Adeo Ressi

Everyone knows water is a problem. Everyone knows smoking is a problem. Everyone knows cancer is a problem. Everyone knows fossil fuels are a problem. The true grand challenges facing humanity are not obvious today. Here are some different ideas for large cash prizes that might just change the world…

Prize 1: Food / Nourishment
The entire system of food has not substantially advanced since the evolution of agriculture and herding. Our inherited digestive preferences, our foods, and our consumption patterns hinder our cultural evolution, strain the resources of the planet, and limit our ability to explore space. It is time that the great minds of humanity take a careful study of sustenance, growth, and the correlating health effects, looking to invent highly effective and low impact means to nourish a hungry species. What about a prize that encourages the creation of a non-organic food product that can be created through a catalytic process with no polluting byproducts?

Prize 2: Power / Light
The concept of burning fossil fuels to move water to spin a turbine to move electrons over thousand of miles of wires to burn a filament to create light is literally preposterous. If you took a college class of great minds and challenged them on how to create a scalable system to light the world, the electron-filament solution would get an “F.” Then, why do we do it? We need prizes in energy that get people thinking outside the box. What about a prize that encourages the creation of a mass produced lighting system that operates with no polluting byproducts?

Prize 3: Materials / Housing
The fundamental materials available in our arsenal of constructive tools has dramatically increased in the last century, allowing human beings to build great structures, explore the depths of the oceans, reach the peaks of land, and touch the edge of space. Materials have a profound effect. Imagine a thin and flexible bio-suit that maintained your core temperature in operating temperature extremes of this planet, from the desert heats to the cold of the arctic. Imagine a flexible and inflatable material that could be molded, shaped, then turned harder than steel for construction, then decomposed when needed. Why are we not building our own houses? What about a prize that encourages the creation of a lightweight, flexible, and super strong construction material that can be decomposed when needed?

On Tuesday, October 27th, I will be speaking at TMT.Ventures`08 in Zagreb, Croatia. The start time is 4:00 PM locally / 7:00 AM PST. They may even be broadcasting from the conference site here.

Crayon Physics – Not out yet, but looks awesome.

While I was in Los Angeles to attend the X PRIZE Board meeting, I had the Tesla Motors Roadster #1 on loan for 36 hours. While at an X PRIZE Board dinner, a few of the other Board members had the first opportunity to test drive the car, which was caught on video-phone by Sira Lazar below.

Driving the Tesla Motors Roadster is truly an amazing experience. It’s silent, fast, and punchy. Most of the other drivers that night described the experience like driving a go kart, except is goes A LOT faster.

A lot of my friends view the current state of the Dow Jones Industrial Average at 8,451 as a great opportunity to buy. And, it may be. But, I do not share that view. Here is why…

Not only are buyers of stocks conspicuously absent, but much of the selling is forced.

“Off a Cliff,” The Economist

Stock markets are based on fundamentals when they operate rationally. Today, fundamentals are irrelevant. Stocks are trading on the ratio of buyers to sellers, and sellers far outweigh buyers with no tipping point in the foreseeable future. Where might the needed buying power come from?

First, the average American consumer is facing painful losses across all of their asset classes: real estate, bonds, equities, commodities, etc. Keep in mind that average American is already highly leveraged / debt laden, so a lot of people are facing margin calls, increased debt servicing fees, and, in some cases foreclosures. The small amount of American savings, which is normally leveraged, has been halved in the last few weeks. They are certainly not buying stocks.

Second, the many foreign governments and sovereign wealth funds that have traditionally invested in the dollar and the safe American equities are facing staggering losses and the need to focus locally to stop their own regional hemorrhaging. America isn’t looking so safe with the Fed and Treasury making the rules up as they go along and partisan battling over the details. If anything, large foreign investors are looking at ways to pull out without causing further collapse using programmatic sales. Keep in mind that most global equity markets are collapsing. They are certainly not doubling down in America on the trillions they already have over-invested here.

Third, the traditional market makers for many stocks, derivatives, bonds, and other assets, the “investment banks,” are all on the verge of collapse. It’s irrational to think that Japan will pull out of the $9 billion deal to buy around 20% of Morgan Stanley, since the whole company is publicly valued at $11 billion, so the Fed / Treasury is going to have to step in somehow. Taking over this type of firm that has never been carefully overseen by the government will be a mess: these are seven figure a year “young gun” bankers, not DMV employees. These market makers would buy any stock if they thought they could sell them a little later for a profit, and this behavior backstopped fast market declines. No more. Bear, Lehman, and Morgan are soon to be distant memories, and I can’t imagine that Goldman will survive, either.

In a market where (1) sellers far outweigh buyers and (2) you have extremely hampered global buying power, I see a bottom much lower. From my view, the Dow Jones Industrial Average may hit 6,500 to 6,800 in intra-day trading over the next two weeks, and recovery will take months.

My advice would be to sell now. If you see some fast movement upwards, you can always jump back on the gravy train, but don’t lose another 20-25% on the way down.

More to come…