"Innovation is 1% inspiration, 99% perspiration"
– Thomas Edison
In our financial practice we enjoy working with inventors and entrepreneurs who took great risks and were rewarded by building enormous wealth. With all the negative economic headlines, political division, and (OWS) protestors, it is easy to lose sight of what continues to make America great: innovation. We invented the light bulb (Edison), telephone (Bell), airplane (Wright Brothers), television (Farnsworth), and the iPhone (Jobs). Unfortunately, we also invented credit default swaps (CDS), subprime mortgages and spam (both the email and canned meat varieties). All of these inventions occurred in our free market that rewards the winners and ultimately causes the losers to go out of business.
In Southern California we see many examples of innovation across several industries including technology, aerospace, and home building. Best of all, these companies are creating jobs in California.
A company in Huntington Beach has engineered a plasma cutting tool which aerospace engineers believe is the greatest innovation in their industry in the past decade. Their innovation was to eliminate the heat transfer and micro-fracking in electrical discharge machining (EDM). Cutting within a micro-meter without damaging sensitive composite materials has many industrial applications including hole boring and fastener removal. These two applications solve for severe pains for tier-one OEMs and each represent a one billion plus market opportunity. The thought leaders in the aerospace and defense industry have become the early adopters as the company counts Lockheed, Boeing, and the Navy among their largest customers.
There is also a company in Mira Loma that has taken the homebuilding industry by storm in developing a new streamlined process to build homes with great precision at significantly lower cost. The entrepreneur changed the way home products such as cabinets were manufactured and has now leveraged his talent for optimizing manufacturing processes by changing the way new homes are designed and built. The result for the consumer is a better home at 30% less cost.
The reason why America remains the land of opportunity is because only in America can a "nobody" become a "somebody." Innovation affords entrepreneurs from all social classes the opportunity for social mobility. My wealth management practice is focused on entrepreneurs who have solved real world problems and built significant wealth in the process. Let us all continue to root for the innovators and entrepreneurs as they represent the best of what America has to offer.
Bruce Munster is a Financial Advisor with the Global Wealth Management Division of Morgan Stanley Smith Barney in Woodland Hills, California. The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Smith Barney LLC, Member SIPC, or its affiliates. © Morgan Stanley Smith Barney LLC. Member SIPC