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The Gilder Paradigm

In order to develop an investment strategy, a paradigm--a model of technology change--is indispensable.  Some paradigms--such as the Gilder paradigm--are explicit and explained.  Most investors, though, follow a technological paradigm without knowing it. They respond to a consensus about technology implicit in the media, which is driven by fashion rather than insight.

Within a consensus paradigm, large breakthroughs are impossible.  If everyone expected the breakthrough, it would already inform the market.  Shrinking from technology analysis, therefore, most investment letters seek little advances, incremental gains, picayune profits, excelling the Dow or Standard and Poor's by some modest margin.  They seek new investment opportunities chiefly by running computer programs through databases of financial statistics.

Informed by a systematic vision of technological change, the Gilder Telecosm Forum team finds ascendant companies through legwork and technical acumen in laboratories, entrepreneurial offices, semiconductor clean rooms, optical engineering centers, and technological investigations around the globe.

Formed in the 1980s, the first Gilder paradigm was the microcosm: microchip companies such as Texas Instruments, Intel and Micron and equipment companies such as Applied Materials that appreciated by orders of magnitude in the Personal Computer Revolution while scores of personal computer companies went bankrupt.

The paradigm of the 1990s was the telecosm: the convergence of fiber-optic-networks and wireless communications. Ascendant companies were Qualcomm, Ciena, Corvis, Global Crossing, Globalstar, Texas Instruments, Xilinx, Equinix, Agilent, and Corning.  Building the new Internet infrastructure, Telecosm companies incurred heavy debts and collapsed in the crash of 2000. Several died. But this painful setback gave alert investors significant gains in the stock market when most of the companies revived early in the new millennium.

The new millennial paradigm combines microcosm and telecosm in a new cornucopian convergence of optical networks and spectronic wireless.  Its first fulfillment came in Asia, in South Korea and China. The Asian advances have been analyzed for subscribers in Gilder Technology Report issues. Some ascendant companies have tripled or more during 2002 and 2003.

Joining them in 2006 and 2007 will be a set of companies currently in stealth or preparing for IPOs. This next generation of paradigm players promises advances that will change the entire landscape of optical, electronic and computer technology.  They will be the focus of the next few years of discussion on the Gilder Telecosm Forum.

Published by Gilder Publishing, LLC and Forbes, Inc.   Copyright © 2007 by Gilder Publishing, LLC