This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Nanotech: Huge Focus on a Small Science

Nanotechnology, the practice of manipulating matter on the atomic scale, may demand an exact science. But so far, nanotech investing has not.

A few short years after Wall Street's first flirtation with the science routinely touted as the next big wave of innovation, there is more misunderstanding about nanotechnology among investors -- and more confusion than information. And it's not just the little guys who get befuddled; it's also big investment banks like Merrill Lynch.

On April 1, 2004, Merrill and its highly respected tech analyst, Steve Milunovich, launched the Merrill Lynch Nanotech Index, injecting a jolt of volatility into many of the 25 small-cap components. A week later, the firm quietly swapped out Cabot Microelectronics (CCMP) for Cabot Corp. (CBT). A week after that, Merrill pulled six companies out of the index after some of them -- including Applied Film (AFCO), Emcore (EMKR) and Three-Five Systems (TFS) -- complained that they didn't see themselves as nanotech plays. It also added three others.

In one of the most eloquent admissions of error in the history of analyst reports, Merrill wrote, "Given the difficulty in defining nanotechnology, along with the dynamic nature of this emerging technology, we believe these changes will enhance our index, making it more useful to the marketplace."

By Merrill's own definition, the index has only grown more "useful." Nearly a year on, nine of the companies in the original Merrill Nanotech Index have been jettisoned, without the mergers or delistings that normally occasion such changes. Ten of the 27 companies in the current version were not included at the start.

Given all the volatility and uncertainty about nanotech stocks, why does anyone bother? Because as nanoscience reaches its adulthood and more laboratory breakthroughs transfer into commercial applications, the ability to engineer at the nanoscale has the potential to transform nearly every industry, just as assembly-line manufacturing did in the 19th century and networked computers are doing now. Merrill's index may have been embarrassing, but the fundamental point was right: Something big is shaping up in nanotechnology -- and Merrill was smart to pursue it.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
GE $24.51 -0.24%
HPQ $28.13 0.46%
IBM $146.78 1.19%
AAPL $110.37 -1.75%
FB $88.15 -1.94%

Markets

Chart of I:DJI
DOW 16,374.76 +23.38 0.14%
S&P 500 1,951.13 +2.27 0.12%
NASDAQ 4,733.4970 -16.4820 -0.35%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs