Think Big, Invest Little

Nanotechnology companies are comparable to biotechnology companies; unpredictable, risky, and able to spend billions of dollars with no end result. Don’t get me wrong, these sciences do create breakthroughs that are priceless to advancement in all areas of life, but the odds are usually against them.

You can double your money on a flip of a coin, but the odds are 50%. You can earn 50 times your money on a nanotech, but the odds are 1/20. Why not own all of the nanotechs, and forget about which one makes you the money? That’s exactly what the ETF PowerShares Lux Nanotech (PXN) does. By owning a basket of nanotechs, you can allow more than half of them to flop, and as long as just one makes a breakthrough, odds are you’ll profit with less risk. (Keep in mind the odds from the example were arbitrary)

Here is the list of PowerShares Lux Nanotech’s Top 10 holdings

Although I like PXN and I continue to watch nanotech companies with interest, I refuse to suggest buying either. When investing you can’t lose sight of the bigger picture, and I am adamant that we are too high on the DJIA. Unfortunately, nanotech companies will trade in sympathy with the market.

There are plenty of bulls right now who disagree that the market will take a hit; if you’re in that camp, go straight ahead and buy PXN. As for me, I’ll stick with my gut and wait until the “all clear”.

With the end of this months trading one day away, I am in the bear camp, believing that the strength in the past few days was mostly due to window dressing. Keep in mind skepticism is almost never a bad thing.

Here are some random articles on nanotech companies that I found of interest. Fool1 Fool2 Yahoo Forbes