Andrew Allentuck

Saturday, April 19, 2003

Quantum Investing
by Stephen R.Waite
266 pages
ISBN 1-58799-140-3

Stephen R. Waite comes highly recommended. Chief Knowledge Officer of Trilogy Investments in New York, he has a high prestige business card and, no doubt, the annual bonus to go with it. The flyleaf of the cover says he is a participant at the Santa Fe Institute, a schmoozefest where the best brains in many fields converge to stimulate one another.

In that vein, Mr. Waite tells us that the development of quantum physics over the past century has fundamentally transformed the business and financial market landscape by creating products, such as the transistor, laser, microprocessor, and MRI, with pervasive and widespread consumer value.

In fact, this is wrong, sort of. Many of these developments came out of physical chemistry and electrical engineering. Quantum physics may help explain how hydrogen atoms dance in MRI scans, but the technology works fine without commentary from the weird world of quantum physics.

Mr. Waite rambles on with a quote from Neils Bohr, a physicist, who is supposed to have said that "anyone who is not shocked by quantum-based technology doesn't understand it." This is probably true. But so what? Mr. Waite developed a reputation for being a seer via his book, Boomernomics. The name spread, but the idea didn't work. Boomernomics investments are future-looking things in high tech and, not surprisingly, portfolios stuffed with tech stocks have not done well, to put it mildly. Canadian mutual funds with the Boomernomics in their titles have done worse than the market as a whole.

What then are we to make of a book supposedly on investments that ruminates on the meaning of being on the cutting edge of physics with predictions on how important nanotechnology and theories of complexity are supposed to be? One can read this stuff for general interest - and it is fascinating - but as an investment concept, it is either in the land of the failed theory or far ahead of its time. Either way, Quantum Investing offers a high risk investment model. The investor who wants to make money, which is the idea, should stick to more mundane concepts like value or growth at a reasonable price. A risk taker, on the other hand, can just take a bankroll to Vegas. At the moment, the odds at craps are better than in investing in the little known.