Nanotech's High Huckster Multiple

Depending on whom you ask, the LightWave Energy Patch is either the first miracle of nanotechnology or just an early instance of 21st-century snake oil. Do an Internet search on the patch -- it claims to employ "nano-scale organic antennas" to give bodybuilders a jolt of energy -- and you'll find inspiring testimonials from presumably beefed-up customers and scathing denunciations from less-than-musclebound scientists.

Under its manufacturer's liberal definition of nanotechnology -- "manufactured products that are made from atoms" -- the polyester patch is undeniably a nanotech product. But so is the computer screen you're reading this on. What's less clear is whether the nanopatch delivers as advertised. But the advertisements themselves are emblematic of the growing trend in using the buzz of nanotechnology as a marketing ploy to give an otherwise unremarkable product a LightWave-like infusion of promotional energy.

(TheStreet.com is taking a look at nanotechnology this week, including the myths surrounding it and how Wall Street is attempting to get a handle on it.)

The trend, unfortunately, hasn't spared the stock market. "A lot of the people who shout the loudest about nanotechnology and who are really trying to boost it have very little understanding of the science," says Tim Harper, president of Cientifica, a research firm specializing in nanotechnology. "It's always worth asking them if they know the difference between a macrophage and a macromolecule, and in most cases, they don't."

(A macrophage, if you're wondering, is a big cell that devours dead cells and foreign material as part of the immune system. A macromolecule is a very big molecule.)

Very often, it's hard to see where the nanotech marketing by companies ends and the willing suspension of disbelief among investors begins. Simply putting the magic letters n-a-n-o in a company name or business plan is enough to invite a surge in stock trading and price volatility.

Take Nanogen. The company makes molecular diagnostic products using microelectronics, a promising field but one that observers say doesn't quite fit under most definitions of nanotechnology. Yet in December 2003, the stock doubled on surging volume when President Bush signed the Nanotechnology R&D Act.