Don’t invest in technology

The USA narrowly avoided voting itself into financegeddon over the weekend, but nothing has changed for the World’s Sole Superpower(TM). It is still spending money at a rate vastly higher than it can generate – and seeing most of that money getting siphoned off into corporate coffers while normal people sleep in sports halls.

As yields on Spanish bonds continue to drift higher than they were before the Euro was ‘saved’ the other week, the Euro can-kicking exercise looks to be every bit as effective as trying to fend off Moth-Ra with a table spoon and a French-English phrase book. Meanwhile, the Chinese are in the grip of several unsustainable inflationary booms in their own economy and when reality dawns will have learnt that slave labour an economy maketh not.

So your technology shares are overpriced. Whenever the crash arrives, the one thing people won’t be doing is buying an iPad 3.7 or whatever generation of Android phone we’re on now. Subsequently, the value of all these hilariously pointless doodads like Foursquare and Twitter is going to sink faster than Rik Waller chained to a fridge full of lead ingots.

The upgrade cycle is going to look a LOT longer in 2013 than it does now which is going to play merry hell with whole swathes of assumption behind the price of tech shares. Watch for a new trend in downgrading as people discover that, actually, spending 40 quid every month on a phone with Angry Birds makes little sense in a world where it costs £2.80 for a packet of crisps.

The technology boom lasted from 1999-2011, which wasn’t a bad innings. Only on the other side of the crash will it be apparent which services actually added value to our lives – and the list is likely to be quite short.

 

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