3-D Printing Stocks

Guaranteed Basic Income Feedback 

3-D Printing Stocks 

Three D Systems (DDD) and Stratasys (SSYS)

What I Wrote Last Week

Last week, I presented the case for instituting a Guaranteed Basic Income (GBI) in the U.S., while eliminating dozens of the inefficient, duplicative, means-tested programs currently in place.

At the heart of my argument for large-scale change were these facts:

1. Capitalism is good.

2. But the rich and powerful are increasingly denying the working class a fair share of the rewards of the country’s growth.

3. And the rich and powerful, by misallocating capital, are not providing useful signals to markets.

4. Meanwhile, growing machine-driven efficiencies and changes in labor markets mean underemployment among certain populations is likely to become increasingly common.

5. And sometimes, there are more valuable things to do than work—like go to school or care for family members.

6. Lastly, our patchwork welfare system is ripe for improvement.

Guaranteed Basic Income

A Guaranteed Basic Income (GBI) would be just what it says, a guaranteed payment, by the Federal government, to all adult U.S. citizens or residents.

There would be no means testing. Every living adult would receive the same payment, every year. Even Donald Trump and Hillary Clinton.

The main result of this payment is that millions of Americans would no longer be poor, and thus millions of Americans would be less inclined to break the law.

A secondary result would be improved health, from both improved nutrition and better health care.

And a third result, difficult to forecast, would be the market signals sent by the way all that money is used, telling producers what the vast number of Americans truly want.

The libertarian right likes the idea of transferring power from the government back to the people.

The left likes GBI because it thinks society is unequal and wants to redistribute wealth.

And the technology elite like the idea because it’s so radical, so unpopular (even unknown) among all major parties.

But what do my readers think?

Feedback on the column was heavy, with roughly 50% in agreement, 20% opposed, and 30% somewhere in the middle.

I thank all who answered, and I apologize for not answering you directly; volume was too heavy for that.

Following are some of the best responses.

Your Responses

WOW! What a fascinating idea! I’m going to reread it tomorrow. My only negative reaction was about giving also to the rich. But their number is so comparatively small, that the cost of weeding them out would not be worth it. Maybe they’d give it to charity.

Taking care of family hands-on and more schooling sound great, but I have a hard time not assuming the laziness factor will turn a lot of people into permanent sloths. But so what? Maybe it’s worth that cost, as otherwise those same people might be criminals. Maybe a lot of them will become artists. As long as they spend it on weed and not on meth, it’ll keep them peaceable and happy.

Of course only if Sanders becomes President has this idea any hope. Dream on. But what a constructive idea to dream on.

Lillian D.
Oakland Park, FL

Terrible idea! SuperPacs level the playing field relative to the biased MSM [Mainstream Media]. People need to work. Get rid of many regulations, eliminate Federal Minimum wage laws, lower corporate taxes and a Flat or Fair tax are all better policies. Plus provide education choice to all American families with a voucher for each and every child in the $10K range. Education choice and stronger economic growth are the answers to income inequality.

Steve T.
Salinas, CA

Tim, THIS IS HARDLY CRAZY … THIS IS THE KIND OF BOLD-THINKING IDEA THAT KEEPS ME ATTACHED TO YOUR ORGANIZATION. THIS IS A LECTURE WORTHY OF A PRESIDENTIAL CAMPAIGN OR CANDIDATE for president of the U.S. I am at work now. I will take my time to reread this and respond appropriately. Wait till you hear my idea of GIVING every law-abiding citizen $250,000 after graduating HS and another $250K after graduating college … you are a big idea guy, I know you won’t laugh until you hear the details. Congratulations on a masterful and forward-thinking column…

Auguste G.
Boston, MA

Some good points … you mention TESLA a few times. They have received almost 5 billion tax dollars in last several years. And ethanol is big scam but no more than green energy.
Every time I see a Prius I see about 15k of tax dollars.
In 2008, I operated a small apt bldg in upstate New York; all the tenants were poor but all had better health care than I have ever had…pre-Obamacare.
Cuba just released a few thousand elderly to USA; they will receive more benefit from social security, Medicaid, debt and rent subsidy than average social security recipient.
Easy to blame PACs but I don’t see many pols addressing these issues.
Yes sir I will be voting for MR TRUMP or MR CARSON!

Andy P.
Port Charlotte, FL

My husband [who is a Libertarian at heart and has worse things to say about extreme progressives than about extreme conservatives] and I have had quite a number of arguments about this topic, till he wore me down with being right about it.

I grew up, a child of two WWII refugees, with a very strong work ethic. I remember asking my mother which way she thought that a teacher meant for me to do a homework assignment and she asked me which way was harder. I told her, and she said to do it that way. I’d learn more. And she was right, I worked hard and learned quite a lot. So that was the right way to do things.

However, I had a biology teacher who also taught me something very important. When it comes to life, he said, there is no right and wrong, just useful and not useful. Useful traits get preferentially passed along and not useful traits stagnate at best and, depending on how not useful they are, ultimately die out. A different way of looking at things.

So, as much as it annoys me at times to think of people sitting around all day eating Cheetos and watching free cable while I work hard [Not Right—Get A Job!], I think about what is useful.

Freeing people up from the exhausting daily burden of poverty so that they can even think about going to school or working or anything else other than getting through the day is useful. Giving people enough so that they do not feel that they have to violently take it is useful. Allowing families the means to care for themselves and each other is useful. [The fact that I think that those things are also maybe right is neither here nor there …] Yes, some people will take advantage of it, but why should I care? I am thankful that I can make choices.

And I do agree that most people, given the chance, will choose to do something useful; that is where science and art come from. [First generation: workers; Second generation: scientists; Third generation: artists]

Linda V.
Salem, MA

Hi Tim
You make some good points, though it’s so new and strange to me I’d have to think about it a lot more before I could really go for it. I don’t think a growing gap between haves and have-nots is necessarily a bad thing, considering, as you admit, that everyone round the world has benefitted. The concern over the ‘gap’ can then sound purely envious. Why shouldn’t the most productive/entrepreneurial get the most benefit from their work? There also happens to be a good article today in Investors Business Daily about how we need people with so much wealth they can afford to lose it—because they are the ones who really fund the biggest and most difficult or risky projects. The rest of us who’ve scrimped and saved only feel comfortable investing in relatively ‘safe’ investments, but you need the Howard Hughes’ of the world to get a whole commercial airline off the ground or to fund start-ups.

The other point that comes to mind about giving everyone a payout is that I believe everyone needs to be able to work in some way in order to feel useful (and in fact, be useful). In an ideal world, your solution would enable some to be able to afford to take care of their families, better pursue artistic endeavors or start some other productive enterprise, but it seems that many (most?) of the people currently receiving welfare simply abuse their time—sleep late, lose motivation, get addicted to alcohol, drugs, or anything electronic (online gaming, gambling, pornography, following superficial Facebook entries and tweets, etc).

Maybe you do have a crazy idea, but it’s always great to keep the brain stimulated with out-of-the-box thinking—thanks a lot!

Rachel H.
Essex, CT

LOVE the concept! In 2008, I wondered why we didn’t give $700 billion to those who had underwater mortgages. I know, there’s something unfair about my irresponsible neighbor getting a free handout and owning their home through just another government handout. But, think about it, they would stay in their home, my home’s value would be supported without multiple foreclosures on my block, and best of all, all that mortgage money would go back to the banks in the form of mortgage payments and there would have been no crisis, no layoffs, no Great Recession, no QEs. Talk about Win-Win!

The simplicity of the GBI is truly elegant. The chances of such a plan working its way through this Congress? Can you say Zilch! But, I love the way you think and this idea should be promoted.

Dave B.
Harleysville, PA

Some good thoughts but I also think the whole world is overdue to drop the workweek again. After all, people at one time worked 7 twelve-hour days a week and the workweek gradually dropped to the present 40, which is being pushed up again by those wealthy people at the top. After all, on an individual basis they are correct in their belief that working people harder makes them more money; however on a collective basis it’s obvious that it’s not giving everyone enough to spend on all those things companies make. It can be argued that giving more people more spending ability would help more companies.

Marion C.
Cuero, TX

Tim, I think this is a great idea and the best article that you have ever written. I am a capitalist but I, like you, think the income inequality is really hurting our country. We cannot be great without a thriving middle class. If changes don’t happen, I am concerned that we could have rioting in the streets. As a part of the solution, I think we need campaign funding reform. The 1% have the chance to buy elections and then the problem gets worse. Capitalism is great, but unabated, capitalism is a problem. Keep writing and talking about this proposal. Thanks for your comments. I am sure that you will hear from the other side.

John H.
Louisville, KY

You are right, a “crazy idea.” I believe the facts from the Reagan years support the notion that lower taxes and less regulation create more jobs. Accountability of our citizenry ensures the jobs are filled. In general, capital goes where it is most appreciated. Investment overseas, especially Asia, has grown more than in the U.S. for that reason. Asians are becoming more educated and appear much more motivated and qualified to fill new jobs created by capitalism. I think the real solution lies in significantly raising the threshold for social program benefits and time limits on how long benefits are provided. Without “tough love,” these people become professional “victims” seeking a lifetime of benefit.

Additional consideration: we already have 11 million illegal immigrants to the U.S. and at least one news outlet that has interviewed some recent border crossers suggests our “welfare state” is the main attraction (not jobs). If we grant them amnesty and offer the guaranteed income, methinks the migration will further escalate.

Margaret Thatcher observed that socialism is great, but eventually you run out of other peoples’ money to spend.

Dan R.
Albuquerque, NM

Far and away one of the best writings you have ever done! I find it odd, to say the least, that I can agree and disagree with you on almost everything you said. It is very interesting to ponder this concept. Thanks for the great article.

John B.
Marquette, MI

I very much like this idea in theory, but have some questions.

I have done some work with Native Americans (Seminoles) who received monthly stipends from their tribe. Starting at age 16, each person received about $2,000 a month. I was teaching some of these teenagers who had little ambition in life beyond spending their income to get high. I worked with them at a behavioral education center because they’d broken the law, and this school was the last stop before juvy. The idea of working for a living, or going to college to learn how to do something because it would be interesting was not a goal for these young adults.

Here in Maine, someone making $40K is doing pretty well; that is enough for one person to pay for home, car, insurance, food, utilities, and still have some left over for vacation or retirement. I’d consider that upper middle class in Maine. Most people in Maine make less than that. There are plenty of jobs starting at $7 or $8 an hour, with no benefits. A few places will start at $10 to $12 an hour (teachers, police officers, office work), but people making $20 or more are professional or millworkers or have been somewhere a long time. Or people like lobstermen who make a lot more for part of the year and less for the rest of it. So adding your $12K to someone making $12 an hour could be a lot closer to that elusive $40K of having enough.

But how do we change our cultural thinking about people who don’t work? From your examples above, it seems like the people in socialist countries have a better appreciation of what to do with their spare time. I worry about the lower classes, the high school dropouts, the people with low ambition, or no prospects. If they know they are getting $12K a year without working, how do we encourage them to see that as an opportunity for better living, not a reason to do less for themselves?

Love to read your stuff, but I don’t always make the time. I do know that whenever I read these great ideas, they stay in my head for days, displacing all those other things I should be doing.


Robin J.
Blue Hill, ME

I applaud to Mr. Timothy Lutts for an article “A Crazy Idea?” on a subject of a need in a 21st century to reevaluate job/labor as value by itself—in the era of unprecedented progress of science & technology and rapid growth of automation across many sectors.

Idea of basic income is not crazy. Crazy is to think that without radical changes in the context of exponentially growing unemployment created by technological labor displacement we can get away with competition based game and labor for income as a means for earning a living.

In a market economy, there is little incentive for super-rich people to redistribute their wealth from the market itself since profit and market growth is the name of the game.

Capitalism is steadily moving towards a system error where abundant supply does not meet respective purchasing power thus leading to crashing on fundamental level. That may lead to violence, societal collapse of unprecedented level and scale leading to unnecessary suffering, waste of human energies, lives and even accumulated knowledge.

What is needed now is an agreement among the political, business, government leaders to consider a new long-term goal internationally—removal of monetary system altogether and gradual transitioning into Resource-Based Economy.

Natural Law/Resource-Based Economy is founded on humane application of science and technology to provide human basic needs (not wants) without a need of resorting to labor for income through competitive market economy, and a preservation of ecological life-supporting systems for long term sustainability.

NLRBE uses intelligent, technologically responsible management of Earth’s resources. For that idea to work, all the planet’s resources must be declared as a common heritage of humanity and not selected governments and corporations.

In an NLRBE, market efficiency is replaced with technical efficiency—all technologies are open-sourced so everyone competent enough can contribute to development for the good of all.

Ownership is replaced with a Strategic-Access (of goods, service, living apartment, transportation).

In a NLRBE, labor automation is viewed as the socially responsible thing to do to free humans for higher value pursuits—science exploration, family, creativity, sports, you name it….

Work, if there would be a need for such in a traditional sense, would be voluntary and hardly would demand more than few hours a day.

Competition gives way to collaboration. This is the next phase of evolution. An organism in a battle with itself, from the perspective of evolution, is guaranteed to experience extinction.

Competition is what makes us fight each other on daily basis. It was great in all previous centuries and best 200 years ago. Now it is working against us.

Two World Wars and unavoidably, an unfolding third one are great examples of how inefficiently resource management is happening in a context of monetary system.

To sum up, Guaranteed Basic Income is not a crazy idea. It is a necessity if we are sincere in our wish to live meaningful lives and face all current socio-economic and environmental problems without resorting to violence, global social unrests, riots, spread of radical ideologies and other related causalities originating from inequality, poverty and structural violence that is inherited in a market system.

Intars K. – imaginer, who believes in Science, admires and fears Natural Order
Latvia (?)

You raise some interesting points and I agree that we are currently in a situation in which the wealthy (and I am fortunate to count myself in this group) keeps prospering while there is a significant portion of the population stuck in or near the poverty level. I am a business owner (commercial real estate), but I started my career teaching economics at the college level as I have a Master’s Degree in economics. Over the years, I have watched with interest all the economic trends, one of which is that a growing percentage of the population apparently believes that the Federal Government should solve every problem.

This philosophy has a fundamental weakness. There is nothing the Federal Government does that the private sector cannot do better. And when a government program is instituted, once it fails to achieve its goals, the more liberal portion of our population takes the position that it is not working because it needs more funds and more employees. This is exactly what would happen if the program you suggest were put in place.

If such a program were implemented, it would be run by government employees. While there are many good people working at all levels of government, the government cannot attract and maintain the best and brightest employees. I deal with the General Services Administration in negotiating Federal leases. Most of them are nice people, but they are woefully inept. After they hold their job for a short time, they can’t be fired. Many of them would not last in the private sector because of their lack of skills and/or their lack of desire to do a competent job.

If the government could perform any function efficiently, FedEx and UPS would not exist. The United States Post Office would be performing the functions they fulfill.

One more comment: Education is a fundamental key to success. Many schools are failures (they aren’t run by private businesses), and many of our citizens fail to take advantage of their opportunity to obtain a quality education.

We desperately need to find a way to lift the bottom tier of our workers out of their current income levels, but I can’t be optimistic that a government-run program will provide the answer.

Taylor B.
Tyler, TX

3D Printing Stocks

Remember the 3D printing stocks that were hot back in 2012 and 2013?

3D Systems (DDD) soared from 9 to 97, while Stratasys (SSYS) zoomed from 18 to 130.

Some of the advance was certainly justified. Both companies had demonstrated their ability to grow earnings year after year, and in 2012 and 2013, both companies enjoyed many quarters when revenues boomed more than 50%.

But look at the stocks today.


Not only have both these once-hot stocks been trending down for nearly two years, but even the market’s latest strength hasn’t served to bring them to life. The sellers (some finally giving up after two years) still overpower the buyers.

What went wrong? And why are these stocks still in the doghouse?

First, the high profile of the stocks attracted momentum investors, who bid the stocks even higher and then sold when the strong uptrend ended. And second, the industry grew more challenging, as competitors popped up and competitive pricing took hold.

But both companies kept on growing revenues the whole time! In fact, it wasn’t until the third quarter of this year that both companies finally posted negative revenue comparisons.

Interestingly, even though there are many differences in the companies’ technologies and business models, there are many similarities from an investor’s perspective. Revenues are similar: $151 million for 3D Systems in the latest quarter versus $167 million for Stratasys. Market valuations are similar: $1.1 billion for 3D Systems vs. $1.4 billion for Stratasys. And institutional sponsorship is similar: 306 funds own DDD while 314 own SSYS.

Lastly, after-tax profit margins are eerily similar: 0.5% for 3D Systems versus 0.4% for Stratasys.

One major difference is this: The CEO of 3D Systems resigned at the end of October. The CEO of Stratasys still has his job.

Now, sometimes, the exit of a CEO will prove to be the catalyst that reassures investors and gives a stock a new spark of life.

But not in this case. The fact that both of these stocks couldn’t rally even in the market strength of the past month tells me there’s little hope for the rest of the year (though there’s a chance they’ll enjoy a year-end bounce in December).

In hindsight, these stocks are both great examples of one of my favorite investing tenets. “A trend, once established, tends to last longer and go further than originally expected.”

And then there’s Hewlett Packard (HPQ), which has great experience in the 2D printing industry and says it will introduce a 3D printer in 2016. HP will be late to the party, but probably smarter for it.

Bottom line, DDD and SSYS are still stocks to be avoided.

If you want to own a stock that goes up, your odds are better in stocks that are actually going up!

And if you want some ideas in that vein, by all means take a look at Cabot Top Ten Trader, which every Monday steers you to 10 hot stocks with great potential to soar in the weeks ahead.

Yours in pursuit of wisdom and wealth,

Timothy Lutts
Chief Analyst, Cabot Stock of the Month
Publisher, Cabot Wealth Advisory


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