I’ve spent quite a lot of the last two weeks angry. For nearly two years there have been seats on the tube and now suddenly there aren’t – but it’s much worse than that. People on the Northern Line seem to have forgotten how to be Londoners: they don’t move down the carriage, and – this is the bit that is most irritating – they do it because they want to stand near to each other and talk to each other. They don’t realise this is what the Sony Walkman and its descendants were specifically invented to avoid.

It’s not difficult to figure out what’s going on: they’ve never worked in London before at a time when it’s not a pandemic. Label them Gen Z or whatever you want, it doesn’t matter – they’re new in town, and don’t know what’s normal. I look forward to their heads dropping and their new-found silence as they realise….only forty more years of this commute. Their whole lives they’ve been told they were special – actually we’re all different shades of the same, of normal. It must be quite a comedown.

It’s been depressing watching share prices too, but again history seems to indicate we’re back to ………..normal. Our regular readers will have appreciated the subtext in our October 2021 quarterly entitled “COVID bounceback delivers full valuations”, that we thought we were at or near the top, and note the unsubtle repeated use of the “all time high” about many of the metrics.

Whatever charts you pick, it’s clear that we’re now closing on being back to normal. The near-term risk is over-compensation for the lockdown exuberance, with retail influence, via redemptions, constraining fund managers exploitation of opportunities. Throw in various inflationary pressures and the threat of war in Ukraine, and this becomes a vicious circle of redemption catalysts.

But we’ve been around a while (the longest tenure and biggest team in Tech on AIM – continuity and experience) and just as with the opportunity in March 2020, we can see that timing will be everything. First step is, how do you define normal? We let our charts decide:

These are derived from our finnCap Tech 40 and finnCap Next 50 indices, dating back to 2014, and they shine a light on “the norm”. We have maybe a touch more value at risk before we are there: maybe a little high if you go by averages for P/E; at the top of the “normal range” for EV/EBITDA; and EV/Sales, the least precise of all the stats, is the most back to historic norms. See the table further up this page for the actual 8 year averages, highs, lows, and the current levels.

Valuations will remain nervous, we expect – go and have a play with timelines and metrics on our finnCap Tech Hub: as ever, and just like our research, uniquely free to all, and there to be explored alongside the growing library of demos. Unlike a Gen Z on the Northern Line, we know it actually is special.

Happy Friday