| Dear Reader, Hello again from the 2018 Strategic Investment Conference in San Diego. A thrilling first day of presentations and panels has just concluded. Patrick Cox, editor of Mauldin’s Transformational Technology Alert, and Karen Harris, managing director of Bain & Co’s Macro Trends Group, opened the show after lunch. Cox said he sees a perfect storm brewing. The impact current anti-aging and life-extension research will have on society is almost something out of science fiction—but it’s actually happening. And it’s coming a lot sooner than most people think. Although Millennials are about to outnumber Baby Boomers, the old-age dependency ratio—the number of retirees being supported by young workers—is rising. The young are paying the bills of the old. Will they rebel against this intergenerational problem? Healthcare is driving growing budget deficits and medical costs. Regenerative medicine is the only answer, Cox said. He believes that this imperative will drive radical regulatory change and get these drugs and therapies to market far faster. Biotech Panel Eric Verdin, president and CEO of The Buck Institute for Research on Aging, showed how genes control lifespan. Research from the Buck Institute points to the impact of gene mutation on longevity. In his argument, he drew on lab results that produced a 35% life extension in mice. Michael West, CEO of BioTime, talked about how the lion’s share of healthcare costs is spent fighting chronic diseases. In a lab setting, scientists have been able to reverse the aging process in cells. This cell process, said West, is now firmly under human control. Aubrey de Grey, chief science officer of the SENS Research Foundation, parsed the critical differences between gerontology and geriatrics—things that happen throughout life versus those that happen at the end of life. Understanding the differences are crucial to how we approach the diseases of aging. Niall Ferguson Ferguson used the metaphor of an ancient city, and the difference between squares, where people meet, and towers, where the power resides. For tech optimists, things did not go quite as they planned. An increasingly connected world should have led to an awesome world, but it didn’t work out that way. The power was not shifted to the “squares.” The obvious question is, why should connecting the entire world make it a better place? Connectedness has instead disrupted political hierarchies. Without tools like Twitter, campaigns like Donald Trump’s would not have won. Social media made the difference. Connectedness has created huge, monopolistic networks, Ferguson said, “and it will take a network to defeat a network.” In the network battlefield, the winner takes all. The financial crisis was a global network crisis. In a hyper-connected world, is the status quo sustainable? David McWilliams Upheaval and change is not new; it happens all the time. McWilliams, economist and best-selling author, related this to the words of William Butler Yeats, who wrote that the center falls apart while the best people are silent, and the worst of society takes over. None of the people paid to predict the future were right, said McWilliams. At the tipping points, when things are fragile, it is the unconventional thinker that sees the world clearly and holistically. We need unconventional thinkers today—but do we reward or punish them? McWilliams drew a connection to the types of brains rewarded in academia. It is the linear thinkers that are encouraged, he stated. The result is that millions of people leave school feeling clever. They go into banking, the military, or become economists... and we employ them. Then we end up with group-think at the top of organizations. The most conventional thinkers being economists is very dangerous at a time like today, he said. Panel with Niall Ferguson, David McWilliams, and Our Own John Mauldin When asked about volatility, Ferguson said he thinks the Fed is coming off of its role in volatility suppression. McWilliams talked about the old link between monetary policy and inflation being broken. He sees the interplay of human behavior and economics as being out of sync. Ferguson noted that people invested in financial models but had unexpected results. One example is QE, when the anticipated inflation did not happen. The conversation moved to the populist backlash seen in the US and Europe, and Ferguson warned that it is not temporary—it will continue, but in unknown directions. Will it produce even more radical outcomes? Will it end like the final days of the Roman Empire? It is extraordinarily hard to predict political outcomes. It introduces uncertainty into the process of solving problems—and looking to the historical models for help will not work. The question of decentralization as it applies to blockchain tech was raised. This question leads us to another: Will we look back on this period and think how wrong we got the blockchain story? That’s all for day 1 at the SIC 2018. If you enjoyed my summary of today’s events and want to access all the presentations and panels in their entirety, you can do so with the Virtual Pass. With your Pass, you will get the video recordings and transcripts of every session, plus the slides used by the speakers. Better yet, if you secure your Virtual Pass now, you can watch the remaining two days of sessions live on your computer or mobile device. Have a great evening—I’ll send you another update tomorrow morning. Sincerely, Ed D'Agostino
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