Pulp friction – The tech sector feels like investors have made a date to meet up in the year 2000


Andrew Evans

Andrew Evans

Fund Manager, Equity Value

Your house was very small, with wood chip on the wall.

When I came round to call, you didn't notice me at all.

I said, let's all meet up in the year 2000.

Won't it be strange when we're all fully grown? 

If history really is more inclined to rhyme than repeat itself, then whoever is currently writing its lyrics – in stark contrast to Jarvis Cocker of Pulp – really needs to up their creativity. Just 15 years after the internet bubble burst, the market is in the throes of another technology boom – with the proliferation of highly-valued so-called ‘unicorn’ stocks we discussed in Hit and myth just one of its manifestations. 

‘Disco 2000’, whose lyrics you may well recognise above, is the 1995 Pulp hit where Cocker sings as the geeky schoolboy yearning for his childhood friend, Deborah, who is now very popular and out of his reach. Here on The Value Perspective, we believe an investment analogy may be drawn here – albeit, unfortunately, with us and other value investors playing the role of the lovelorn geek. 

As some people dance from one exciting new technology to the next, value investors – constrained by our undying belief that risk and reward are tightly tied to the price you pay for an asset – can do little more than look on. Every now and then, however, we see the odd sign we are not totally alone in our views on the sector, such as this chart from technology research firm Gartner. 

Source: Gartner, August 2015

The chart seeks to offer a graphic representation of the excitement and demise that are part-and-parcel of new technologies and while the subject matter is fairly subjective – indeed, there is something ‘Cockeresque’ about phrases such as ‘Peak of inflated expectations’ and ‘Trough of disillusionment’ – it does a good job of illustrating the emotional journey surrounding anything hyped-up or faddish. 

Here on The Value Perspective, we accept that anyone involved in new technologies might dismiss our suspicion that the sector could be approaching ‘peak start-up’ as Luddite and lacking imagination in its own right. Let us quickly add then that we have no issue at all with technological processes and the exciting developments these could bring for the world. 

Where we do have an issue, however, is with how such processes are being valued. Imagination can be very helpful in investing and yet it must always be trumped by common sense – and a healthy dose of scepticism. So, as it starts to feel as if we are once again meeting up in the year 2000, we believe we are less likely to share in the melancholy of Pulp’s song if we avoid these hyped-up stocks all together. 

In common with Deborah’s lovesick admirer, those currently besotted with technology start-ups might want to think about moving on with their lives. If it helps them to do so, we can sing along with a few of the lesser-known lines from ‘Disco 2000’ …


And now you've paid your money and you've taken your choice.

I know we'll never meet again but I want you to know

Want you to know that I remember every single thing …


Andrew Evans

Andrew Evans

Fund Manager, Equity Value

I joined Schroders in 2015 as a member of the Value Investment team. Prior to joining Schroders I was responsible for the UK research process at Threadneedle. I began my investment career in 2001 at Dresdner Kleinwort as a Pan-European transport analyst. 

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