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The Value of Imagination

By Jim Whiddon

As U.S. stock market averages near all-time highs, many investors are wondering if there is more downside or upside potential for stocks. With all the chatter about stock valuations, let’s not forget the big picture and what really matters.

Jim Davidson, co-founder of SilverLake, a global leader in technology investing, once relayed this anecdote concerning Albert Einstein: “Einstein had a boyhood dream of what it would be like to ride on a light wave. Is it physically possible? Could you actually ride on a light wave? And then, years later, he comes up with his theory of relativity. He asked one question as a six-year-old — a pretty amazing question. Would it physically be possible to ride on a light wave through space? And the whole world changed because of that one question from a six-year-old.”

Einstein would be truly astounded by the innovations and breakthroughs in our time.

Here are just a few of the amazing creations cited in the best-selling book, Big Data:

  1. Asthmapolis has attached a sensor to an asthma inhaler that tracks location via GPS; aggregating the information lets the company discern environmental triggers for asthma attacks, such as proximity to certain crops.

  2. The firms Fitbit and Jawbone let people measure their physical activity and sleep.

  3. Basis allows wearers of its wristband to monitor their vital signs, including heart rate and skin conductance, which are measures of stress.

  4. In 2009, Apple was granted a patent for collecting data on blood oxygenation, heart rate, and body temperature through its audio earbuds.

  5. Derawi Biometrics has developed an app for smartphones that analyzes an individual’s gait while walking and uses the information as a security system to unlock the phone.

  6. Two professors at Georgia Tech Research Institute, Robert Delano and Brian Parise, are developing a smartphone application called iTrem that uses the phone’s built-in accelerometer to monitor a person’s body tremors for Parkinson’s and other neurological disorders.

These remarkable creations represent what investing in the market is all about. It is the idea of investing in the world of the imagination. Foremost, we have the good fortune to live in a country that provides patent protection, without which the risks of innovating would outweigh potential returns. With this vital foundation in place, a combination of American ingenuity and consumer-driven technology is able to create new opportunities. Once a product or service is deemed useful or desirable, it can be monetized first for the inventors and then for individual investors via stock and bond offerings.

While this simple explanation is not necessarily new information. It is something we really take for granted. It is no less than the creation of prosperity out of the best ideas and thoughts of humankind. Wow! And in a strategy where you essentially own the lion’s share of the market, via evidence-based techniques – you can “own” all of those great ideas yourself and benefit from the demand that may take their value to new heights.

I often wonder what the geniuses of times past would have thought about our world today. What would George Washington say as he sat on Air Force One as it made its way down the runway for take-off? What would Alexander Graham Bell have said to Steve Jobs upon seeing the iPhone prototype? What would Ben Franklin say upon trying on a pair of Google glasses? And would Albert Einstein have ridden that first Saturn rocket to the moon if given the chance? I suspect the answer to that last question is “absolutely.”

So what is on your mind? What innovation is hiding in your gray matter? Perhaps you have a world-beating idea that will make the cover of Time. You never know, but you have the same opportunity as anyone else to make that happen. Even if your ideas never make it to market, you always have a second bite at the proverbial apple. You have a chance to enjoy and profit from the great life-changing ideas that have made it to market and help our economy flourish — an economy our ancestors could have never envisioned.

Will the stock indexes keep climbing to new heights today or begin a decline? Who knows? As long as we don’t limit our imaginations, it’s hard to envision any limits to what can be achieved. Here’s to E=MC²!

 

Copyright © 2014, JDH Wealth Management. This material and any opinions contained are derived from sources believed to be reliable, but its accuracy and the opinions based thereon are not guaranteed. The content of this publication is for general information only and is not intended to serve as specific financial, accounting or tax advice. To be distributed only by a Registered Investment Advisor firm. Information regarding references to third-party sites: Referenced third-party sites are not under our control, and we are not responsible for the contents of any linked site or any link contained in a linked site, or any changes or updates to such sites. Any link provided to you is only as a convenience, and the inclusion of any link does not imply our endorsement of the site.