Recognize The “Hype Cycle” When Investing In New Technologies

Remember the 3-D printing craze? In 2014, it seemed like the topic wouldn’t go away. The hype was deafening as Stratasys, one of the leading stocks in the industry, traded at an all-time high during the year as price-earnings multiples gave way to thoughts of a future filled with possibility. “Industrial 3-D printing is at a tipping point, about to go mainstream in a big way,” Dartmouth professor Richard D’Aveni gushed in the Harvard Business Review in early 2015. But then the hype disappeared. A Goldman Sachs report, noting the “ hype cycle ,” points to a timeline that points to when a firm has pricing power and when it is diminished.

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