We have compared the dot-com “bubble” to the hedge fund “bubble” several times on these pages.  Nearly three years ago, for example, we suggested that hedge funds were to mutual funds as e-business was to bricks-and-mortar businesses in the late 1990’s – a disruptive technology that has the potential to delineate and re-organize traditional value propositions and their supporting business processes.

Last summer we told you about professor Richard Taffler, the British pioneer in the emerging field of “emotional finance” (note: different than behavioral finance”).  Taffler wrote an interesting paper in 2007 that compared the emotional stages of the hedge fund bubble to the parallel stages in the dot-com bubble (namely: Emerging to View, Rush to Process, Psychic Defense, Panic Phase, and Revulsion and Stigmatization)

While Taffler’s model lacks a happy ending, another dot-com analogy introduced in the FT yesterday ends on a far more positive note.  In a column titled ” Hedge fund industry climbs its ’slope of enlightenment’ “, GAM’s David Smith draws on yet another technology rubric to explain the current state of affairs in the hedge fund industry.

Smith draws on an idea called “Hype Theory” originally proposed by tech consultancy Gartner Group.  Nearly a year before the dot-com bubble burst, Gartner consultant Alexander Drobik wrote that e-business would soon come to an “end”.  Argued Drobik: More…