Manic Market, Innovation Cycle, Alzheimer’s Blockbuster, Reader Outrage, and More!

by Addison Wiggin & Ian Mathias

  • Why Mr. Market is going manic…
  • Oh, to be 28-years-old again: How one company is aiming to make it happen…
  • The “innovation cycle” in a down economy…
  • The Alzheimer’s “blockbuster”… dial an organ… and a cure for deafness…
  • Our “detachment from all that is decent”… readers outraged by our take on BP… our candid response

   An increasingly bipolar Mr. Market, to borrow a phrase from the inimitable James Grant, is having one of his manic episodes today.

The Dow opened up 1.5% in the first half-hour of trading.

China denied rumors that it’s about to bail out of its forex reserves held in euros. First-time jobless claims fell last week. And the Coast Guard says BP’s “top kill” effort to plug the oil blowout in the Gulf of Mexico appears to be working.

All’s well with the world… until Mr. Market enters one of his depressive phases. It could happen anytime, for any reason… or no reason at all. So this morning, we’re going to take a brief detour to explore the “innovation cycle” that we suspect will ignore Mr. Market’s ups and downs… then we’ll get back to the numbers.

   “An increasing number of scientists believes that regenerative medicine will eventually give us the ability to restore our bodies to a permanent biological youth,” asserts Patrick Cox, “probably equivalent to about 28-years-old. That is the point before our cells have started to lose function through loss of telomeres.”

American life expectancy has grown 19 years since 1900. Ten of those years came after 1950. And the pace is accelerating. “We are far wealthier than the previous generation,” asserts Patrick, which means, “we can afford medical options undreamed of only a generation ago. There's a catchphrase in Silicon Valley: ‘That's not a bug, it's a feature.’”

   Here in The 5, we’ve been observing that scientific progress marches on to an ever-faster drumbeat when the economy slows down. Inventors and entrepreneurs are often oblivious to the follies of Washington and Wall Street.

“Things are changing so fast,” Patrick wrote his subscribers last week, “that most people, including policymakers, are operating using outdated assumptions. I'm not talking simply about new gadgets and medicines – we are experiencing a global demographic transformation that affects every area of life.

“It is taking place on an unprecedented scale.”

   We’ve been following, for example, Craig Venter’s attempt to grow biofuels with genetically altered algae. We read in the paper while eating breakfast at the Grand Hyatt Beijing last week that his team used an artificially synthesized genome to bring back to life a bacterium that had its own genetic material removed.

“He has not,” Patrick clarifies “as some headlines proclaimed, created life. He has, however, created a new species, and far more rapidly than selective breeding practices of the past. This will almost certainly lead one day to the ability to grow fuel oil cheaply, which is his near-term goal.”

“Venter hopes to use the technology,” Reuters adds, “to make new and better vaccines, to create organisms that will pump out jet fuel and to make ‘cars that can run on garbage.’ Bacteria have been found in nature that thrive on oil and radiation – Venter hopes to refine their genetic sequences to customize such properties.”

   Yesterday, too, you’ll recall we rejoiced at the prospect of coffee offering protection against the onset of Alzheimer’s disease.

Digging a little deeper, we see that one company in Patrick’s sights followed the bread crumbs from a 2008 discovery that a common painkiller can prevent damage to the eye caused by glaucoma and diabetic retinopathy.

“The drug binds with ‘sigma receptors,’” Mr. Cox explains “to keep retina cells from coming under stress. In fact, the higher the stress level, the more this protective effect seemed to kick in.

It turns out, retina cells and brain cells share a lot of similarities. With this insight, the company’s scientists have developed a series of animal tests. The drug they’re developing appears to have the same protective effect on the brain as the painkiller has on the eye.

“The results were seen in dogs, rats and mice,” says Patrick. “Moreover, the results showed benefits at extremely low doses with a very low toxicity profile. This opens the door to a wide variety of dosing options, including long-term use of low doses as a preventative. This is enormously exciting news for Alzheimer's sufferers as well as those who are prone to the disease and their families.”

The company’s chairman recently told Patrick that human clinical trials are just around the corner.

   Mind you, the company developing this Alzheimer’s drug is just one firm on Patrick’s radar. Another example crossed our desk just this morning. The CEO of BioTime – a company Patrick has been following for years – will make a big announcement during a science conference today in Boston: His firm will offer for sale five new stem cell lines for research.

We’re still awaiting further details, but we already know these stem cell lines could lead to breakthroughs fighting kidney disorders as well as Parkinson’s disease and other disorders of the nervous system.

We’ll keep you posted on the announcement.

   There’s another company in the Breakthrough Technology Alert portfolio that can already grow perfectly formed human corneas in a petri dish. (We respectfully withhold this one’s name in deference to paying subscribers,)

When we were in Juan Enriquez’s office for our documentary interview last month, one of the associates showed us a catalog through which your doctor can submit DNA samples and specific requirements and have a replacement body part manufactured and returned to you for use.

Crazy today, de rigueur tomorrow?

   Now comes news that scientists are growing tiny mouse hair cells in a petri dish – the kind of hairs we have in our inner ear, without which we’d be deaf.

We’re born with 30,000 of these hair cells in each ear. But they die off as we age, and they don’t regenerate. After this breakthrough, the next step is to produce human hair cells for transplant. But the cells could be just as useful for deafness-curing drugs.

Patrick is tracking at least a half dozen, every one on the verge of game-changing scientific breakthroughs.

  • One, Patrick is convinced, will “eliminate the threat of influenza and other virus-born diseases that are particularly hard on older people, as well as infants”

  • Another, he says will “improve the efficacy of cancer treatments significantly.”

On the flip side of the housing collapse and fiscal calamity developing in Washington, we believe these kinds of innovations will drive the economy and provide new jobs. Just as the communications revolution leveled some industries and completely reinvented others, so too will these frontline companies and their innovative ideas.

   If you invest in energy, communications or precious metals companies, you already know the drill: The big money comes from the tiny names developing projects in places nobody’s ever heard of.

Microsoft – the granddaddy of all home runs in tech investing – had a hell of a run. Despite being eclipsed just yesterday in market cap by Apple, from 1986 through last month, it rose 38,000%. The key was to get in early, before the company became a household name.

You can read about all the companies Patrick’s tracking in most recent write-up, Wealth Revelations 20:10 — A Lifetime of Wealth From Four ‘Miracle’ Research Companies.

With your membership to Patrick’s Breakthrough Technology Alert – available now for a special price break – you can get Wealth Revelations 20:10 free of charge. But you should take us up on the offer today because Patrick’s work has become so spot on and important, after midnight tomorrow, the regular membership fee for Breakthrough Technology Alert will more than double.

   With the stock market back on the rise this morning, the dollar index is in rapid retreat. It’s back to 86.2 as we write. The euro has firmed up to nearly $1.236 now that the China scare is over and Spain’s parliament approved some new austerity measures (albeit by a single vote).

   The relative dollar weakness makes gold’s performance all the more impressive. It’s holding steady at $1,214.

   Oil is another beneficiary of hot money flowing out of dollars. It’s zoomed past $74. That’s a gain of $5 in just a week. The news from the Gulf of Mexico doesn’t hurt.

   “BP is not out of the woods,” says an e-mail this morning from Byron King, reacting to the positive news from the Gulf of Mexico. “But killing that well will put a limit on the oil spill, hence give the market some sense of the scope of costs to BP.”

BP shares bounced 6% on the open. On Monday, Byron told readers of Outstanding Investments to expect a short squeeze if the top kill technique works.

“Expect a bounce,” Byron wrote, “and sell into it if you're trying to unload you BP shares.”

Sure enough… the rally is on. Take profits if you can. Depending on the size of your holdings, that advice alone could have paid for a lifetime subscription to Outstanding Investments. Grab a basic subscription here.

   “Forget about BP,” writes a reader. “All the offshore oil drillers are going to get hit. The potential rules, regulations and government fees that will come out of this will kill off shore drilling and potential profits well into the future.

“What some people forget is anything that enters the ocean currents will travel the globe, landing almost anywhere for the next 50 years. Hell, they're still finding beached Japanese glass floats from World War II.”

The 5: Even if Washington clamps down on drilling off America’s shores, its authority does not extend to the rest of the world. You think the Brazilians are going to dismantle everything they’ve developed since the discovery of the Tupi field in 2008 and go home?

BP, Exxon Mobil, Shell and a host of other companies wouldn’t be exploring for oil in deep water if the “easier” onshore good weren’t already tapped out. The Deepwater Horizon only proves that we’re reckless as a species and that when things break, we don’t often know how to fix them. That’s not right or wrong – it just is. But we learn and move on. Invest accordingly.

   “Oh, my gosh. You guys are worried about BP's dividend?” a reader writes in response to yesterday’s issue. “If there were any justice in the world, that company (after the cleanup is funded from its obscene profits) would be bankrupted and dismantled and its officers thrown into a deep, dark prison for several decades.

“Your detachment from all that is decent is staggering.”

The 5: You better hope Venter can figure out how to grow oil from algae pretty quickly with that attitude. Your detachment from reality is staggering.

Seriously, how can profits be “obscene”? You’re suggesting there’s a moral component to risking capital and making a return on it? It’s OK to make a little… but not too much? We wouldn’t want to offend anyone.

With all due respect, you’re looking at only half the picture. The tainted, moral do-gooder half. How about all the technological innovation that has gone into scraping oil out of the ground so you can cast your moral approbation on us from your electricity-powered computer? Who would pay for those… or even bother coming up with them… without profits and risking investment in new ideas? If you have a better idea of how to power your house…your block… entire cities… how are YOU going to pay for it?

Perhaps you’d rather hit the reset button and begin with an agrarian barter system so you can guide the economy in the direction suggested by your perfect moral compass. Didn’t Chairman Mao already try something like that in the 1960s in China? The Great Leap Forward worked really well, as we recall.

Sure things go wrong. And yes the environmental disaster is horrendous. That’s the risk we take for all the damn material things we want in life. BP was fine when it was out of sight in the ocean trying to figure out how to safely drill in 10,000 feet of water for the very substance the economy – of which you are a part – is addicted to. But once there’s an accident, you climb on your high horse and want its officers thrown in jail?

Good grief… you’re ungrateful, at best.

We agree there need to be alternative sources of energy. We’re been very interested in watching them develop, and not just because there is money to be made as investors. But you’re an idiot if you think solutions to global energy demands will spring up overnight… or that they’ll be developed accident free.

If you’re going to throw people in deep, dark prisons for presiding over disasters, you may as well crawl right in after them… because we, as a species, would be going nowhere in the light.

   “To the subscriber with the hypothetical case of owing $500,000 in mortgages and owning $1 million in gold,” writes our last reader today, “I would say don't forget about the horrendous tax the government will have imposed on the sale of gold by the time it reaches those heights. It will probably take 70 or 80 pieces of gold to pay off the $500,000 mortgages.

“I doubt you will print this, but I had to give it a go.

“I believe gold is true money and have purchased it for years, but given the desperation of the government, my hopes of us realizing fabulous profits are slowly being dashed.”

The 5: It’s not about “realizing fabulous profits.” It’s about preserving purchasing power. Even at confiscatory tax rates, gold has a better shot at that than a Federal Reserve note.

Why wouldn’t we print what you’ve written? Just wondering.

Regards,

Addison Wiggin

The 5 Min. Forecast

P.S.: The price of Breakthrough Technology Alert is going to double tomorrow. But if you get in today, not only can you lock in a significant discount, you’ll get a copy of Wealth Revelations 20:10, describing all the company names – their ticker symbols and game-changing innovations – from today’s 5 absolutely free. Please accept this offer, here.

rspertzel

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