Money & Markets: The latest technology to invest in – gene editing
Image credit: Igor Stevanovic - Dreamstime
Genetic engineering using the new Crispr technology is just hitting the US stock market. This brand new sector has the potential to explode in price and keep on growing for decades.
Most people are aware that the dotcom boom was technology-based, but few realise that since the very start of stock markets in the 1700s, the whole shooting match has been driven by technological advancement. The history of the stock market is the history of funding and the speculation in technology: sail, navigation, canals, railways, radio, automobiles, electronic, computing, the internet and finally the internet applications like Facebook, Google and Amazon.
So the way to invest is to catch new technology at a stage where it is exciting enough to be incorporated into listed enterprises, but not so late as to be a later entrant buying at increasingly lofty valuations.
Some people call this investing, but it is in the end speculation, a less respectful way of typifying someone putting their money down to back an opinion. Some will call it gambling, but the thing to recall about gambling is there are groups of people who make huge sums gambling, namely bookmakers and casinos, and the only difference between them and the customer is that for ‘the house’ the odds are skewed in their favour. Picking to invest in technology before it breaks into the mainstream is investing with an edge, because skill is the edge in the stock market and spotting technology is certainly a skill.
So I have written about the coming hydrogen economy and why the platinum group metals are a place to invest alongside other producers and IP holders of exotic metals, but one should never stop looking for the next big thing.
For sure a next big thing is genetic engineering and it is just hitting the US stock market. Like nuclear power, genetic engineering has been a taboo since my childhood; sci-fi monster movies are embedded in the minds of many, with evil mutations causing havoc. So the good old trick of a rebrand seems to be doing the job of slipping in this unstoppable technology under the radar.
It is now called gene editing and offers hope and potential almost beyond limit. Fixing genetic diseases, the terrible consequences of which plague millions, is only the tip of a massive iceberg of positive possibilities, and in an incredible breakthrough the ability to fix and change DNA has been slung into a new era by a new technology.
This technology is Crispr. I’m no biogeneticist, but my ‘finance guy’ understanding is that Crispr allows for a cheap, fast and accurate way of cutting out and/or adding in new bits of DNA code to existing living cells. Jennifer Doudna and Emmanuelle Charpentier were given the Nobel Prize for the development of the gene-editing tools that led from Rodolphe Barrangou’s yogurt research to the development of phage-resistant yogurt bacteria. (Blessed are the cheese makers.)
By the time you read this I will probably own all the Crispr technology companies listed, which include: Crispr Therapeutic, Editas Therapeutics, Intellia Therapeutics and Beam Therapeutics, all in the US, but while this is an exciting cohort today, just like the hydrogen economy theme and for that matter cryptocurrency, this is just the start of a new explosive segment that will grow for decades and provide those investors who care to skill up on the nuances of the field an opportunity to build wealth for much of the rest of their lives.
Right now, these companies are comparative minnows with market caps of $4-$11bn. These might seem a lot, but when you consider Tesla can hold a value of $700bn and merely replaces the internal combustion engine in one form of transport, you can imagine that a technology that transforms the engine of life itself can command some interesting valuations given enough time to penetrate the mainstream investor imagination.
People always want names as tips. It’s an entropic method that is as inadvisable as it is popular. The key tip is that this is a new segment that will explode in value and that speculators/investors can adopt it as a platform for long-term gains.
Biotech companies and the so called pharmas are a core segment for investors, especially in the US, and it is only a matter of time before the Crispr-Cas9 revolution breaks out of the specialist press and into the mainstream. Things never go as fast as you expect, especially if you see the future clearly. This shortening of the field of view is a drawback of seeing what is going to happen next, but in the end it does come to pass. You could have been receiving email in 1990 and be clearly expecting online systems to turn everything upside down, yet still have to wait a few years to jump on board the stocks that would then go vertical.
The key idea is that it’s worth getting in early, hanging on tight while constantly winnowing the sector down to the small sub-group that will be the colossuses in 20 years’ time. The earlier you can find such a sector, the more upside there is. As such, it’s a great time to be investing, as there are crypto, hydrogen economy and gene-editing segments that will have a long and lucrative future for those gritty enough to dig in and become experts in these technologies.
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