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Any Strategy Can Work
Steve Forbes: Marc, thank you for joining us. Before we get to your specialty area of low-priced stocks, which you have very real definitions of — not all are the same — you make a very intriguing point.
You say that whatever category you use, whether it’s growth, value, quality, sentiment, momentum, if you stick to it and learn how to execute it, it can be successful. There is no one answer. Can you explain that?Marc Gerstein: Sure. Just consider the environment of the market today. We know Warren Buffett. We know what he’s all about– the ultimate value investor. Take the long-term view. We know he does very well. Go 180 degrees opposite; Jim Cramer, who seems like it’s what’s happening now — now being one mine at a time. He does very well.
How can you explain where two completely opposite and legendary investors do well in the same market at the same time? The answer is there is no one right style. Anything works if executed effectively. Trying to lock in on one style — “This is my formula. It’s the right way. It’s the only way” — it’s a distraction. It doesn’t help.
Forbes: I remember once interviewing Roy Neuberger, who just loved to trade. If he hadn’t made 100 trades by 10 minutes into the market, the guy would get fidgety. And then another money manager I remember at the time rarely traded. Both had great results.
Gerstein: Another case in point.
Forbes: Now investors today, you also make the point, have tools that even the most sophisticated investors wouldn’t have had 30 or 40 or 20 years ago.
Gerstein: Right.
Screening Stocks
Forbes: So tell us about Stock Screen 123.
Gerstein: Stock Screen 123 is actually a platform for individual investors that’s put out by a company called Portfolio 123. Both of these products are stock screeners. And a screener is where you set certain rules — PE less than some number or maybe PE lowest third in the universe or the industry, growth rate is such and such, better than such and such, debt — you set a particular test.
Forbes: Sales to market ratio?
Gerstein: Price to sales. Anything. You can also do technical analysis. We combine fundamentals and technicals. You can do them in the same screen. Each of these items is a yes/no, pass/fail rule. If a company fails any one of these items, it’s out. So you can very quickly narrow a universe down from 8,000 stocks to maybe 50, 60, a hundred or even 10, very quickly.
Then what you can do is go to the next step. How do you choose among them? Say you have 150 passing stocks. We have ranking systems also, similar to the old value line ranking system. We have different factors. The companies are ranked under each factor. They’re weighted. You sort them and go from the top to bottom. If you want a portfolio of 10 stocks you simply take the top 10.
And what’s very interesting about this tool — especially Stock Screen 123, which is priced for individual investors — is we have back testing. And that’s something that, until basically Stock Screen 123, was not available to individuals at all, at a reasonable price. It’s something that even institutions — many of them didn’t always take it because it’s expensive. Now it’s not. So you actually test your models and you can see how they really work. If it doesn’t work, you fix it and try again.
Common Mistakes
Forbes: What, then, are the most common mistakes investors make? Is it not sticking to their metrics or getting buffeted about, so to speak?
Gerstein: We basically know what makes for a good stock. It’s not rocket science. And I’m guessing that almost everybody who comes through here will pretty much agree on the general principles. The problem is we get distracted.
You could almost make the analogy of a big, big block of marble; somewhere in there might be Michelangelo’s David. How you get to it, is you take things away. Same thing with the idea of what’s a good stock. We have this whole blob of ideas and we have to start taking things away and get down to what we know. Some of the crazy ideas we have is that the best stocks are the ones you hear about all the time in the media. Not true. Those are the ones that just are interesting to talk about. They’re not necessarily interesting to invest in at the moment.
Another idea — and this is so incredibly well accepted now — is that it’s a good thing for a company to beat earnings guidance. I think many people would be shocked to realize that beating earnings guidance has absolutely no relevance whatever to investment merit. But that would be a shock to people, because nowadays not only is it so widely talked about, there are organizations that build quant models to actually analyze the positive earnings surprise. And in some cases even predict positive earning surprise.
And there are people who will ask management, “So are you going to surprise us?” And I’d hesitate to see what might be going on at the SEC as the CEO is answering this question. We don’t do that. We tell you what we think. So there are many ideas — like, again, the idea that there’s just one right way. That’s a distraction.
There’s also a distraction — that stock analysis is the most important thing. And that could be a bit of a surprise. If you spend all of your time analyzing stocks that are basically dogs, you’re going to wind up with a dog. It may be the best dog in the kennel, but it’s still going to be a dog.
I think more important than that is the need to identify which stocks are worth looking at in the first place. That’s why we go through the rigmarole with Stock Screen 123. We find them. We cull the universe. We rank them. We want to have you focusing only on stocks that are really worth your time and effort.
Forbes: So on Stock Screen 123, you in effect offer up various models that people can use?
Gerstein: Right. We have some to help get them started. There’re some models we’ve created that I think the –
Forbes: But the user can create their own models?
Gerstein: Well, they can take our model, they can save it into their own account and they can edit it. They can try to outdo what I’ve done — and welcome to it. We give them also certain samples of models; here’s a sample growth model, here’s a value model, here’s one based on company quality. They can combine them, mix and match as they wish. And then some just like the models as they are — will take the list and work with that. User choice.
Doubts About Apple
Forbes: Now you also seem to be making the point it’s not wise to just focus on one metric. And you cite the case of Apple. On a P/E basis, boy, that’s ultra cheap.
Gerstein: Absolutely.
Forbes: To take out this cash there and, gosh, give ‘em that growth. Who wouldn’t wanna buy it? But you have your doubts?
Gerstein: I have my doubts. And the reason is because the price-to-sales ratio is very high for a hardware company and also for a specialty retail company. And I mention specialty retail because with iTunes you have to consider that as part of Apple. But either way you go, that’s a very, very high price-to-sales ratio.
And what that’s telling us is yes, the street, everybody knows that P/E is low nowadays. This is not the 1940s. Everybody knows the P/Es; you’re not mailing away for the little S&P stock guide and hope you get it in a week and then you can look up the P/E. You can find it in like five seconds on your smart phone.
So as everybody knows it’s a low P/E, why are they not bidding it up higher? I think that’s because the price-to-sales ratio is as high as anybody is comfortable going and they don’t want to let that get any higher. And I think when you put this together, people may be thinking that Apple’s margins right now are not sustainable. That the amount of earnings they can generate –
Forbes: You mean there’s competition?
Gerstein: Bingo. It’s economics 101.
Forbes: Whoa.
Gerstein: But you go on a lot of bulletin boards and you mention that, and you are going to get flamed into the daylights. Of course you just can’t say that about Apple. But yes, competition. Not only with other competitors but even with themselves. How many people out there, for example, can afford an iPad at these prices? Joe average can’t.
And how many electronic gizmos can we think of, since the black and white television, that have held onto their day one price levels? Way down. Remember when household calculators were several hundred dollars? Now they’re sold cheap where if you break one it’s, “Okay, who cares. Get another one.”
Forbes: So the real question then with Apple is, can they keep coming up with the new high margin stuff, even as the old starts to get knocked down?
Gerstein: And that’s a bigger question than people realize because the last three items are really basically the same thing. You have the iPhone. Then you have the iPod Touch which is an iPhone without the phone. Then you have the iPad which is an iPod Touch that’s a lot bigger. They’re really working on the same basic thing now for quite a number of years. And at some point they may need to cut this.
Forbes: Only Henry Ford with the Model T had done that.
Gerstein: Right. But Henry Ford actually, his stock in those days — I don’t have the numbers in front of me, but I wouldn’t be surprised if people talked about it the same way they talked about Apple today. Could be.
Disrespecting Mr. Market
Forbes: So the market, you make another interesting point, is when there’s a stock price don’t automatically think, “Boy, the market is stupid,” or, “The market is overvalued.” The market usually has good, sound reasons for pricing equity the way it is. And you better have a better one to go against it.
Gerstein: Okay. I’m going to brace myself now because I’m going to say something contrary not only to Warren Buffett but one step better, Ben Graham, because he’s the one who created this Mr. Market analogy.
Forbes: I’m looking for the electricity and the thunderbolts coming.
Gerstein: I’m beginning to see it here. Okay, so let’s see if we can do this and get away with this. Ben Graham coined the Mr. Market, I guess I’ll call it a myth or an icon. Mr. Market is this mythical being who is manic depressive. One day he’s so gleeful and joyful and excited he will offer you crazy high prices for any stock that you want to sell.
The next day he’s just hopelessly depressed and you wonder why he’s not just hauled off or at least pumped full of Prozac. And the best he can do is exceptionally low prices and he vacillates this way and that way and this way and that way. And you almost never get a truly rational price.
I think Peter Lynch carried that myth forward, Mr. Market. Warren Buffett has really carried it forward. And other modern day Buffettologists cite it all the time. To the point where I think if you write the phrase Mr. Market on a website or in a magazine or say it on TV, everybody knows what you’re talking about.
Forbes: Has anyone tried Ms. Market yet?
Gerstein: Yeah, but here’s where we’re going to get the lightning flash. I think Mr. Market today, like most people, can see that the information is out there — can see that they’re so easy to learn about stocks — and is a lot more intelligent than he used to be. He’s not always right, but I think he’s right often enough that you have to give him the presumption of innocence.
In other words, when somebody tells me the stock moved this way, the market’s crazy, they’re nuts, they don’t know what they’re doing, I usually say, “Maybe you’re right, but you’d better know what Mr. Market is thinking before you disagree. And give it some serious thought.”
Forbes: Now is that an argument for indexing? I mean –
Gerstein: No, not necessarily. I’ll come to indexing in a second. But Mr. Market, A) he can be wrong. It happens. And it most often happens with earnings guidance, when that issue comes up. If a company misses guidance or something goes wrong, life happens, things come along more slowly, a stock get slammed. Yeah, okay, this is where Mr. Market – he may not be wrong but maybe he has a shorter time horizon than some people do.
Indexing is interesting. I don’t think there’s any such thing as passive investing anymore, because if you’re going to index, even if you pick S&P 500, a spider, you still have to defend the choice of well, “Why the spider as opposed to any one of these other 800 indexes?” Some of them narrow and some of them broad like a Russell 2,000 or even the Russell 1,000. So indexing is very much an active form of investing today, whether we like to acknowledge it or not.
Forbes: Even the Wilshire? What is that? 5,000.
Gerstein: Wilshire 5,000. There are big arguments. Maybe it should be an MSCI global index. I mean you can’t just say S&P 500 and leave it at that. That’s a U.S. large cap index. And the selection algorithm is we don’t know what it is. It’s basically a managed portfolio by Standard and Poor.
Discounted Cash Fluff
Forbes: Now in terms of what people think of as fundamental analysis, discounted cash flow. You call it discounted cash fluff. Why?
Gerstein: Why? Okay, this is where I’m glad I’m out of business school, because I would have failed that course. A stock doesn’t have a maturity date like a bond. And that creates a big, big problem for this type of a model. The idea of discounted cash flow is we want to estimate all the cash flows that the shareholder is going to get as a result of owning the stock, and that’s going to be dividends and/or capital appreciation when we sell the stock of the future.
Alright. We’ll sell the stock five years from now. How do we price the stock then? Well, the person there has got to have a look out to infinity. There is no date. What all this comes down to is we have to estimate cash flow stream out to infinity. How do we do that? How reliable is that?
We see from the earnings surprise game that analysts have trouble estimating cash flows three months out. How do we do infinity? You can’t do it. Now I’ve said often a reasonable approximation is better than false precision. We could say, “Okay, you just make a guesstimate of what the cash flow is and plug something in.” Very often that’ll work. Not in these models. If you build a good, discounted cash flow model, make a small change in those assumptions, especially what they call the terminal value, the infinity assumption, your answer is going to go up and down like crazy.
Forbes: Talk about manic.
Gerstein: And I don’t want to invest in something that has an answer that gyrates so wildly based on an assumption going out to infinity. I’m not going to do that.
Long Term Is Negligence
Forbes: This also then leads to your other piece of heresy which is long-term investing. Bad. Bah humbug.
Gerstein: Well, not bah humbug.
Forbes: What do you mean?
Gerstein: I mean I was originally a lawyer and I actually like it, because long-term investing equals negligence, which usually means legal fees.
Forbes: Oh my goodness. You are a bad guy.
Gerstein: It is. The long-term investing — to have something for a 10 year horizon is negligence, because every piece of financial information that induced you to buy the stock is obsolete three months from now at the latest. You have to review it every time new information comes out.
If you happen to hold a stock for 10 years, it means that maybe you reviewed it 40 times — four times a year for every financial — and it was a consistent company. You just happened to come up with the same answer every time. But that’s not a long-term holding. That’s a three month holding where you just repeated it 40 times. So it’s buy and review, not buy and hold.
Forbes: So how does Buffett succeed? He’ll tell you he doesn’t even like quarterly earnings.
Gerstein: I think a lot of things that Buffett says, he says for effect.
Forbes: Like you?
Gerstein: Yeah. If you really look at what he does, as opposed to what he says, you’ll see some interesting juxtapositions, including his having invested in financial weapons of mass destruction — i.e. derivatives — according to the Berkshire Hathaway annual report that year because he thought he had a good price. How else can you explain his investments in silver? Silver doesn’t have an economic moat. It doesn’t have a sustainable competitive advantage. It’s a metal. He invests in it.
Technicians Are Reviewers
Forbes: Now apropos of your point that any kind of a discipline works if you apply it consistently and it has some merit, you say you don’t diss technicians .
Gerstein: Not at all.
Forbes: When I was growing up, alchemy was sort of a byword for technicians.
Gerstein: Actually, I’ve heard this legend. Arnold Bernard, the founder of Value Line for whom I worked, in his younger days there was a question as to why he was fired from Moody’s. Was it just the stock market crash, ’29 to ’32? There was also some rumor that it had to do with his spreading out charts on his desk and doing technical analysis, which they didn’t like very much.
And people don’t realize that Arnold Bernard, Value Line, was a heck of a technical analyst. Technical analysis is like a movie review. It tells you what people out there think about your stock. I mean after all this price action we’re seeing like this, well, this is telling me that people like it.
Forbes: So Yahoo! reviews the list of the people’s ratings — that’s technicals.
Gerstein: Yeah. Sometimes you can agree or disagree. I saw Hangover II this weekend. The critics gave it like a C plus; I loved it. You don’t have to agree with the reviews. But at least it helps to know what people are thinking. And in the stock market, that’s very important because nobody is smart enough to know everything.
If I see something like that and then that, alright. If I don’t know why that happens before I buy, I need to go do some more homework and figure out why that happens. The stock is persistently overbought; I need to figure out why. So it guides me.
Forbes: So is long-term investing simply a way of saying, “I didn’t make a mistake?”
Gerstein: People use it that way. A lot of times you’ll see somebody where the stock price collapses and the person who recommended it goes, “Yay, hooray! Now you can buy it at a lower price.” Which, frankly, I think is very, very offensive for people who bought it at the higher price.
No, you don’t ever want to see that. If you get a chance to buy it at a lower price, it’s a consolation prize. It’s better than just suffering, but it’s not desirable. The long-term should never be used as a substitute for, “I made a mistake,” because there’s that quip, “How long can a market be wrong? A lot longer than you can be solvent.”
Forbes: So what did you learn at Value Line?
Gerstein: A lot of fundamental analysis. A lot of what I use in the newsletter, Low-Priced Stock Report, I’m basically doing what I did at Value Line. You really learn to just sit down, look at a company and get the story. Free yourself from all the distractions and what’s going on because, again, Value Line was neutral.
The only one we were beholden to were the people who paid for subscriptions. No investment banking. Nothing like that. And you really get a chance to look objectively at a company. Objectivity was big. And to not be afraid to say no to a popular stock, like my attitude toward Apple. You learn that in Value Line. I don’t know what Value Line’s saying at Apple at the moment. I haven’t seen them in years. But you do learn to say no.
The other thing I learned at Value Line was to combine fundamental analysis, judgmental, with number work. Their famous timeliness ranking system. It was an earnings growth momentum model, primarily driven by momentum. And learning how to reconcile that with the subjective story — it was a great place to learn how to be an analyst.
Low Price Stocks
Forbes: Now low-priced stocks. They’re not all created equal. People say if you focus on $1 to $3 stocks, why not one to three cents? Boy, you can get real big percentage gains. But you make the distinction.
Gerstein: You really can make big percentage gains on paper, but there’s a difference between a price that’s computed by a database to plug in a number because they need a number for a stock that hasn’t traded in six months, versus something you can really get in the market.
Forbes: So you stay away from pink sheets?
Gerstein: I stay away from the pink sheets. I won’t rule it out forever because there are some stocks where you start out. they’re in the NASDAQ — and the NASDAQ sometimes get a little ornery with their rules — and the stock goes below a dollar for a certain time. They’re threatening to kick it out of the NASDAQ. I have not had it happen yet, but you always have to hold out the possibility.
But that’s not the kind of pink sheet thing I fear. The type I fear is where there just is no regular market. And even if you see somebody who I bought the stock at one cent, I sold it at three, well, maybe that person did. But if you try to do the same thing and a second sell order came in when it was three, that second sell order, even from a retail investor buying $1,000 worth, could be enough to put it back under one.
Forbes: So what are your criteria for — how do you define, first, low price stock? I sort of gave it away. One to three. But you have other criteria.
Gerstein: I’d say below three. I mean, the New York Stock Exchange and the AMEX are not as wired into the dollar number as NASDAQ is, so AMEX stocks will be below a dollar. But they’re pretty liquid. I start out, the first thing I do is look for legitimacy. I want business legitimacy. And that’s not something I can do quantitatively.
I just have to look at the company and see: Does this look like it’s a real business? Is this an honest business? Does this have numbers that make sense that I can actually evaluate? In other words, I don’t want a company that sold the subsidiary that produced 95% of its revenue and that this happened three weeks ago. I’m not going to look at that company. I’ll just knock it out.
I want trading legitimacy. The way I find that is usually NASDAQ. And also I do my own trading through a brokerage firm called Folio Investing where I can trade a basket of stocks very cost effectively. And I look for stocks that that firm can trade, which is sort of — I’m letting their compliance department do a lot of legwork for me on what’s tradable.
Once I get that trading legitimacy, then I want some preliminary indications of business competence. Under a growth rating system that I created, a ranking system, I want it to be at least 50. I want to see the moving average trends be at least reasonable, relative to the industry peers or the market as a whole.
And I want something, either break-even performance or decent corporate quality. Meaning margins, returns, balance sheet, that sort of thing, or cash flow. I give a lot of choices here. And I’m not that picky. The reason being, conservatism sounds nice, but taken to an extreme it can become troublesome.
And a good example would be, imagine this little fairy tale. There’s a young mother in northeast Ohio who takes her son to a high school basketball coach for a tryout. But she wants to show that this kid can perform under adversity, so she makes him wear five pound wrist weights on each wrist. Naturally the kid’s performance is horrible. He can’t hit a shot to save his life. And the coach says, “I’m sorry, Mrs. James. Your son LeBron just has no talent at basketball.”
That’s what happens if you get too conservative. You want to be conservative in a sensible way. So this sensible conservatism characterizes my screen. Once I get that screen – and it can often be maybe 50 to 150 stocks that will pass it — I put them all through a ranking system I created, which I call it our QVGM model. Quality, value, growth and momentum.
We use all styles. I don’t want to pre-judge how a stock can show its merit. Some stocks may be a great value and average at everything else. Another one may be a terrific growth company and average at everything else. Another one may be a bit above average at everything.
I’m going to give these stocks a chance to demonstrate merit and how they do. I’ll sort them. The top 40 is the top 40 list that’s on page eight of every newsletter. The top 15 is the model portfolio. And that’s one that I personally buy every month. I just trade in that as a group.
Forbes: So your own mini ETF?
Gerstein: Exactly.
Fewer Eyes On MicroCaps
Forbes: Now low price stocks — we’ve sort of touched on this. You feel, one, they have more opportunity because they don’t have as many brains looking at it.
Gerstein: That’s certainly one thing. You don’t have — obviously there are a lot fewer people looking at Entertainment Gaming Asia than there are looking at Apple. So I have a better chance of finding something interesting there. There’s nothing I’m going to learn about Apple.
Forbes: Well, you make the point that people know more about these neglected stocks than they did about the big ones 30 or 40 years ago.
Gerstein: Which is true. It’s all relative. If you want to try to get the opportunities, you have to go where the crowd isn’t. And, again, the crow is larger than it used to be. But there’s still less of a crowd down in the low price end than there is up there. Very much.
Forbes: So what are the things you think are the problems? And when you say high return, high risk, people think, “High return! Yes, this is it.” But you point out a lot of these companies just have one pony out there.
Gerstein: Right. High risk, statistically we call that high volatility. But it’s not just a statistical phenomenon. It’s not something that happens. It’s there for a reason. When you’re a very, very small company, fixed costs are a much bigger part of your operating picture than a large company. And it’s going to be a lot harder for a small company to grow beyond these fixed costs and show a profit. So a lot of these companies are in the red.
Now one thing Mr. Market does very, very well is he recognizes that diminishing losses can be every bit as positive as growing profit. And a lot of people don’t realize this. They’ll see red ink and they’ll go, “Oh my god. It’s like internet stocks 1999. I can’t do that.”
Well, no. You can if it’s a real business and there are real sales. You can see the progress. And you can see a scenario where, over time, the company outgrows its fixed costs. And then something we’ve had in the newsletter periodically — most recently with a company called PHC, an operator of mental health hospitals — they just get acquired. Because a big company sees, yeah, they’re growing out of the fixed costs. Maybe I can grab that and I don’t have to grow myself.
Sirius And LinkedIn
Forbes: One final question. Talking about manic. Mr. Market still can get manic. We see it in LinkedIn. So how does an investor recognize that occasionally the market does go a little crazy?
Gerstein: LinkedIn is not that much of a challenge. When an IPO goes out for something like $45 and immediately goes over $100 you know something is happening. But LinkedIn — I cannot rule out the possibility that I may have LinkedIn in the model portfolio five to 10 years down the road.
I have a lot of these situations where something comes out and there’s a lot of hype. The stock gets ridiculous. But meanwhile, as the years pass, the market gets completely fed up. The stock goes from there all the way down there and suddenly it’s under $3.
And while all this is going on and while the market is complaining and there’s selling and this happening, the business model is starting to fall into place and the company’s starting to get commercially successful. And next thing you know we’ve got an opportunity. I’ve had Sirius Satellite Radio.
Forbes: Tell us about Sirius? Howard Stern –
Gerstein: made it famous. A lot of people lost a ton of money on Sirius Satellite Radio. An insane amount. But by being under $3 we didn’t even look at it. We couldn’t consider it back in those days. We got into it, I think, in the high ones. And while all the time has passed and the market, everybody got fed up with it. They left it. Well, meanwhile Sirius, they got control of their balance sheet. They got control of the costs. It helped that the government didn’t oppose the merger between Sirius and XM, which I think was the right decision, as Pandora proves. Yes, there was still competition.
And what’s happening now is Sirius is converting from being a survival story to a growth story. And in the first quarterly report since I recommended it we see that auto production, a big increase, had a big jump in Sirius subscribers. And, again, this is something that’s important. Sirius has never really had a chance to work with a rising market in auto production, as a clear survivor. Last time auto production was decent, Sirius was too busy worrying about staying in business. That’s not the case.
Now the big risk, obviously, for sentiment, what happens when Howard Stern’s contract is up? Someday he’ll leave Sirius. He’s mortal. We all leave our employment someday. A big chunk of revenue would go but then so too would a big chunk of cost. And actually I’ve listened to Sirius myself and I’m surprised at how good the music stations are. There’s a lot there beyond Howard Stern at this point.
Small Names Marc Likes
Forbes: Give us a couple of other quick names?
Gerstein: All right. A couple of other quick names. Casual Male Retail Group I like. Men’s retail is automatically an eclectic group. You go into any mall, it is all women’s clothing and maybe somewhere in the corner there’ll be some little closet that sells something for men. Not only is Casual Male male-oriented, it’s for big and tall men, as in large men. As in, I’m a customer. It’s a segment the fashion industry doesn’t like to focus on, but look at the demographics. This is a big group. Not just in terms of size but in terms of the numbers of population. And to serve it well is a good opportunity.
And another one — this is a classic low price stock opportunity — is a company called Charles & Colvard. They are the producers of the gem called moissanite. I believe that’s the pronunciation. There’s plenty of numerical proof that they’ll put on their website — it has a lot of gemological characteristics similar to diamonds. The cost is closer to cubic zirconium, the junk. If they can succeed in carving out a new category of affordable luxury, this could go someplace. This is a company that went all the way down during the bad years. They got hammered in 2008 and beyond when the recession came, because nobody wanted luxury of any kind, affordable or otherwise.
Now they’re starting to turn the corner and pick up a little bit. Getting a former Zale executive on their board of directors helps. It gives some credibility. You think this person’s someone who would know the gem industry. So that’s a company I like.
Here’s another example of a hot name where the hype goes away and eventually the commercial reality starts to build — nanotechnology as a field. It was all the rage a few years ago. And nanotechnology, by the way, is particles — really, really small. I think 100,000 nanoparticles is less than a human hair. Something like that? But that sounds exotic. But the products that nanophase technology is making with this are products that are used additives for things that coat surfaces.
Forbes: So you don’t scratch it.
Gerstein: So you don’t scratch it. That’s a very mundane thing. It’s not like they’re trying to genetically engineer a new type of cow. This is a real business. For window cleaning, wood polishing. And new surfaces, new materials, could be very potent. You know?
There was a time when automobiles were made of steel. They’re made of composites now. There’s polyester for clothing. New materials is a real business. And this company is starting to grow now. And they have valuation that’s on par with where they should be.
Forbes: Marc, thank you very much.
Gerstein: Okay. Thank you very much for having me.
source: forbes.com
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