What are "black box" technologies and why invest in them?

"Black box" technologies are innovations being developed behind the scenes that aren't yet widely known or commercialized but have potential to dramatically transform industries. Think of quantum computing or advanced gene editing, which are still largely in research phases but could completely reshape how we solve problems or treat diseases. Investing in these technologies early offers the potential for significant returns when they "emerge from the shadows" and begin widespread adoption, though this approach carries higher risk due to the speculative nature of these technologies.

What is quantum computing and why is it included in this portfolio?

Quantum computing uses the principles of quantum mechanics to process information in ways traditional computers cannot. While regular computers use bits (0s and 1s), quantum computers use quantum bits or "qubits" that can exist in multiple states simultaneously. This potentially allows them to solve certain complex problems in minutes that would take traditional supercomputers thousands of years. Companies like QUBT, QBTS, and ARQQ in this portfolio are developing this technology and its applications in areas like encryption. They represent "black box" investments because the technology is still developing but could emerge suddenly with market-disrupting capabilities once certain technical barriers are overcome.

What is CRISPR gene-editing technology?

CRISPR (Clustered Regularly Interspaced Short Palindromic Repeats) is a revolutionary gene-editing technology that allows scientists to make precise changes to specific DNA segments. Think of it as a genetic "cut and paste" tool that can potentially correct genetic mutations that cause diseases. Companies in this portfolio like EDIT, CRSP, NTLA, and BEAM are developing therapies using this technology to potentially cure previously untreatable genetic conditions. It's considered a "black box" technology because much of the development happens in research labs before clinical trials, but when treatments receive approval, they could transform medicine and create tremendous value almost overnight.

What makes these investments higher risk than traditional stocks?

These "black box" technology investments carry higher risk for several reasons. First, many are pre-revenue or early-stage companies focused on R&D rather than current profits. Second, there's significant technological uncertainty – breakthroughs might take longer than expected or face unforeseen obstacles. Third, even successful technologies may struggle with commercialization or face regulatory hurdles. Finally, many of these companies are smaller and more volatile than established firms. However, this higher risk comes with potential for outsized returns if these technologies successfully emerge and transform their markets as expected.

What does "Market Cap" tell me about these companies?

Market capitalization (Market Cap) represents the total value of a company's outstanding shares, calculated by multiplying the share price by the number of shares. For the companies in this portfolio, market cap helps you understand their relative size. Many cutting-edge technology developers are smaller companies with lower market caps, indicating they're still in growth phases but potentially offering more room for expansion. Larger companies like NVDA have bigger market caps, suggesting more established operations but possibly less explosive growth potential. Market cap is an important consideration when balancing the risk profile of these speculative technology investments.

16 handpicked stocks

Solar Eclipse Black Box

This carefully selected group of stocks represents breakthrough technologies developing in the shadows before their dramatic market emergence. Our professional analysts have identified companies pioneering quantum computing, gene editing, and other innovations with potential for explosive growth once they step into the spotlight.

Han Tan | Market Analyst

Updated 2 days ago | Published at juin 17