STREET DOGS

Tech mania is resurgent. Investors are again glancing at a clock with no hands — and dismissing the risk. The profitless start-ups that were wiped out in the dotcom crash have consolidated into an oligopoly composed of leading survivors such as Google and Apple. These are giants with real earnings, yet signs of an irrational euphoria are growing.

One is pitchmen bundling investments with very different outlooks into a single package. Last decade, they bundled Brazil, Russia, India and China to sell as the Brics.

More recently, they packaged Facebook, Amazon, Netflix and Google as Fang, then, as names and prospects shifted, subbed in Alphabet, Apple and Microsoft to make Faama. Others are hyping the hottest tech companies in China as BAT, for Baidu, Alibaba and Tencent. Whatever the mix, acronym mania is usually a sign of bubbly thinking.

As the US stock market keeps marching to new highs, the gains are increasingly concentrated in the big tech stocks. It’s true that prices today are not quite as widely overvalued as in 1999. Only a few technology companies — mainly the internet giants — are trading close to the valuations of the dotcom era, when the average price:earnings ratio for tech companies hit 50. The average ratio for the sector today is 18.

However, the scale of today’s tech boom is hidden by the fact that much of the investment has moved into the hands of big private equity investors. These new private funding channels are creating “unicorns”, companies that haven’t gone public but are valued at $1bn or more. There are nearly 300 worldwide.

If signs emerge that these privately owned unicorns are faltering, the value of publicly owned tech companies is likely to do likewise.