there were three majors at Medill (four if you count advertising). You could major in newspapers, in magazines, or in TV. It was easy to tell us apart. The TV majors dressed well while the print majors looked like the students we were.

While I haven’t made a fortune since, my idea has been fulfilled, even if the media industry still doesn’t know it.

There is only one medium now. This medium, the Internet.

There is no newspaper business, no magazine business. There is no TV business, no newsletter business. These are all just means to the same end, which is communication. The problem is we don’t know what the new industry is about.

Reject Panic

The best reaction for investors to what is happening in the stock market today is no reaction.

Traders and speculators should feel free to panic. People who own cryptocurrency should feel free to panic. If you define your wealth by your market position on a day-to-day basis, panic away.

But investors? No.

The underlying strength of the American economy is obvious. Moore’s Law runs in every direction, from clouds to chips to software to systems. Entrepreneurs are constantly finding ways to turn these resources into savings, into value worth buying and owning. America has never been stronger.

The Real News Problem

The real media problem has nothing to do with monopoly, or politics.

It’s that media still hasn’t accepted the reality of the Internet.

In the year 2022 book companies still think they’re selling paper books. Newspapers still think they’re selling paper news. Magazines still think in terms of print. TV still thinks in terms of how TV was distributed before the Internet.

It’s done to preserve the appearance of monopoly. Eyes remain closed to the challenges, and the opportunities, of the Internet.

Take CNN. Even their critics have it wrong. The critics are worried about new commentators shoving right-wing politics down the throat of the public.

What Tech to Buy

With most tech stocks now down for the year, it’s time to talk about which to buy.

The answer is simple. Buy technology that cuts costs or creates value.

There’s a lot of stuff that does neither. Crypto doesn’t, so Coinbase (COIN) and Robinhood are out (HOOD). The metaverse has yet to get a killer app, so Meta Platforms (META) and Roblox (RBLX) can wait.

The other Cloud Czars are fine. Salesforce (CRM) and ServiceNow (NOW) are fine. Adobe (ADBE) is fine. The cybersecurity stocks like Palo Alto (PANW) are overpriced, but over time they will come good.

Then you want to look at efficient users of technology. On the consumer side this gets you into the retail space. It means you can buy Costco (COST) and Walmart (WMT), Target (TGT) and Lululemon (LULU). On the business side there are a bunch of industrials you can grab, like John Deere (DE) and Johnson Controls (JC).

Junk Tech

Imagination is in a constant competition with Moore’s Law.

Imagination often loses.

Moore’s Law makes many things possible. Not all these things are worth doing.

I call things that aren’t worth doing junk tech.

Bitcoin is junk tech. Web3 is junk tech. Blockchain is junk tech. So is the “metaverse,” in the sense that we should all live in a virtual world rather than the real one.

Good applications can come from junk. The home shopping service I supported in 1984 became an Electronic Data Interchange (EDI) format. The map CD-ROM I worked on in 1989 became a format for geographic data. Creating lemonade from lemons is always a great opportunity.

The Streaming Winners (And Losers)

This is something I saw coming years ago at Investorplace.

Streaming will be owned by the Cloud Czars.

All the entertainment companies with their lawyers, producers, and lobbyists are going to fade away. Together, they’re worth a fraction of what Amazon or Alphabet are. Amazon and Alphabet are, in turn, worth barely half what Apple is.

It’s game over.

The reason is simple. Think of the cloud as the operating system of our time. Control what’s beneath and you control what’s above. IBM understood this in the 1960s. Microsoft understood it better in the 1980s.