The Information Age is about to get interesting
The IT revolution has been around for a while now, says Merryn Somerset Webb. But we're just getting to the good bit.


In this week’s podcast (moneyweek.com/podcasts) I talk to Rob Arnott, the chair of Research Affiliates. We talked a good bit about the UK market: he is as convinced as we are that now with Brexit off the front pages (the gas shortage has nothing to do with Brexit) and the UK’s Covid-19 strategy proving to have been more successful than one might have suspected last year, there is no good reason for our market to be trading at a 60% discount to the US market. We talked about the US market too – I wondered if it is possible that the valuation differential between the US and the UK might be closed not by the UK rising, but by the US falling.
In part, yes, says Arnott – there are parts of the US market that are definitely not in a bubble of any description (think energy) but there are other parts that are (technology). It makes sense for investors to steer away from the super expensive to the reasonably valued.
The case for optimism
I’m minded to agree with him, of course (MoneyWeek tends to be biased towards value investing). But there is also a very compelling alternative view. Kirsty Gibson, co-manager of the Baillie Gifford US Growth Trust, suggests looking at some of the more “optically expensive” US companies – not with an eye to short term price/earnings ratios, but with one to the idea of the stage we are at in our current technological growth cycle (see carlotaperez.org for more on the theory regarding this). Much of the time nothing much happens; but every now and then (five times in the last 550 years) we get a sudden speeding up in innovation – a technological revolution. Think the Industrial Revolution, the age of steam, the widespread adoption of electricity, and the age of oil and mass manufacturing.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
In all cases there are two stages. First, the “installation” stage, in which the new technology enhances a few sectors and makes a few great fortunes. These stages – which typically last 20 years – tend to be characterised by rises in inequality and social unrest. Next comes the good bit – the “deployment phase” – the bit when the new technology enters all parts of the economy and benefits everyone. We are, reckons Gibson, around the beginning of this bit of our stunning information technology revolution right now (a little earlier than we might have been without Covid-19).
One example? Education. She points to the rise of Coursera, one of the originators of massive open online courses (MOOCs) and a company now using the internet to open access to high-status education to anyone with the ability to take it on. Health is another example: diagnosis is well on its way – via artificial intelligence (AI) and genomics – to being less educated guesswork, and more accurate, personalised and efficient. Think about the change underway, the change to come and the almost limitless opportunities there are for companies set up to grasp them; and, while one-year valuations are not meaningless, they can’t offer the information that is really important – about the potential tied up in revolutionary companies.
I love this gloriously optimistic way of looking at it – there’s a reason I have and will keep holdings in a variety of Baillie Gifford funds. But there’s room for both views in a portfolio – and sometimes price really does matter. I am topping up my conventional energy holdings too.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).
After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times
Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.
Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.
-
Review: The Grill at the Dorchester
The Grill at the Dorchester has a new, easy-going atmosphere, but the food is serious: from punchy beef wellington to grown-up tarte tatin, says Dan McEvoy
-
Review: The Hut, Colwell Bay – a seafood lunch with a holiday feel
Travel Getting to The Hut in Colwell Bay on the Isle of Wight is almost as rewarding as actually eating there
-
Global investors have overlooked the top innovators in emerging markets
Opinion Carlos Hardenberg, portfolio manager, Mobius Investment Trust, highlights three emerging market stocks where he’d put his money
-
Investors should cheer the coming nuclear summer
The US and UK have agreed a groundbreaking deal on nuclear power, and the sector is seeing a surge in interest from around the world. Here's how you can profit
-
Healthcare stocks look cheap, but tread carefully
Shares in healthcare companies could get a shot in the arm if uncertainty over policy in the US wanes, but are they worth the risk?
-
The Palace of Westminster is falling down
The Palace of Westminster is in need of repair, but the bill is prohibitive, says Simon Wilson
-
'Gen Z is facing an AI jobs bloodbath'
Opinion It has always been tough to get your first job, but this year, it's proving tougher than ever. AI is to blame, says Matthew Lynn
-
Should the Online Safety Act survive?
The Online Safety Act, a measure to safeguard children, is having unintended consequences
-
The secret behind Sweden’s success
Opinion Sweden's stock market is in rude health, says Max King. Why can't Britain follow suit?
-
Prabowo Subianto: Indonesia’s Deng Xiaoping
Prabowo Subianto, like his Chinese hero, is taking power in his 70s with big ambitions for his country. Yet many view his return to politics with dread