I suspect I am not alone among people over a certain age. Technology only entered my life as I approached my teenage years in the form of a second-hand ZX81 – my first gaming experience was a Binatone dug out of a jumble sale, its one and only game a black and white version of the classic Pong. Yet while I am hardly a so-called digital native, nor am I a Luddite either. Even if I wanted to be, it is increasingly impossible to live a technology-free life, and certainly not in the workplace. Nor would that be desirable, given the many benefits of technology that I enjoy on a daily basis (including watching too much dystopian science fiction on Netflix). Even dirty old mining is getting in on the act, as Mark Robinson explores on page 48, with many positive consequences.
It would not have been a good idea to be a Luddite when it comes to investment, either. Because just as technology has come to permeate every corner of our lives, so it has come to dominate stock markets, too. The scale of America’s largest technology companies means they have also driven the performance of its key indices. If we look back a year, just three tech stocks – Amazon, Netflix and Microsoft – had accounted for 71 per cent of S&P 500 year-to-date returns.
Yet much of the thinking that has driven this is very simplistic indeed – technology is everywhere, therefore it is a good investment. As we suggest in this week’s cover feature, investors should now look much deeper into technology for good value exposure, because it is lazy thinking like this that has got many investors into trouble time and time when chasing trends, making as it does for very crowded trades that push valuations sky high and attract many me-too competitors chasing the same growth opportunity. If that growth does not materialise, valuations can quickly go up in smoke.
Right now, this is exactly what some investors are starting to worry about – according to the latest Bank of America Merrill Lynch Fund Manager Survey in the US, the threat of a trade-dispute-induced global slowdown has sent many scurrying for the safety of Treasuries, now ahead of long-technology as the most popular trade. While that may seem like swapping one overvalued trend for another, we should still be wary of technology’s ebbing momentum.
