But separating the fakes from the real thing isn't easy. "Right now, picking nanotech stocks is pulling needles from the haystack with very few needles and a pretty big haystack," says Matthew Nordan, vice president of research at Lux Research, which has its own index of large-cap and small-cap nanotech stocks (LUXNI).
Even defining nanotechnology is a good way to spur a debate among people familiar with it. One of the more commonly accepted definitions is from the National Nanotechnology Initiative, which considers nanotech the ability to control or manipulate objects on the atomic scale, with novel properties and functions because of their size.
But that raises confusion over the standard explanations of the nanoscale. Nanotechnology involves things larger than a nanometer but smaller than 100 namometers. To put that in context, people always reach for the statistic that a human hair is 80,000 times wider than 100 nanometers (or 50,000, or more than a million, depending on who's talking). But some human hairs are ten times wider than others.
So, how can the layperson understand the scale that this science involves? One way is to consider that ten hydrogen molecules fit into a nanometer. A better way is to consider that it would take 100 objects 100-nanometers wide to be seen by people with good eyesight. Another is to take a ride down an order of magnitude scale. Looking at the differences in scales, you can imagine that if you were a nanometer tall, the average person would be roughly as large as the orbit of the moon is to us.
At the lower end of the nanoscale, quantum properties take over, following laws that differ from bulk properties in some startling and unpredictable ways. Gold doesn't appear gold anymore, it looks red. The ratio between an object's surface area and volume rises. Very weak energy forces that are insignificant on the macroscale we live in start to play a significant role. The new laws are good news -- by opening the door to new possibilities -- and bad. Chipmakers are creating 90-nanometer chips, but once they get below 50 nanometers, they may need to rethink the way they make chips, investing in costly new processes that are not yet proven to work.