A few months ago, I told you about “A Stock That’s Surely Going to Zero” — because if it wasn’t, it would have to be going through the roof. Since writing that column, it has gone neither to zero nor even to ankle height — it’s almost exactly where it was. About $3.75 ($5.50 or so Canadian).
The fact is, I own a lot of this stock. This is because I am, at heart, a terribly self-destructive person with a secret gambling streak. You know how that mild-mannered Miss Marple on CBS turns out to be the toughest detective in England? Or how that fellow in the flannel shirt across the way from you who drives a ’91 Honda Civic turns out to be the multi-millionaire next door? Well, Mr. Prudent here turns out to take some pretty blood-rushing gambles.
Prudently, of course.
I didn’t tell you that my hopes for it were actually kind of high, because I feared that if I did, you might buy some and lose your money. And I still fear that. For all the reasons I cited in that column, it’s just really hard to imagine that this is real. For one thing, why wouldn’t all the people who’ve seen it, and who understand the science — I sure don’t, I think electricity is magic, pure and simple — why wouldn’t they have bid the price up?
Yet week after week the company inches along with its press releases (“The Gamma Engineering Prototype Chorus(tm) Motor spun this week, right on schedule . . . “). So even as I was writing that first column, and ever since, I’ve been trying to balance how rotten I’d feel if you lost money with how rotten I’d feel in case it panned out — and I got rich but you didn’t.
If you share my — prudent — self-destructive streak, read that column again for the caveats, take a look at the company’s web site, and put in a few dollars that you can truly, truly, afford to lose without remorse. If you don’t have dollars like that, skip this.
I fear that if more than a few of you do this, the stock will rise. This will make it all the less attractive a speculation. All I can promise you is that I will not be selling mine as you are buying yours.
Final caveat: At the end of that first column, I asked the smart kids in the class to take a look and let me know what they thought. Not encouraging.
John: “This is a highly complex field mostly stuffed with guys that have Dr. in front of their names. I have worked with motors and controllers for many years, yet I may as well be reading Chinese when researching this stuff. One thing that I can say about the Borealis motor is that it uses 18 phases instead of 3 phases. That means that the construction of the motor may be 6 times more expensive because each phase is a wire that has to be wound in and around the motor stator. Also, instead of having three wires hanging off the motor for the electrician to wire, you will have 18! They compensate for this glaring fact (the cost to build this motor) by saying how much money you will save by using it. It’s like buying a $5,000 refrigerator that saves you $50 dollars on your yearly electric bill. Eventually you will recoup the extra cost in those yearly savings. Because of all the graphics and fancy charts, I would say something smells!”
Professor Dana Dlott: “Nothing wrong with the theory of the chorus more efficient motor. The only question is whether it can make any money. According to Lester Thurow, sometimes when you build a better mousetrap the world doesn’t come knocking at your door. Sometimes it is more expensive, too expensive to replace the old mousetraps, the guy who invented it wasted all his money on invention and you can sell knock-offs cheaper, and so on.”
Larry: “It’s been too many years since my college class on motors to do a proper job of analyzing the Borealis motor claims. But if this motor is truly as revolutionary as Borealis claims, electrical engineering departments around the world would be lined up to test and verify its performance. I, for one, would avoid any company that seems to be spending more time touting its stock price and seeking licensing inquiries than it does in proving the technology it claims have invented. “
Thorsten Kril: ” In case you are interested in the humble opinion of an MSEE:
“1. The motor should work and indeed be more energy efficient than traditional 3-phase motors. However, it is kind of obvious that motors get more efficient with more phases. I don’t remember that anybody has built an 18-phase motor yet, but I don’t believe it is worth a patent. Are you sure they got one? Their patents web page just shows: “This page will display motor patents as they are issued.”
But I could be wrong. There could be technical difficulties with developing an 18-phase motor that require a proprietary solution which might get patented. But it wouldn’t matter much — see #2.
“2. Most applications of high-power motors (where energy efficiency would matter) use 3 phases not because it allows the best motor design, but because the electric power supply happens to come in 3 phases. And it’s rather difficult to convert it to more phases. They even admit that when describing the drive (the electrical parts needed to connect the motor to the power supply): ‘It is clear that the Chorus™ uses many more components than a comparative (larger) 3-phase motor which has the same performance. However, this is countered by a number of cost-reducing features…’ I doubt that it is countered. So your motor might be doomed to niche applications. Which is fine, but don’t get your hopes up to see Borealis market cap reach Billions.”
Doug Wade: “I’m a “non-practicing” physicist. That’s to say I have a BS in Physics but I program computers for a living. I paged through their site, and what strikes me isn’t so much the motor section as the different divisions of the company. Their cooling section says they’ve revolutionized cooling, getting amazing efficiencies. In their power section they offer ‘a fundamental breakthrough in the field of power generation.’ Their steel manufacturing ‘promises to revolutionize this basic industry.’ and of course their ‘revolutionary electric motor with dramatic improvements in torque, efficiency and cost, over existing motor drives.’ I haven’t seen the word revolutionary used so many times since I read a history of France. So either these guys are the engineering studs of the decade or they’re really into hype. Or both, I suppose. I like to suspend disbelief as much as the next guy but I can’t manage it for these guys.”
Brian Annis: “You write: “Borealis claims (among other things) to have invented and patented an electric motor that is 30% more efficient than today’s motors.” I’m not sure that’s an accurate description of what they have done. While their motor is only slightly more efficient than a standard motor (93% vs. 90%), they have modified the torque curve, potentially allowing someone to get away with a motor that is (theoretically) up to 30% smaller than they otherwise would have used. To do so, however, requires a source of power providing the significantly greater number of phases needed by the motor (the example on their web site uses 18) than the standard three supplied by the local power company. I would think that the costs and inefficiencies involved in doing this would, in most cases, outweigh the benefits of the new design. BTW, I’m also skeptical of what they could have patented that would be both crucial and unassailable.”
Quote of the Day
Very few American investors buy any stock for the sake of something which is going to happen more than six months hence, even though its probability is exceedingly high; and it is out of taking advantage of this psychological peculiarity of theirs that most money is made.~John Maynard Keynes
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