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I have in my computer every e-mail message I have sent or received since 1992. Minus the obvious spam, this database comes to about half a million messages from people as varied (or similar, if you think about it) as Larry Ellison and Larry Flynt. But lately my e-mail seems to be dying. Yours is, too.

What’s happening to e-mail is complex but comes down to changing contexts and competing media. Back in 1992 communication for me meant e-mail (which at that time for me was cc:mail, MCI Mail, and Internet mail), snail mail, Usenet newsgroups, bulletin board systems like The WELL, telephone, and fax. Today the mix has changed almost completely and I have Internet mail, snail mail, SMS, various chat systems (Skype, iChat, ICQ, etc.), twitter, Facebook and other social networks, and the big one for me — WordPress. BBS’s are gone as are proprietary e-mail systems, my fax machine was thrown-away long ago and Usenet has been subsumed into the Internet as a whole.

Spam killed for most of us the native joy of e-mail. Looking back at my early 1990s mailboxes I see a rich discourse with readers and almost no spam at all. There was no noise to cut through, no need for social networks to vet our contacts. I could get to almost anyone back then by e-mail and they could get to me.

Then spam spoiled it all. I hate spam. I feel betrayed by spam and the spam industry. Remember those proposals to put an ISP postage charge on e-mails to eliminate spam? Those proposals failed because it looked too much like a restriction of speech or a violation of net neutrality, but I wish it had worked. I’d gladly pay a couple bucks per month to be truly spam-free.

But as we are wont to do, instead we added a layer of technology to deal with spam just as we had for viruses and trojans. Anti-spam became a big business just as spam had become before it. I’m paying that couple of bucks but this way it isn’t deterring spam at all, just hiding most of it.

For me a second big e-mail hit came with my switch to WordPress in late 2008. Changing from Moveable Type at PBS to WordPress on my own was a revelation since it eliminated two editorial layers and replaced crappy technology with elegant technology. But the unintended consequence for me was a huge drop in e-mail volume since readers could now comment on my work so easily (and publicly) that they didn’t bother anymore to write to me directly. I miss the mail, frankly. I get it that the new system is better for you, but it isn’t as much fun for me.

Then in the last year something new has happened, which I see as the combined rise of mobile Internet technology and Facebook. While smartphones have made us more e-mail-enabled than ever, I think people are actually sending less total e-mail as a result, substituting SMS texting and mobile use of social networks.

Facebook has brought for non-professional writers in us the same e-mail effect I saw when I jumped to WordPress: every wall or chat posting makes unnecessary at least one e-mail, maybe several.

And don’t forget that our youngest networked generation — teenagers — doesn’t e-mail at all, preferring the immediacy and intimacy of texting to almost anything else.

E-mail will never completely die, but I feel it has lost critical mass and is fading rapidly. That’s why when Facebook announced Titan, its new inter-user communication platform, they had such a hard time explaining what it was. Zuckerberg & Co. want us to see Titan as the universal communicator but they feel they can’t, at the same time, say that other media are dying as a result. They don’t want to be seen as the predators they are.

But predators are an essential part of any healthy ecosystem, remember. So this is all good, I guess.

Sad, but good.

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So Exchange Traded Index funds and the $1.2 trillion invested in them have increased volatility for small cap stocks making the whole IPO process less attractive for many founders of U. S. tech companies — our kind of companies. It’s not the end of the world but has been a downer of sorts for both the market and the tech industry for the last decade. What’s to be done about it, then?

“The problem as we see it could be 80-90 percent contained if only Exchange Traded Funds were subject to the same sort of trading circuit breakers that were imposed by the SEC on regular shares after the Flash Crash of earlier this year,” says Bob Litan from the Kauffman Foundation.

The fact that such circuit breakers haven’t already been imposed, stopping trading altogether when things get a little too crazy, makes no sense at all, at least not to me. What’s good for the stock is good for the index that trades like a stock. So do it.

The better question, though, is how do we actually benefit from this situation? How do we — smart nerdy we — make a few bucks on these ETFs that aren’t going away?

I have a plan.

Here’s where it might be a good idea to go back to my last column and read or re-read it so I don’t have to write that stuff all over again. Notice the comments, too, since those folks are far smarter than I am.

So we have this market that goes up and down based on, well, something (nobody is quite sure what) but smart traders can make a good living from it, so why can’t we? I think we can. I think we can make an extraordinarily good living from it simply because much of the Index ETF volatility has nothing at all to do with the individual stocks contained within the index. The price goes up or down for whatever reason and the ETF’s — huge institutional investors in their own rights — are required to rebalance their portfolios to reflect the new market values — values that are, for the most part, artificial.

As a result, shares of the Acme Transistor Company go up or down when it makes no sense for them to do so if you know much about the Acme Transistor Company. Because the bozos running the ETF that is the largest shareholder in the Acme Transistor Company by definition know nothing about what happens there. They simply don’t see it as their business — a very un-Buffettlike way to invest.

Warren Buffett, now that his name has been dropped, wouldn’t pay any attention to this because, as a value investor, he completely ignores this kind of volatility. And as a huge investor, he actually ignores these entire companies because there simply isn’t any way he can stuff enough of his money into any of them to satisfy Berkshire Hathaway’s hunger for shares.

If you are buy-and-hold, then by all means buy-and-hold. But if you want to try and play the game a bit, here’s what you need to remember: for intrinsically good companies this is a zero sum game. Prices that dramatically dip will eventually rise again. And those that dramatically rise will eventually dip again, absent any real news.

Become a specialist in a few little companies within an index like the Russell 2000. Follow both the rumors and the news. If the stock swings wildly and there is no news, no rumors, no insider head feints, no reason at all for that to be happening other than that when elephants fight the grass is trampled, well that’s actionable. Buy or sell as needed, maybe (definitely!) get some leverage by trading options. Short the stock if it is going up or go long if it is going down.

What we have here are two different trading universes and each is simply noise to the other. When you have a sense of the rhythm of an individual stock you can trade on the ETF noise. Rhythm and noise — it’s an inter-dimensional trading algorithm that actually works.

Weird, eh?

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I write a lot about technologies, companies and industries, some about economics, but hardly ever about stocks or trading, so this column is an unusual one. But because of the hard work of a couple economist friends of mine I’m finally coming to understand a stock market phenomenon that has been hurting tech startups for over a decade — Exchange Traded Funds. Forget about bad banks, cooked books and even the recession: Exchange Traded Funds are forcing more and more good tech companies to abandon the idea of ever going public.

We saw this trend on this summer’s Startup Tour where not one of more than 30 companies we visited saw an Initial Public Offering (IPO) in its future. Every company saw itself eventually being acquired. But there’s a problem with being acquired, which is that it greatly limits the upside for entrepreneurs. Had Microsoft been acquired by IBM, for example, would Bill Gates today be the richest man in America? Heck no. Lotus Development was acquired by IBM and the fortunes of those Lotus people haven’t fared any better than those of their colleagues at Big Blue. Yes, they got $3.3 billion, but today that’s not worth much more, maybe less.

IPOs are better if they work. IPOs make entrepreneurs big rich. So why aren’t there more of them?

That’s a very good question — one that until this week was generally answered by experts rolling their eyes like they were trying to explain the great frog die-off. IPOs are too expensive, we’re told. A positive upside is no longer as certain as it was in the 1990s, they say. Acquisition is just plain easier and big companies have learned better how to grow by acquisition: look at Cisco.

Then along this week came Harold Bradley and Bob Litan of the Kauffman Foundation with a completely new and novel reason for the decline in IPOs. They say in their new study that Exchange Traded Funds have caused such volatility for newly-public tech companies — volatility that has nothing at all to do with the companies themselves — that founders are being scared away from IPOs and into being acquired for substantially less money than they might have made.

Exchange Traded Funds have been around since the early 1990s and can be thought of as index mutual funds on steroids. Both types of funds have underlying assets that reflect their target index. If the mutual fund or exchange traded fund is intended to represent the Dow 30 Industrials, then it should own all 30 stocks in equal amounts. Where the funds differ is in how they are traded and taxed. Index mutual funds are priced to represent the value of their underlying shares so the redemption price is set once per day based on the closing Net Asset Value of the stocks in the portfolio. Day traders aren’t interested in index mutual funds because there is no intra-day price volatility. There’s no shorting, either. You can’t normally borrow and short a traditional mutual fund, nor would you want to because the tax consequences could ruin the deal. But ETFs, in contrast, vary in price throughout the day based on supply and demand so day traders might be interested. If the ETF price varies significantly from the price of the underlying basket of stocks, then there is an arbitrage opportunity that some trader will notice and take advantage of — buying the ETF while selling the underlying stocks, for example — generally without the tax concerns of a traditional mutual fund because the retail ETF shares are traded through intermediary market makers that effectively decouple share gains from underlying capital gains. Got that? Me neither, but that’s the way it works. Oh, and ETF shares can be shorted, which of course increases volatility even further.

ETFs change value constantly based on supply, demand, manipulation and rumor. And here’s the weirdest part: at the end of the day index mutual fund prices are changed to match their Net Asset Value while with index Exchange Traded Funds at the end of the day the underlying securities are bought or sold to reflect the notional value of ETF shares. As a result ETFs are constantly buying and selling, leading to yet more volatility.

Now that we have some vague understanding of ETF structure, here is how they screw things up for little companies. This happens in two very different ways, first by reducing market interest in individual stocks in favor of funds that hold those stocks and second by amplifying the share volatility of small companies that are not widely traded.

In relative term,s retail investing in the USA has died. The huge trading volume increases of the last two decades have been driven almost entirely by institutional traders with their computers buying or selling billions of shares per day. Compared to these institutions, you and I and our trades have almost no impact on where the market is going. Since we have no sense of efficacy, we trade mutual funds or ETFs, which is to say we let the institutional investors do it for us.

“People have given up on picking stocks,” said Bob Litan. “Indexes are cheaper and ETFs have tax advantages. So much money is now in the index ETFs that many investors no longer care about the individual companies that underly the index.”

If an ETF is comprised of large cap stocks like Microsoft and Dell, that’s fine, but if the index is composed of smaller companies like the Russell 2000 index, those companies with very few shares outstanding are in for a wild ride. One ETF, IWM-Russell 2000, is the largest shareholder for more than 800 of the companies in that index. If the ETF goes up then the ETF has to buy more shares of the underlying securities or issue more shares of the ETF, itself. If the ETF goes down then it may have to sell shares. And none of this has anything to do with the fundamentals of those particular underlying stocks.

The shares go up and down, well, because they go up and down, which makes a CEO feel helpless — sometimes so helpless that they my choose to opt out of the system by foregoing an IPO altogether.

“The index is the tail that wags the dog, ” Litan continued when I talked with him yesterday. “It’s like riding a bull. Why IPO into that?”

And so, more often than not, tech startups these days walk away from the public markets.

Next: What’s to be done about this problem and how can it make us all rich?

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Nearly every day I hear from at least one person who thinks I am an idiot. Typically they are complaining about something I wrote months or even years before, so I often confirm my idiocy by not even remembering what has them so upset. This week, however, I was contacted by an upset reader who may well have a good point, so let’s reconsider for a moment the security of Global Positioning System — GPS.

I wrote more than a year ago that a Government Accountability Office report was overblown, claiming a 20 percent chance of the GPS system going down in the next few years because the U. S. Air Force can’t launch new satellites fast enough to replace those that are dying. I just didn’t see this as a big deal and said so.

This week, however, I heard from a retired communication engineer who lectured me at great length about my various failings as a human being, but in the process made a couple points that I have to concede are correct. The first of these is that the GPS system is vulnerable to a catastrophic solar storm and we have reason to believe such a storm might be coming between now and 2013.

Or not.

That’s the way it is with these things, you know. A lot could happen, but nothing must happen. Still, his argument was sobering. Basically we are headed toward a peak of sunspot activity in 2012 or so that could well trigger a Coronal Mass Ejection (CME) that could take out half or more of all geosynchronous satellites, not just GPS. No more satellite navigation, no more cable TV.

Here, simply to infuriate space scientists everywhere, is my simplistic explanation of a CME. Remember how in Ghostbusters they weren’t supposed to allow the beams from their nuclear-powered ghost guns to cross? Well there are similar magnetic beams that emerge from sunspots and solar flares and if two of those with opposite polarities should happen to cross, a magnetic burp follows, ejecting millions of tons of magnetically charged material from the Sun’s corona headed toward the Earth at speeds up to two million miles-per-hour. That’s a Coronal Mass Ejection or CME.

CME’s come in various sizes and velocities. CME’s aren’t intrinsically aimed at the Earth and could just as easily dissipate into empty space. Many CME’s don’t even make it as far as the Earth. But if conditions are right, CME’s can do a lot of damage. A CME hit Quebec in 1989 causing a nine-hour blackout and $4.3 billion in damages to the Canadian power grid. The mother of all CME’s in 1859 took down every telegraph in the world, causing arcing, fires, and melted wires in the equipment. Imagine what something like that would do to your PC or cellphone!

“Something like that” in this case means a very quick release of energy comparable to 100 billion Hiroshima atomic bombs. It would fry satellites, overload power grids, destroy all our computers, and possibly put the lights out for most of us for months simply because it would take at least that long to replace all the blown utility transformers.

Interestingly, CME’s have impact not only on that part of the Earth facing the Sun, but also on the backside where the Earth’s magnetic field is stretched and then rebounds releasing terawatts of destructive energy. So the entire GPS constellation including spare satellites is endangered.

Okay, against a threat of that scope and grandeur I’ll accept that the GPS system is vulnerable, which brings me to the guy’s second point: the only viable alternative to GPS that is ground-based is the old LORAN system, which was recently switched-off for good.

IF we really believe the GPS system is vulnerable and there is even a remote chance of these actions coming to pass, then shutting-down LORAN was a mistake. The U. S. Coast Guard shut down the LORAN system to save $36 million per year in operating costs, which to my critic this week seems a false economy. It might be better, he says, to actually add LORAN capability to all GPS-enabled devices, since LORAN works indoors and in burning buildings, too, where GPS doesn’t.

I stand corrected.

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Rested, rejuvenated, and — most important of all — replenished with good ideas, the Startup Tour is getting back on the road, revisiting the companies we saw last summer. That first visit set a baseline, introducing the startup companies, but this trip is our chance to help.

Just like they did on the old Newlywed Game, we’re bringing to each company a gift “chosen especially for you.” This is typically something we sensed was missing on the first visit that — through the power of television — we could help provide on this second trip. Sometimes it will be a customer, a strategic partner, a distributor, an investor, a new head of marketing or CEO for those companies that need one, or even a hero for inspiration. For about a third of the companies we’ll be bringing plain old money.

All startups think they need money and some can actually use it. For many, though, cash alone isn’t the answer, because cash brings complexity and obligation — two things these earliest stage companies often can’t handle. Ready-fire-aim may work in Silicon Valley, but we’re avoiding Silicon Valley, remember? So aiming is what we’re all about.

Sometimes finding what we can do to help is easy. The company can’t get a meeting at WalMart, for example. We can fire-up the cameras and maybe get that meeting in Bentonville, but first we’d argue against it, because working with WalMart kills many companies, especially those with shallow pockets. WalMart shows vendors no mercy and doesn’t care how big or small they are. It may be better to aim our cameras elsewhere.

But finding money, it turns out, is a little harder.  At least it was for me.

Every startup needs a break, a lucky accident like sitting next to exactly the right person on an airplane or finding the ideal partner at your son’s Cub Scout meeting. But such accidents happen only to those who actually get on planes and attend Cub Scout meetings. Good fortune rarely knocks on doors.

Nor does capital, it turns out.

I had this idea right from that start that venture capital would play a role in both the Startup Tour and the TV show. Here I had this crowd-sourced deal funnel filtering hundreds of good companies into a couple dozen really exceptional opportunities. Readers did the work of a dozen overpaid VCs finding the best startups. What resident of Sand Hill Road wouldn’t want to hitch a ride on something like that? I envisioned offering my VC friends the chance to tag along, giving sage advice on TV and snapping-up the best investment opportunities in the process. It was going to be a win-win.

Except I couldn’t interest anyone in seriously participating.

“We’ll eventually see all those companies,” my VC friends said to me. “They’ll come to us. ”

No they won’t.

Most of our Startup Tour companies have never even met a VC and wouldn’t know how to arrange a pitch, much less do a good one. That’s the Silicon Valley tradition of startup-as-theater. Startup Tour companies have real products, not just ideas, and they’ve already survived an average of six years. I’m not saying they can’t do an elevator pitch nor that they shouldn’t have to do one. I’m saying the Tour and the show aren’t about pitching, but doing.

My VC friends turned out to be too lazy, I think, to participate in what would have been an amazing opportunity for any of them. That’s their loss. But where was I going to get the money?

Hong Kong, mainly.

Now does it make more sense that I’ve been writing about China?

America is strapped (all except the banks and of course the big corporations sitting on $1.4 trillion in cash). Okay, Americans are strapped, while Asians seems more prosperous and less risk-averse, at least for now. Little Hong Kong has plenty of accredited investors still interested in the American Dream. Ironic, eh?

So with my friend Jong Lee, the guys and gals of Hambrecht & Quist Asia Pacific, and Kingsway, a Hong Kong investment bank, we raised the Startup America Fund specifically to help some of these little Startup Tour companies. H&QAP is a Hong Kong-based private equity firm that is 25 years-old and has $2.8 billion under management, so there is adult supervision, which means no new RV for Bob, dammit.

These aren’t prizes, they are investments. We sat down in Hong Kong and decided as a group to practice old-time venture capital, investing modest amounts in real companies with real products that are ready — or nearly ready — to go. The investments vary from $100K to $5 million, which are amounts beneath the threshold of many Silicon Valley VC firms, and involve a substantial component of sweat equity — the fund’s sweat, not the founder’s. Helping startups to succeed is what this is all about, though making a profit is nice, too.

So we’re getting that win-win after all from this desparate exercise in me channeling Simon Cowell.

I only wish more American investors and institutions had taken my call.