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The Risk Premium Factor: A New Model for Understanding the Volatile Forces that Drive Stock Prices by Stephen D. Hassett

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Appendix B

Technology on the Horizon: What if Moore's Law Continues for Another 40 Years?1

Moore's Law says that computer power doubles for the same cost about every two years, implying rapidly falling cost, increased power, and proliferation. If this continues, the equivalent price of a $600 iPhone would be $18.75 in 2020, $0.59 in 2030, and overall power or cost improving 1 million times by 2050. How should we account for this possible scenario in our investment strategies and plan for potential impact? What products and services have good present potential but could be enormous if Moore's Law continues?

Intel (NASDAQ: INTC) cofounder, Gordon Moore, wrote an article for Electronics magazine in April 1965, describing his thesis that the number of transistors that can be placed on a chip will roughly double every two years—meaning that computing power also doubles. He saw that this could lead to some revolutionary advancements:

Integrated circuits will lead to such wonders as home computers—or at least terminals connected to a central computer, automatic controls for automobiles, and personal portable communications equipment.

Gordon Moore, Electronics magazine, April 1965

It is an amazing vision. He was still with Fairchild Semiconductor, and Intel would not be founded for another three years. I am sure it seemed preposterous. Even Electronics magazine poked fun at him, placing a cartoon (not shown) with the original article. (To view the original article and cartoon, go to ...

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