Your Weekly Update, and Exponential Growth?

This Week's Quote:
“Exponential Growth looks like nothing is happening, and then suddenly you get this explosion at the end....”~Ray Kurzweil

J.L. Davis Thoughts This Week:

Noted “Futurist” and author Ray Kurzweil was one of many interesting speakers at an industry conference that we and 300 or so prominent advisors from across the U.S. had the opportunity to hear from last week in Newport Beach, California. Other presenters were former Florida governor Jeb Bush, actor/writer/lawyer/economist Ben Stein, and plenty of other industry experts.

Ray is frequently cited in Forbes, Fortune, and other media for his predictions about the future. He’s also considered the brains behind the development of voice recognition software, the flat-bed scanner, digital synthesizers used in music, and a host of other remarkable inventions. An amazing guy, to say the least and many of his prognostications have very interesting implications for the financial world.

To put things in perspective, his opening comments looked at the timeline for communications. From the spoken word to the written word, took perhaps thousands of years. From the written word to the printing press, another thousand or two were required. The telephone arrived in a few hundred more years, followed by the first cell phone about 50 years later. Today’s email, texting, and immediate response social media have eventuated virtually overnight. Next up could be thought transmission. Really.

The point to Ray’s comments was that all growth, in his view, is exponential, not linear, and that we humans are in the phase of development that could allow us to enjoy the benefits of technologies that have been eons in the making.

A few of these predictions include “nanobots” which will be injectible into the bloodstream via perfect genetic matches (made from our own cells) with the needed tweaks to our DNA structure to cure, or more importantly, to avoid virtually any disease. A smartphone the size of a human cell, which contains thousands of times the computing and communication power of today’s iPhone. He points to a 50% “deflation rate” in the cost of technology, meaning that not only does computing capability double ever couple of years (Moore’s law), but becomes ever cheaper to buy (editor’s note: I can relate. My first computer printer cost $2500 in the 80’s, and my first cell phone around $1800). Mr. Kurzweil also pointed to three dimensional printers, which will form actual materials and products on the spot. Wow.

The rub, if there is one, is that he says we will need to live about another 15 years or so to be able to start taking advantage of these things, especially the amazing improvements in health and longevity he says are on the way.

In Ray’s concluding comments, he stated that computers would be virtually indistinguishable from humans by 2029. Their decision making ability, witnessed by IBM’s Watson beating Jeopardy contestants as well as defeating Gary Kasparov at Chess, will be unmatched by humans.

We’re not sure we’re buying all that 100% but it is impossible to argue with Ray’s facts. If you’d like to learn more about Ray’s vision of the future or past prognostications (good and bad) you can check out the link below:
http://en.wikipedia.org/wiki/Ray_Kurzweil

Or, do as we did and visit www.howtocreateamind.com and buy his latest book.**


Market Week: October 29, 2012

The Markets

Despite good economic news, particularly from the housing market, disappointing corporate earnings continued to contribute to strong downdrafts last week as any halting attempts at a rally generally gave way to renewed selling. The large caps of the Dow and S&P 500 were hit hardest among the domestic indices, while the Global Dow fared even worse.

Last Week's Headlines

• Sales of new homes rose more in September than in any month since April 2010. The 5.7% increase over August put new home sales a whopping 27.1% ahead of the previous September. If sales were to continue at that pace, the Department of Commerce said, it would take 4.5 months to deplete the inventory of new homes for sale--the shortest amount of time since October 2005.
• U.S. economic growth accelerated in the third quarter, rising to 2% from 1.3%, according to the Bureau of Labor Statistics' initial estimate. The increase was driven in part by a 14.4% increase in construction spending, consumer spending that rose 2%, and a 3.7% increase in federal spending, primarily on the military, while capital spending by businesses fell 1.3%.
• More than 80 CEOs of some of the largest and most well-known U.S. corporations issued an open letter urging Washington to attack the national debt. The letter didn't endorse either presidential candidate's economic proposals. However, it did call the approach developed by the bipartisan Simpson-Bowles Commission--a combination of spending cuts, increased tax revenues, and measures to limit health-care costs and strengthen Social Security--an "effective framework" for attacking the debt problem.
• Significant orders for commercial aircraft helped durable goods orders soar almost 10% in September--their biggest increase in more than two years. However, even setting aside the nearly 32% increase in the transportation category, orders for goods intended to last at least three years were up 2%.
• As expected, the Fed will continue to buy $40 billion of mortgage-backed securities each month. The Federal Open Market Committee said that without such support, the current moderate economic growth might not be enough to produce improvement in the labor market.
• After reaffirming Spain's bond rating the previous week, Moody's downgraded 5 of Spain's 17 regions.
• The U.S. Justice Department filed a $1 billion suit against Bank of America, charging that the bank fraudulently sold Fannie Mae and Freddie Mac defective mortgages that were processed without proper quality checks.


Eye on the Week Ahead

More earnings reports, fewer days until November 6: In addition to corporate earnings, Friday's unemployment data will be of interest, as will any potential economic impact of Hurricane Sandy.

Key dates and data releases: personal income/spending (10/29); home prices (10/30); business productivity/costs, U.S. manufacturing
(11/1); unemployment/payrolls, factory orders (11/2).


Data sources: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

Prepared by Lee Davis** and Broadridge Investor Communication Solutions, Inc. Copyright 2012