Igor Danilenko, Managing Director of the large world-class investment fund, about the world economy’s technological giants and the specifics of investing into them, in Elizaveta Osetinskaya’s program (10/2020).

VIDEO: Russian; Translation Support

Coherent exposition of the interview

1. Technological giants’ concentration. The presentation begins by stating that global markets are effectively controlled by four dominant technology corporations — Apple, Amazon, Microsoft, and Alphabet. Their influence expanded significantly during the pandemic, as shifting consumer behavior led to substantial stock appreciation. Companies such as Tesla and Zoom demonstrated similar rapid growth, reinforcing the broader market trend.

2. Technology as a defensive asset. Investors increasingly view major technology firms as defensive holdings within their portfolios. These companies tend to perform well under most macroeconomic conditions due to their strong market positions and diversified revenue streams. High margins and elevated valuation multiples make them particularly attractive for long-term institutional capital.

3. User and investor psychology. Attention-driven business models play a central role in supporting tech valuations. Social platforms employ dopamine-based engagement mechanics that keep users highly active, indirectly boosting investor interest. As a result, investing itself becomes gamified for many retail participants, while U.S. pension funds continuously accumulate shares of the largest tech players.

4. Competitive advantages of major platforms. Large technology companies benefit from powerful economies of scale and structural advantages unavailable to traditional businesses. Amazon demonstrates this clearly by compressing costs and reshaping the retail sector through unprecedented operational efficiency. Their ecosystem models enable rapid expansion, proactive acquisition of smaller rivals, and long-term preservation of market dominance. Some national (domestic) tech firms are also experiencing strong expansion and actively pursuing consolidation strategies.

5. Leadership as a driver of market perception. Corporate leaders significantly influence how investors evaluate technology firms. Figures such as Elon Musk enhance the market narrative surrounding their companies by presenting ambitious visions of industry disruption. However, when expectations are not met—such as Tesla’s exclusion from the S&P index—market reactions can be sharp and negative.

6. Uneven effects of the pandemic. The pandemic created substantial asymmetry across industries: small and medium-sized enterprises faced severe challenges, while major tech companies adapted with remarkable speed. Amazon, for example, hired 100,000 employees almost immediately to handle rising demand and operational shifts. These companies used the crisis to expand their market share and consolidate their leadership positions.

7. Diversification as a source of corporate resilience. Igor Danilenko highlights that companies with a wide range of products and services tend to remain more resilient in periods of economic stress. Diversified technology firms can offset declines in one business segment with growth in another, stabilizing overall performance. This structural flexibility represents a key factor in their long-term attractiveness to investors.

8. Caution toward hype-driven businesses. The presentation advises investors to be skeptical of companies whose valuations depend primarily on market excitement rather than measurable fundamentals. Excessive hype can create inflated expectations, leading to mispricing and subsequent capital losses. A disciplined investor must distinguish between genuine value creation and speculative enthusiasm.

9. Principles of investment discipline. The presentation emphasizes long-term portfolio construction, discouraging excessive concentration in any single sector—even technology. Diversification, systematic accumulation of assets, and sober evaluation of a company’s financial performance are presented as essential principles. Investors are encouraged to focus on stable earnings, competitive advantages, and corporate governance metrics.

10. Valuation through multiples. Traditional companies typically trade at price-to-earnings ratios in the 5–7 range, reflecting more conservative growth expectations. In contrast, trillion-dollar technology corporations trade at multiples of 40–50, with some reaching levels of 600 or even 1000. Such elevated ratios signal potential overvaluation and heightened sensitivity to earnings disappointments.

11. The need for rational, fundamentals-based investing. The presentation concludes with a call for rational decision-making in an environment dominated by technology-sector optimism. Investors are urged to prioritize objective fundamentals instead of relying on narratives, trends, or charismatic leadership. Over the long term, sustainable earnings and operational resilience remain the primary drivers of value, regardless of market sentiment.