Today we are experiencing a major “de-leveraging” of the credit system upon which world economic growth is based. We have never seen anything like it in my 35-year professional career. Already it rivals the mid-1982 deflationary vs. inflationary spiral point of decision, that, fortunately, Volcker navigated successfully.

Around mid-April, all the major nanotech stock indices, including our own, The Nanotechnology.com Small Tech Index, hit five-year lows.

In the 2005 book, Nanotech Fortunes: Make Yours in the Boom; Winning Strategies, we described the importance of four-year lows in all “boom/bust” markets as well as the importance of the mid-2006 to late-2009 timeframe for setting up a premier buying opportunity.

We have been speaking about this and writing about this since 2003. Others, less familiar with the public markets, high-risk investing, or the demands of science and technology (or all three), have been much too early and are paying for it now. They underestimated the FDA process, the time it takes to do good engineering, overcoming or not considering physics problems, packaging issues, taking something from a lab bench to industrial scale-up… etc.

Of equal or greater import, the fact that IBM (NYSE: IBM, Stock Forum), DuPont (NYSE: DD, Stock Forum), Chevron (NYSE: CVX, Stock Forum), Intel (NASDAQ: INTC, Stock Forum), GE (NYSE: GE, Stock Forum), etc. are far more likely to advance their in-house nanotechnology to products than a small company is to overtake them was all but forgotten. In addition, so-called “traditional” technology often trumps the best-laid plans.

Yipes!

Some forgot it wasn’t 2000 anymore; the public would not accept bets on the distant future promise of returns in exchange for the possibility of near-term capital gains.

On the other side, scientists, engineers, and high-tech executives with patents and other intellectual property have welcomed the investor community’s largess with open arms. Who can blame them for creating receptacles for the dollars? They want their labs fully-funded and are more than happy to do their work, push the edges of science, publish and advance their technologies… as long as the livin’ (and money) is easy.

We have a phrase for this in mining and oil & gas venture capital. Many geologists love being “in the bush” and “turning the drill bit to the left”; they are much less concerned than you (the investor) are that they actually “find” anything. They enjoy the activity of their work, and for them that is its own reward (if they are paid to do it, all the better… lol).

This game is over. Actually, it was over in 2002/2003, but the “smartest guys in the room” didn’t grok it, and they led sophisticated institutional investors along with Mom and Pop retail investors astray.

Today, “greentech” and “cleantech” are the catchwords of the moment. They too are having their comeuppance in the throes of the exuberance of too many solutions chasing too many markets that may or may not even exist (note charts of solar and wind stocks over the last few months). Not only are these catchwords just new ones for “nanotechnology,” “small tech,” and “advanced technologies” (think about it, except that they usually don’t include the medical or semiconductor sides of “small tech,” they really are).

As investors and the average folks come to realize how distant some of these markets are, how plentiful oil actually is (nanotechnology is even “finding” more) and, may I say it, how much Gore has changed his “vision” for his pocketbook, this enthusiasm, too, will fade. “Gone with the wind” and wind-farms . . . if you will. (Please don’t write me on this; I’m not saying solar, wind, clean coal, pollution tech, etc., etc. aren’t great things . . . only that the investment enthusiasm is ahead of itself… yet again.)

… to be continued….