Should You Put Your Money in Orbit?

By P.J. O'Rourke

Stansberry Digest readers may be surprised to hear that extraterrestrials really exist. But they're not little green men... they're big investment opportunities.

The global space economy has now grown to more than $330 billion – nearly equal to Germany's gross domestic product. The private commercial space industry is expanding by 10% per year. Governments around the world are increasing their investments in space at almost the same pace. In 2015, seven orbital rockets were launched every month. Countries as unlikely as Laos and Turkmenistan now have their own satellites.

I just came back from the 32nd annual Space Symposium in Colorado Springs, Colorado. If you're interested in leaving the planet, it's the best place on Earth to be.

The Space Symposium is the premier international gathering of businesses, industries, organizations, institutions, and people who send things "to infinity and beyond."

The U.S. military was there. So was NASA, as well as the space agencies of 13 other countries and official representatives from 50 nations, plus 12,000 other attendees.

(The Space Symposium, held every April, is open to the public. The venue – an added attraction – is the spectacular Broadmoor Hotel.)

Sponsors included Boeing, SpaceX, Lockheed Martin, Northrop Grumman, United Launch Alliance, Arianespace, General Dynamics, Raytheon, Aerojet Rocketdyne, and America's foremost tech consulting firm Booz Allen Hamilton.

Two vast pavilions accommodated 189 exhibitors. Displays ranged from models of the gargantuan boosters and goliath payloads of the aerospace giants to small booths where wonders of circuitry miniaturization were shown off by start-up tech geniuses, who speak only in math symbols when asked what their products do.

The four-day symposium included more than 100 special sessions and workshops. Among the people giving speeches and presentations were NASA Administrator Charles Bolden, Blue Origin space entrepreneur (and, in his spare time, Amazon CEO) Jeff Bezos, Colorado governor John Hickenlooper, and Commander, Air Force Space Command General John E. Hyten.

I didn't get to hear a few other people because their sessions required a security clearance. Whatever its other failings, the U.S. government isn't crazy enough to give me a security clearance.

I'm a devoted (but amateur) fan of rockets, spacecraft, satellites, and everything about space exploration. It's the technology of hope rising from a world bogged down in earthly concerns. If you're a space wonk like me and can remember the July 20, 1969, Apollo 11 Moon landing more vividly than things like your children's birthdays and your wedding anniversary, the Space Symposium is – it's appropriate to say – heavenly.

But why am I going on about this to Stansberry Digest readers? Aerospace companies, which depend on politics as much as on economics, are notoriously tricky investments. Private spaceflights are a long way from making money without government contracts or subsidies. Taking a stake in Jeff Bezos's Blue Origin, Elon Musk's SpaceX, or Richard Branson's Virgin Galactic is best left to the billionaire enthusiasts who founded the companies. It's not something to put in your Keogh plan.

However, the Space Symposium gave me a chance to ask space industry experts: "How do you really make money in space?"

I got the same answer from every person I questioned. Whether they were industry executives, military brass, government officials, scientists, engineers, researchers, or astronauts... they all said: "data."

I had the good fortune to be able to talk to all these people because I'm on the board of the nonprofit Space Foundation, which created the Space Symposium and is devoted to furthering international space endeavors.

(I'm not sure why the Space Foundation put me on the board. Unlike my fellow board members, I don't actually know anything about space. Maybe they wanted someone to go to when the subject doesn't require a four-digit IQ or a degree in astrophysics. "Hey," says the Space Foundation board, "this isn't rocket science. Let's ask P.J.")

A senior executive at one of Europe's largest developers and manufacturers of satellites said, "Where the money is made is not satellites."

"It's not the rockets, either," he said. "The money is not made by the people who make space hardware or the people who launch space hardware. The money is made by the clever end-users of what the hardware provides."

What the hardware provides is data.

"Satellites just suck up data," said a senior executive at Arianespace, the French commercial launch service provider that controls 50% of the market for putting geostationary satellites into orbit. These are the satellites that "hold still" in the sky and are vital to telecommunications, weather forecasts, and TV broadcasting – and to collecting data.

We think of satellites as "beaming down" content – entertainment, pictures of Earth, phone and Internet connections. But an endless stream of content is on its way up into space.

We're already making profitable use of that data. I sat down with a top space-industry analyst. I asked him how many commercial companies use space technology in their businesses.

He looked at me as if I were as much of a techno-idiot as... well, as I am.

"All of them," he said.

And he explained that in not even one word, just three letters: "GPS."

He also explained something that wasn't as obvious: "The whole global banking system depends on what time it is."

Satellites collect precise information about international credits and debits. It's crucial to know exactly when each financial transaction is made. Otherwise, I could claim that it's currently 9:30 a.m. on December 12, 1980, and that I have a right to purchase Apple at an adjusted IPO cost of $0.39 a share.

My analyst friend thinks we've only begun to profit from space information. A lot of money will be made with the sensor and imaging data accumulated by relatively cheap low-Earth-orbit (LEO) satellites flying as close as 400 miles above the ground.

Large-scale growers of wheat, corn, soybeans, and other staple crops are already widely dependent on satellite data. E-I-E-I-LEO.

Law firms are starting to use space data in property-rights cases. Satellites are infallible surveyors and can spot unauthorized land use, such as illegal mining or dumping, in the remotest regions.

Space could even be useful in criminal cases if GPS data can show that the law firm's client was, for example, growing marijuana on the right side of the Colorado state line, where it's legal.

Prospecting is much harder with a mule than with a satellite sensor that's too far away to kick or bite. And satellites are opening up new fields of prospecting – in landfills where they can detect the presence of materials worth recycling.

There really will be such a thing as a "Space Cowboy." Cattle can be fitted with GPS tracking collars. The collars show where the cattle are. Soon, the collars will also keep the cattle where they're supposed to be.

Satellites can send radio waves to specific grazing perimeters. These radio waves will activate electric shock mechanisms in the tracking collars if the cattle stray – an enormous git-along-little-doggies version of a PetSafe invisible fence.

Next, satellites will be able to shift their radio-wave perimeters, allowing cattle herds to be moved to better pastures with a few keyboard clicks. The cowboys will be on laptops, not getting saddle sores.

Perhaps the most intriguing thing my analyst friend told me was about OneWeb, which is planning to put 700 satellites in orbit to provide the entire world with Wi-Fi.

I'm not suggesting an investment in OneWeb. A constellation of 700 satellites means a lot of launch and orbital hardware that can blow up or fall down. (A precursor to OneWeb already went bust.)

What's intriguing is that Coca-Cola has invested in OneWeb. Coke's idea is to use Wi-Fi data availability as a brilliant product promotion.

There's hardly a place on Earth where you can't buy a Coke. And if you can "Have a Coke and a smile and Wi-Fi," this beats the Pepsi Challenge.

Space is one business about which we truly can say, "It has nowhere to go but up."

Regards,

P.J. O'Rourke