Outlook: Techno-mania turns stock market into a casino

FEW STOCKS better epitomise the present bout of technology mania than Psion, the palm held computer company. Over the past two months the shares have rocketed from just pounds 8 to a peak of a little more than pounds 30. Then, like a spent firework, down they plummeted yesterday, by more than 40 per cent at one stage, only again to bounce back up, after two suspensions and a clutch of try-on rogue trades, as the bargain hunters moved in.

Is there any rational explanation for these wild gyrations, or are they just a symptom of the present madness? A bit of both seems to be the answer.

Until yesterday's unexpected announcement from Ericsson that it is linking up with Microsoft to develop internet and e mail functions for mobile phones, it was generally assumed that Psion had the field to itself. In a blaze of publicity last year, this startling British success story had managed to sign up the world's top four mobile phone companies - Nokia, Ericsson, Motorola and Matsushita - to its Symbian project to develop the next generation of smart mobile phones and palm held computers.

It was never very likely, when you think about it, that big brother Gates was going to sit there on the sidelines and allow Psion a clear run in what is expected to become the world's fastest growing market for operating systems. Nor was it at all likely that companies as fiercely competitive as these four mobile phone goliaths were going to sign up collectively and exclusively to just one of those developing technology in this area.

But then this present heady investment craze isn't about the likely, is it? Rather, it concerns the merely possible, or just about plausible. If you think this sounds a little unfair on poor little Psion, which unlike so many other participants in the techno-mania, actually already has a very credible product with outstanding growth potential, you would be right.

As it happens, what Microsoft is planning to do with Ericsson, which is to develop a browser, is a bit different from what Psion is doing in attempting to create an operating system. At this stage then, Ericsson's link with Microsoft is not incompatible with its continuing participation in Symbian, though plainly it has potential to become so. It could therefore be argued that Psion remains one of the better new economy plays.

The trouble is that stock markets have become incapable of distinguishing between the good and the bad, or of credibly assessing the growth prospects and market opportunity of these new economy companies. All that is required is the magic words "new economy" to be tagged to a company's prospects, and away it goes.

It is hard not to laugh at the naivity of it all, or marvel at the cynicism of some of those who are driving the process. For many market professionals, the game has become one of creating momentum first thing in the morning by buying a little stock and promoting it on the internet bulletin boards, then selling into the strength as the lemmings pile in. We are dealing here with a fully blown mania, without a shadow of a doubt, and like all manias, it is bound to end badly.

As the money - smart, funny and just plain stupid alike - chases the techno and telecom sectors ever higher, older, quality stocks in traditional industries are bombing. Take Barclays - down from pounds 20 to little more than pounds 16 in the last month alone. A judgement day will come, eventually, when the wheat will be separated from the chaff. Unfortunately, it is as hard as ever to know when it might be or what might trigger it.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions