From: Wales.Larrison@ofa123.fidonet.org
Newsgroups: sci.space
Subject: Privately Financed Space Colonies
X-Sender: newtout 0.06 Jan  3 1993
Date: 09 Jan 93  23:56:00

Randy Burns asks:
>What are the current estimates of folks in this newsgroup of how
>long it will be until the world starts to see privately funded
>space colonization?
  
   I'll chime in with a variation on what other (such as Dani Eder)
have suggested.
   Another way to look the problem is to look at such a program as a
long-term investment program.  Realistically, I don't think we will
have the technology or capability for colonization for another 15-20
years.  To me, that calls for starting now on some investment
programs to build towards this future opportunity.  Let's look at
the case of a long-term investment program to "buy" colonization,
using the same population, but investing over 20 years.
 50,000 persons  $1000 investment  annually  growth=8% yields $2.47B
If we assume a 10:1 leverage potential (10% down...), that same
50,000 persons can invest $25 Billion - which is in the ballpark for
a small permanent Lunar colony, assuming 2010 technology.
 If we assume they invest $2000 annually for 20 years,
50,000 persons  $2000 investment  annually  growth=8% yields $4.94B
which can be leveraged up to almost $50 B.  Even better.
  
   This tells me the space enthusiast community can BUY the future
they want - if they are willing to invest in it.  Now 20 years may
seem long to some people, but I've bought a house with a 30 year
mortgage, and I've set up a college fund for my kid over a 18 year
horizon, so I don't think a 20 year investment planning horizon is
unreasonable to think about.
   Is 8% per year a reasonable return to expect for 20 years?  I
believe it is, since it is slightly lower than the historical 50-
year return from stocks in general (based upon Ibbotsen's and
Sincfeld's study of stock market returns from 1920-1990).  An 8%
return should be achievable with diversified mutual fund investing
in the S&P 500 .  Slightly higher yields should also be achievable
but with a higher variability (risk).
   Is $1000-2000 per year per person beyond reason?  This is a much
more personal question, but I don't think so.  That amount is only
about $20-40 per week.  Furthermore, the money is not necessarily
dedicated to "space investments", nor is it out of reach for real
financial emergencies.  I'm putting substantially more than that
away each year through a 401(k) program from my employer.  On the
_average_ $1000-2000 should be available for savings in general, and
this is only a slightly differing form of savings.
   Is 50,000 contributors an unreasonable base?  In my opinion 50 K
people is not unreasonable - since this program is basically only a
self-directed savings program, and not focused on any specific
investment, but just on a reasonable savings effort.  As a nation,
the US needs to increase its savings rate.  This is one way - with
potential significant benefits in the future for the space
community.  If it can be shown that more focused space investments
are good financial strategy, then 50,000 is probably on the low
side, since anyone who is saving and investing might be interested.
   Are space investments a good idea?  I don't know and I haven't
seen any data to indicate a reasonably convincing conclusion either
way - and I'm not advocating such as the sole type of investment.
However, from readings in the financial literature, space
investments should be a good investment based upon general industry
and firm types, general financial statistics, and current financial
theories - but I have seen no verifable data to prove this.  I'm
working on such a track record in my spare time.   That's why I'm
not advocating anything other than a general savings strategy into a
reasonably low risk diversified investment program.
   From what data I have confidence in, commercial space industry
revenues in the US have grown 20%+ annually over the past 5 years.
Even if this growth rate slows down substantially, it would indicate
investments in reasonable space activities should do at least as
well as overall stock investments (assuming sufficient
diversification).  With luck, substantially better.
   From this I conclude there is quite a reasonable possibility
that the space enthusiast community can BUY the future they want
within about 20-25 years - if we save and invest towards it.  (What
happens with no individual savings and investments by the space
enthusiast community is left to the reader....)
   The up-side opportunity is huge - and the down side seems pretty
small (over 20 years, how bad can you get hurt by setting up an IRA
and investing in a diversified stock market mutual fund?). I have in
a low-key way, been encouraging this over the past several years --
It's part of the rationale for irregularly posting the "Commercial
Space News" here, trying to provide information about the business
side of space, and trying to provide data tracking developments in
the commercial space industry, where I believe high returns are
possible.
    Comments and further discussions on this topic are encouraged.
--------------------------------------------------------------------
Wales Larrison                            Space Technology Investor
"ex nihlo nihil fit"                           P.O. Box 2452
                                          Seal Beach CA 90740-1452

--- Maximus 2.01wb
Newsgroups: sci.space