(FORTUNE Magazine) – PIP COBURN IS NOT YOUR AVERAGE STOCK PICKER. AS THE global technology strategist at UBS, he scours the market for opportunities on behalf of the firm's investment-banking clients and renders opinions on tech companies and sectors most likely to make them money. In the process, however, Coburn is as likely to opine on which books to read or to lecture on the lessons of technology history as he is to recommend specific stocks. Coburn, 39, writes quirky reports that take on a ransom-note appearance, with bold questions, italicized asides, and exclamatory admonitions. Of late, he has been communicating some strong opinions on tech stocks--namely that they're wildly overvalued. FORTUNE's Adam Lashinsky caught up with Coburn recently to discuss Intel's problems, Apple's appeal, why tech remains a siren for too many investors, and how a grown man with a serious expense account continues to let people call him Pip.

If tech stocks are overvalued, what will 2005 bring?

I don't think the market is overvalued per se because I think the stock market is always right. My job is to figure out the next set of right answers. I'm never gonna be one who says, "Oh, the market is so wrong." Those people end up having very short careers, terrible ulcers, or multiple divorces. They're just not happy. Having said that, what I'm seeing is the disconnect between what people are paying for technology stocks today and the fundamentals over the next 12 to 36 months. Three things can happen: First, the disconnect can remain. Second, the fundamentals can rise up. And third, the price can come down to meet the fundamentals. And I think over the next 12 to 18 months we're going to see prices come down to match the fundamentals, which for technology are reasonable but rather boring.

But doesn't tech grow faster than the rest of the market?

Technology companies in the S&P 500 are trading at a 40% premium to the index. The growth rates are as follows: Revenue growth for 2005 is 6% for technology, 5% for the S&P overall. On the earnings front it's 13% for S&P tech and 11% for all S&P 500 companies. So for that 40% premium, we're getting what is essentially a nondifferentiated set of fundamentals.

So why are investors paying that premium?

It's because of historical anchor relationships, a theory popularized by Nobel laureate Dan Kahneman, which says that individual investors develop fixed ideas--anchor positions--that they cling to for years, even when circumstances change. Tech had high growth rates and high P/Es for years, so investors are still locked into their anchor positions. They believe tech is going to be treated as special for the next ten years. But I think they're going to end up in a bad position. I think many of the smartest folks are playing a game of chicken right now, even though they know that a major reanchoring is ahead given tech's muted outlook.

You also say that most estimates are wildly wrong. How can a tech stock investor possibly get it right?

Most estimates are wildly wrong because we're bad at understanding the changes driving product sales. We're terrible at forecasting what demand is going to look like. But we're dealing with growth rates that have some limits these days. We're no longer dealing with whether the PC is going to grow 15% or 25% a year. Now it's in the zero to 5% range. That means the margin for error comes down. Volatility decreases too.

And volatility, while frightening, offers the best chance for reward?

It does. Volatility is typically associated with stocks that are unpredictable and companies that have the potential for high growth. So if those factors go in your favor there's plenty of room for upside.

You like companies that reduce what you call the "total perceived pain of adoption." What's your favorite play on that theme?

Apple's probably done it best for now. And it's nowhere near done. Digital natives are people under 25. Digital immigrants are over 25 but aren't afraid to use technology. Analogists still make up the bulk of the population. iPod plays to digital natives and digital immigrants who have a pretty high interest in music. That's still a limited market. The next set of tricks for Apple is to get to those analogists. So Apple is making the product easier to use. And the color makes it a fashion statement. You don't have to be an audio nut to want the mini iPod. Incidentally, Google is unbelievable at this stuff--making the product really easy to use.

You write that Intel is years beyond its period of great growth. Is Intel as a stock finished?

It is a very small position in our portfolio. They generate a lot of money, but my problem is their inability to change over the past five to six years. They've been trying--and I hate to say try, because Yoda once said, "Do or do not; there is no try"--but they haven't really done anything. That starts to negate all the tremendous change they accomplished in the '80s when they moved from being a memory company to a logic company.

What are some companies whose stocks you do like right now?

Cognos (COGN, $42) and Hyperion Solutions (HYSL, $46), two software companies that do business intelligence. They're playing off the need for companies to consolidate and integrate their technology. Integration is a five-decade theme. The Age of Information lasted almost five decades. It started in 1948 with the release of a book called Cybernetics. And it made it until 1995, and I'd say it's dead. We don't need more information. We have too much of it. What we do need is to be more effective and to integrate a lot of the information, applications, and gadgets we have. To cut through the nonsense. Cognos and Hyperion are selling lots of product right now. The expectations aren't too outlandish, the multiples are reasonable, and the growth is better than good.

Here are just a few of the references you made in one recent report: Machiavelli, HAL from 2001: A Space Odyssey, Field of Dreams, Anaïs Nin, Aristotle, George Santayana, and Mahatma Gandhi. Are your clients, typically fund managers, ready for such erudition?

Absolutely. At the beginning of the 1990s we handed out Nobel Prizes to people who were going to make a science out of investing. Then we spent a decade being completely fooled. People are confused as to what works. So they're looking for new answers.

Did your parents name you for the character in Great Expectations?

No. My given name is Philip, though they always called me Pip. What's more, I've never read the book.