Tech's Sneaky Market Dividend

Readers regularly ask what can go wrong but almost never what could positively surprise. The elephant in our world’s living room is, simply, technology. Not only is Moore’s Law, the North Star of semiconductors, vibrant and likely intact for fully another decade, but silently other technologies are bulging, too.

Moore’s Law–which, as you know, posits that integrated circuit density doubles roughly every two years while costs halve–is the single most powerful positive economic force of our adult lifetimes, akin to the steam engine’s 19th-century impact. Little-known Koomey’s Law moves even faster now, predicting that the battery needed for a fixed level of computing will shrink greatly every decade–a process incomprehensible to most, yet central to improving our gadgets.

Next: the Shannon-Hartley theorem, moving almost as fast, divining maximum data transmission speed over a communications channel, defining telecom’s maximum capability via fiber optics. Slightly slower is Kryder’s Law of magnetic memory–behind most of cloud computing and more. Finally, faster-paced than any of them: DNA sequencing, allowing an unfathomable future in customized medications.

All five concepts are colliding into one another in ways hard to imagine. While I like tech stocks, the big beneficiaries will be the rest of us–and firms that derive increased productivity or conception of innovative products and services.

Investors covet past improvements but also always believe pricing unimaginable future creativity and efficiency gains is Pollyannaish. And they’re always wrong. Bet on it. Productivity will rise as this bull market endures.