Tech Cycles Through the Ages: From Telegraphs to EVs

During their latest episode of the VALUE: After Hours Podcast, Taylor, Carlisle, and Pavese discussed Tech Cycles Through the Ages: From Telegraphs to EVs. Here’s an excerpt from the episode:

Chris: I think there’s a great chart, and I’ve got a letter keyed up that I wrote. I actually wrote it for our midyear letter back in June and decided our midyear letter was already way too long, so I cut it out. I was saving it’s called AI insanity. There’s a chart there that we borrowed, I forget where we “borrowed” from somewhere else. I forget where we borrowed it from, but it shows– There’s that classic chart of stock market cycles that shows buy the dip and where people puke and where all in, all in, all in, and then it’s like the trough of delusion.

There’s a similar chart on tech cycles, and I think going back again to 1999, 2000 makes sense, where the Internet stocks peaked in March 2000. That was the peak of expectations for the internet. But the internet didn’t peak in 2000 by any means.

Tobias: Right.

Chris: When people look at that today and say, “There’s no way AI is going to be smaller today than it is,” or “It’s not going to do all these great things.” They’re probably right, but that doesn’t have any– The correlation between that statement and the valuation of the underlying stocks is zero, if snot negative. There’s a period where the stocks are going to get like you saw on Internet, where it takes multiple years for that just sentiment to be washed out. But in the meantime, the technology is progressing and the use cases are progressing, and it’s a multiyear transition. There’s a great book, and I referenced this in the write up, and of course, I’m completely drawing a blank right now, but it’s the– [crosstalk]

Jake: Carlota Perez, probably.

Chris: I’m sorry.

Jake: Carlota Perez, the history of financial innovation. Technological iInnovation.

Chris: It’s similar to that. It’s a different name though. I’m going to have to circle back with you, Jake. I’m going to forward it to you. But that’s basically the premise. I think I’m thinking of a different one. There’s tons of books on market manias and bubbles, from [unintelligible [00:26:51] to Ed Chancellor to Mackie, but then this is the combination of that with tech innovation, which sounds similar to whatever book you’re talking about that maybe I need to read as well.

Jake: It sounds like you already read it.

Chris: It goes back hundreds and hundreds of years, none of this is new.

Jake: Right.

Tobias: Yeah. Mikhail Samonov has a great 200 years of value. You can see in that introduction of the Telegraph in 1844 had a pretty impact. The steam engine had a pretty big impact. All of those were like tech cycles, they look exactly the same.

Chris: Newspapers, radio, cars. rail.

Tobias: 1690s was the electronics–

Chris: Auto was a broke market for how long. It’s an awful business, and somebody’s got to tell maybe certain other people in the EV industry the same thing.

Jake: [laughs] They’re finding out.

Tobias: Are they?

Jake: Oh. I don’t know.

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