Look Past The Overhyped Facebook Effect

It is an election year, after all.

I don’t think that “banking and finance sectors” are pulling for Obama (they just want to make money) but we do have a big election in a little over 8 months and with Obama, all of the (GOP majority) house and 1/3 of the Senate hoping to stay in office we have a lot of powerful people working behind the scenes to make sure the economy “keeps improving” (or at least seems like it is improving) so people don’t vote for Ron Paul, or a Tea Party Guy or the Green party…

BillyBalls,
I do not agree with your premises.
Stocks are not overvalued. They’re twice higher than during the 2008-2009 free fall, but they’re merely on the path to get back to historical averages. Take a log chart of the S&P (starting in 1950) and you’ll see the past 2 artificial pump/crash periods of 1995-2000 and 2003-2007 have been fully digested.
Economies are going in cycles and not all regions are created equal.
Europe has a tendency to postpone corrections using its massive government apparatus(es). They’ve cushioned the 2006-2009 blow in their economies but by putting forward some of the losses. RE is still overpriced compared to income in many areas of the Eurozone (everywhere except Germany) and they have to churn through that nugget sooner or later.
China is a fast learner. They bubbled up but are engineering a controlled landing. I hope it will keep being controlled. They’re still growing though. Pretty amazing but what would it be without full control and more than opaque reporting?
The US is much much more efficient in all regards. Even with the bailouts, many have lost their shirts. The correction was deep and now the vicious circle that was the engine of this correction has stopped and started to run in reverse. Even slow national housing is not stopping the recovery. Housing activity starts at almost 0, therefore anything is good news from now on. The rest of the economy is coming back on its feet. 3 years after the bottom, it’s been long overdue and it’s good news for all of us (maybe not for the GOP though).

Well I certainly agree with BillyBalls that yields on U.S. Treasury bonds have been pulverized. I don’t think that doesn’t mean they can’t go lower, though.
At a few different times in the last two years, one month T-bills traded in the secondary market at negative yields. And now The Treasury wants to get in on that action (scroll down to ‘graph 7):

The elevated bid-to-cover ratios in 4-week bill auctions in late December were related to the rule that bounds bill auction stop-out rates at zero. The question was asked if it made sense for Treasury to permit bids and awards at negative interest rates in marketable Treasury bill auctions…It was the unanimous view of the committee that Treasury should modify auction regulations to permit negative rate bidding and awards in Treasury bill auctions as soon as feasible. Rutherford noted that any decision on this policy change would likely be made at the May refunding.

Emphasis mine. So soon, you too will be able to easily pay good money for the privilege of holding U.S. debt, and you’ll like it when the Greece situation reaches its denouement.
I won’t offer a prediction, but maybe all that “capital that has no where else to go” will go into more condos in SOMA / South Beach if the stock market is obviously overheated. Stranger things have happened.

The relationship between broad equity markets and D7 real estate has been discussed here before: https://socketsite.com/archives/2010/04/2430_scott_street_an_entirely_different_dow_theory_in_a.html
The Fed, ECB, BoJ, BoE are all engaging in extensive easing policies. There are just not many places to park cash today, so equities have gotten a bump-up..just as they did during previous easing programs. Simply look at the massive reduction in volatility we’ve seen in the past few months — in correlation to the actions of central banks.
Returning to D7 real estate, it’s early in the game. 2601 and 2701 Broadway finally sold for pretty fancy prices.
And again, it’s the marginal buyer who sets prices — even just a handful of social media IPO types could continue the trend.
Anyone remember the BeBos?

The stock market is going to the moon. Look, I know I said sell, sell, sell LNKD, GRPN and Pandora on Nov 28th, and they are up 30% to 50% since then, but I’ve learned my lesson. Now I’m buying everything I can get my hands on. Just not SF real estate which is still going down another 50%.
thanks tipster, now we know how to tell the top and bottom of markets

What some people miss is that much of this newly created credit is not “sterilized”. Hence, we experience money creation which is a hugely inflationary force. During times of inflation, people need to invest in equities, hard assets, etc. to maintain their wealth.
Why do you think companies are reporting 50 year record-high earnings? Why do you think gas is so expensive in February? Since 2008, central bankers have worked to inflate us out of the mess. It hurts savers, people whose income/benefits are tied to “CPI”, etc.
So long as the printing presses print, especially in such a coordinated manner, people need look for ways to preserve their savings.
Final word to the wise. Look at every 20% equity market pullback since Lehman — one solution — TARP/print/MBS purchases/QE/Twist/LTRO/same net effect. And magically, the markets rebound. Rinse and repeat.

Billyballs
Valuations aren’t approaching historical highs. Indexes are. Don’t confuse the two.
The S&P is at 14 x trailing earnings. It was at 30x In the late 1990s. It touched 10x in 2008.
The S&p is trading for roughly 12x cash flow. It traded north of 30x in the late 90s

@Been there
According to this and this S&P 500 current P/E ratio & profit margins are way above trend.
Both being high does not bode well for future stock market returns. The late 90s is not a particularly good example of how to value the stock market.

lyqwyd,
I think the crisis has been rather well contained in 2009-2010. The key was to expand and pretend until some growth could absorb a recognition of the real losses.
I was one of the most vocals around here to say “let markets work” and let the smartest and strongest survive, but it didn’t happen that way. Bad behavior was rewarded and justice wasn’t served. What matters now is how to make the best of this. In 4th grade you see the kid next to you cheating his way to an A+ when you only have a B. Tough. Get over it and work harder. This guy could probably succeed later on better than you, but who cares.
Similarly, savers could get the shaft with pro-growth policies and this is deeply unfair. I am one of these and I’d hate this. But this is the only way therefore I’ll work harder to make up for it.
Today the growth is there, still muted because of the 2008-2009 hangover and trickling realized losses. The sovereign debt issue can be solved through a bit of efficiency, but mostly through a strong growth policy.
Growth works in 3 positive ways on debt and deficits: (1) more profits means more tax revenue, shrinking the deficit which (2) in itself frees up money for more growth. (3) Growth means a lower debt/revenue ratio, making debt shrink in relative numbers.
Shrinking brings us nothing. Ask the Greeks. Taking a pint of blood from a sick man doesn’t make him less sick. It just kills him faster.
Germans might be right to ask for justice, but it doesn’t solve anything. They enjoyed 4 to 5% on fixed income in the 2002-2007 period. Time to pay it back.

@Been there
You are right about the P/E ratio, The site I linked to uses the “Shiller P/E” or P/E10. I was not suggesting that your number was wrong, only that there are other ways of looking at this, my bad for not clarifying that it was a different measure of P/E. Here is some more info on the P/E10, which is currently suggesting the market is about 30% over-valued.
Plain P/E is not all that predictive in the short or medium term, and has even climbed while in the midst of a bear market (when earnings can fall faster than stock prices).
Of course a high P/E (or P/E10 if you prefer) ratio can be corrected by earnings growth, my point is that with already record high profit margins (usually seen at the end of a bull market), it is not likely that P/E ratio will revert to the mean by earnings growth.

@Big V
“If you don’t see the growth, you are blinded by fear.”
I can see growth, but I can also see what it’s based on: which is massive government intervention rather than a fundamental recovery.
“Right now, we have positive trend, and general fear…”
Most of what I see in the news is cheering the Dow breaking 13,000 about how we are in a solid recovery and the Greece/Europe problem is solved. Mainly ignoring bad economic reports, but surges on even the weakest good reports. Seems like a lot of positive information and expectations right now.
There’s only a few nut-balls like me who are pointing out the cracks in the wall, which the cheerleaders happily ignore.
“just like 2008 was a great time to invest and those of us who did made a killing since then.”
What were you investing in 2008? The bottom of the stock market was early 2009.
“so go ahead, sit out the market until you have that nice warm fuzzy feeling of confidence and safety, and enjoy paying top dollar at that point.”
Who said I’m sitting out the market? I’m saying it’s about time to start thinking of getting out. I think within 2 months the market will turn, and the turn will become a proper bear market, resulting in a 20% decline or more.

Joshua wrote:

…we experience money creation which is a hugely inflationary force. During times of inflation, people need to invest in equities, hard assets, etc. to maintain their wealth…Since 2008, central bankers have worked to inflate us out of the mess. It hurts savers, people whose income/benefits are tied to “CPI”, etc.

So long as the printing presses print, especially in such a coordinated manner, people need look for ways to preserve their savings.

I read this kind of sentiment on socketsite a lot, and while I understand why people say this, I have to admit I don’t understand it.
In broad terms what “savings” refers to is a collection of assets purchased at one point in time in order to have them to sell later. To a lot of people reading socketsite, that would include real property in the form of an SFH in “The Real SF”. It could also include shares in Facebook, Zynga or Yelp.com. Maybe it would include a collection of investment-grade corporate bonds.
All other things equal, if the economy performs well over some reasonable future period, then this collection of assets will have a higher resale value at period end than if the economy performs poorly over that same period. Having your “savings” devoted to more than one of these areas means that the future value of your total portfolio will depend more on the overall performance of the economy and less on how prescient a particular “gamble” and the timing in which you took it.
My point is this: if the overall economy doesn’t improve over your chosen time period, then your asset collection won’t be worth as much as you’d hoped (or if things are really bad it will be worth less than you paid) and you’ll have to adjust. I’ve never understood why some “savers” or wealth preservationists think that they should somehow be able to detach themselves from the trajectory of the overall economy.
I don’t see how this is a matter of central bankers “hurting savers”. If we define for the sake of this discussion “reducing the expected future value of a collection of assets”, then the savers are being hurt due to the state of the overall economy.

@Brahma
Savers are people who earn their money by labor, and when they save, their intention is to put it in a safe place, leave it be, and when they come back for it, it has very close to the same purchasing power as when they put it away.
This is different from investors, who expect to monitor their money, and actively increase their wealth by the decisions they make as to where to put it.
Savers are hurt by the current economy because there are no (or very few) safe places to put ones money where you can reasonably expect it to hold it’s purchasing power over the long term.

@lol, sorry for the delay in responding, but this is a big one…
“I think the crisis has been rather well contained in 2009-2010.”
I disagree, I think it’s only been postponed, and in many ways made worse.
“Bad behavior was rewarded and justice wasn’t served.”
I’m aware that happens, but the problem is that the bad behavior has now been institutionalized, and that only ever ends badly.
“In 4th grade you see the kid next to you cheating his way to an A+ when you only have a B. Tough. Get over it and work harder. This guy could probably succeed later on better than you, but who cares.”
I think this is a pretty weak analogy for what’s going on today. I think a better one would be a class where half the kids are getting A- by cheating, and the other half are getting B’s following the rules, the PSAT comes and the cheaters all fail miserable. Rather than tell the cheaters this is the just rewards for cheating, and that they had better stay after school for some catch up classes, the teacher pays off somebody at the SAT for the answers of the test and gives them to the cheaters, but only the cheaters, AND the teacher goes back and changes the cheaters grades to A+, AND assigns extra homework to the rule followers.
“Similarly, savers could get the shaft with pro-growth policies and this is deeply unfair. I am one of these and I’d hate this. But this is the only way therefore I’ll work harder to make up for it.”
Growth is not inherently anti-saver. It can benefit the savers when it’s real growth based on sound economic principles (their real earnings increase, thus allowing them to save more)
“Today the growth is there, still muted because of the 2008-2009 hangover and trickling realized losses. The sovereign debt issue can be solved through a bit of efficiency, but mostly through a strong growth policy.”
Growth is there purely through massive government intervention/spending. Since our debt and deficit are so high, these are not sustainable.
“Growth works in 3 positive ways on debt and deficits: (1) more profits means more tax revenue, shrinking the deficit which (2) in itself frees up money for more growth. (3) Growth means a lower debt/revenue ratio, making debt shrink in relative numbers.”
There is no realistic growth rate that can shrink our debt sufficiently on it’s own. With real growth would come real interest rates, which would cause our debt service to increase faster than any growth. This problem is especially bad since what little growth we have is based on massive deficit spending. Our debt is already over 100% of our GDP, and growing at almost 10% a year. That’s a formula for disaster, and not decades out in the future. We are already in PIIGS territory, and some of them have better GDP to debt/deficit ratios than we do. According to wikipedia our deficit is one of the worst, see this and this, Note the second one shows how Iceland is doing the best, when compared to the eurozone, the PIIGS, the U.S. and some other countries.
“Shrinking brings us nothing. Ask the Greeks.”
Iceland shrank (but did it at it’s own choice and therefore was able to somewhat control it), and is now one of the more sound economies out there, getting stronger every day. Greece is being forced to shrink from external pressure (and in fact is in many ways being prevented from shrinking the way Iceland did), and at the same time is being pillaged. These bailouts will do nothing for Greece, they are only to preserve other European nations interests.
“Taking a pint of blood from a sick man doesn’t make him less sick. It just kills him faster.”
Again, I don’t think that’s a very good analogy. I’ll agree the economy is sick, but expecting us to operate on sound economic principles is nothing like bleeding an ill person. The rules of economics are real (if poorly understood) and the longer we try to fight gravity, the more painful and damaging the impact will be from the eventual fall. Our entire economy is based on covering up the real problems, and creating growth through unsustainable deficit spending that is costing us more than the little growth we are getting. Sooner or later we are going to have to operate in the real world of economic principles, and it will be much more difficult if those principles are imposed upon us from the outside. It’s already starting to happen with Russia, China, and India forming trade programs that do not involve the dollar.
“Germans might be right to ask for justice, but it doesn’t solve anything. They enjoyed 4 to 5% on fixed income in the 2002-2007 period. Time to pay it back.”
The Germans are not seeking justice, they are just trying to look out for their own interests. They lent Greece money so the greeks could then spend that money on German products. It was never sustainable.
When I see growth that is not based on massive deficits and government spending, then I’ll believe in the recovery.

There will be 1452 new FB millionaires. 1257 will be house buyers and 573 will be buying in “real SF”

jjb,
These people are making fun of the fact that the numbers are largely not public or unknowable.
There were well under 500 shareholders before the price of fb stock went way up, so if you assume the number is something like 300, those are the people who may make big money. Some of them may have had only a few shares, and others are investors who may not be local, so you might estimate about 150 people with a million or more dollars.
According to one realtor, 25% of fb employees live in SF (which would mean 37), but the vast majority of them are young and single and may not buy anything, and many of them may consider SF a fun place to be in their 20s but do not intend to settle down here. However, some of the others from outside the area may buy small apartments to use occasionally. I’m guessing the number is probably about 50 SF properties (because you don’t need a million dollars to buy). If fb stock goes up, it probably adds between 50 and 100 more purchases in sf beyond the original 50 in a few years, because the vast majority of employees get hired late and so they a) don’t get much stock and b) don’t get it very cheap. In the last two years, everyone wanted to work for fb, so it didn’t take much to get them to accept a job.
So if it’s 50 this year, that’s 4 per month. There are about 500 home sales per month. Not that big of a deal for the average. However, the top end will likely see a pretty decent bump, because there are usually only a few such homes on the market, and adding one or two buyers a month can make a difference in a market that sells only a handful of such homes a month. A few fb’ers will have a lot of money and those will get headlines.
However, the days of IPOs marking the start of the effects in the market are over. Employees can sell stock and options and even stock units on the open markets that exist for wealthy individuals to buy even before the IPO, and so the IPO won’t change that. So the effects are already baked into the markets because some employees have already sold, though obviously not every employee has sold their shares.
When not just the wealthy can buy shares, will the price go up, so shouldn’t the employees not sell their shares until the IPO? It hasn’t been the case for many companies. Zynga was trading at $14 before the IPO and has not been able to maintain that price after the IPO, so the employees who sold BEFORE the IPO made the most money. So there is no inherent reason for employees to wait for the IPO, though some might.
The difference is that every realtor in town is going to rub your nose in every sale to every facebooker. They will do that to hope you’ll up your bid or whatever. They did that for google, and they’ll do that again. I think most of the google effect was from the non google buyers who panicked and paid too much figuring the whole world was being flooded with millionaires all trying to buy houses. This is what the realtors are trying to do again: they are getting newspapers to publish article after article for the sole purpose of getting the other buyers to panic. The smart buyers will ignore them, and may have to wait 6 months: big deal. Prices fell after the googlers bought but also after the headlines subsided and people started acting more rationally.
Some buyers will believe the realtor salespeople and panic in the next few months and all of those buyers will lose money. Just expect it: your realtor is not your friend, he is someone trying to get as much money out of you as he or she can. He or she does that by getting you to buy, but making you feel good about paying far too much is one way they do that and they are trained day after day to get that to happen. Your realtor is being paid by the sellers to do that for them too.
The reality is that many of the google employees who bought houses after their IPO lost money on the homes they bought, while the googlers who took that money and used it for an MBA or to start a business or both (and did not buy homes), came out ahead, so I suspect the facebookers who make money on the IPO will pause before spending it on housing, or they may just wait a year until after the IPO so that the effects will have petered out.
One of my ex employees went to work for facebook, and has already left to go back to grad school. She started there 4 years ago, and they gave her a handful of shares. She made about $10K. Used it and a whole lot of loans to go to grad school. She’ll make more money having done that than she would if she stayed at fb.
fb is also trying to expand outside of the area, something we didn’t see with google at the time of their IPO. They are opening a New York office, and whether the opportunities for advancement will be elsewhere, causing people not to want to buy here, no one will know for a while.
So there are no hard and fast answers. Whatever the number, it will be less than portrayed by the media. But in the end, no one knows. So far, fb employees have tended to want to buy on the peninsula, not SF. Before Zynga went public, they moved closer to caltrain presumably because they too wanted to buy south of here. Twitter will probably have the biggest effect on SF IMHO. A higher percentage of their employees will buy in SF than fb.
That lays out the numbers, but certainly no one knows, not me or anyone else, and no one knows what percentage of people will throw that money away on housing or where they might buy.
A dozen realtors and cheerleaders will now chime in and tell you they DO know and I’m wrong. The number is ten thousand more home purchases for a million dollars higher every month for eternity.

Nobody rubs people’s faces in anything, Tipster. Especially not the faces of internet blog opiners who are never going to be in any market during the duration of their time spent on this planet. You always write as if you’re involved somehow. You’re not. You say stuff on the internet, OK? Big difference. It’s so funny how you try to act like it’s about you in any way. Pretty funny how you’re now acting as if “media” and “realtor” are synonymous. That’s a new one.

“@ R and anon.ed – Why the rancor over tipster’s comment? I agree with his general premise and observations.”
Eh? One person’s “no rebuttal” is apparently another person’s multiple direct challenges of word use. Never mind that he wrote a book about how the FB IPO might actually move the needle a bit in some areas even though last week he said it was going to be nothing. As for not being in the market now or ever, that’s a known fact.

1.Go back and read Zynga’s S-1 like I did, NVJ. Then use the data and my statements to show your “two orders of magnitude.”
I think you’ll find my statements fully supported by the public documents.
2. Not every employee who gets stock gets enough to make that person a millionaire.
3. Not every shareholder lives in the area.
4. Banks will lend against RSUs for a home purchase. No one has needed to wait. Anyone who has waited may wait even longer or not buy at all.

lyqwyd
I’m trying to understand what comes next, i.e. what follows the deficits.
Does anyone disagree that we’re going to be seeing lots more deficit spending in the next five years?
I don’t see a balanced budget, or budget cuts, or tax increases, only QE6 or the like…
I’m reading a book about Ron Paul (not his) and I didn’t do a great job explaining that point. I’m trying to learn more about and perhaps debunk his positions.
His advocacy for the gold standard stems from the thought that a gold standard prevents a government from just printing money. Inflationary policies, and/or associated currency devaluation, are a form of “theft” (Marx, anyone?) because, in devaluing a currency, a government can meet its policy goals, but also devalues its citizen’s money at the same time.
The idea actually predates Paul; One of Alan Greenspan’s early papers was on the subject.
By Bruno, I meant the Sacha Baron Cohen movie.

A lot of speculation out there.
I’ll throw another element: the paper wealth effect.
Some of FB employees are in their first jobs and are not so cash rich (yet), but many are in their 2nd, 3rd gig, probably from a successful series of good paying jobs. Either these employees have already purchased a home, or are waiting for the right time.
Employees who know they’re going to get a windfall and have enough already saved up can perfectly purchase now before there’s too much competition out there.
As I have said many times before, a big effect these new companies is not only the one-time cash out effect, but the overall total wealth of an economic segment. A company that went from 0 to 100B in less than a decade brings not only cash into the market but also paper wealth and the behavior that comes with it.

Again with this stuff? As if saying it a lot makes it valid?
1.Go back and read Zynga’s S-1 like I did, NVJ. Then use the data and my statements to show your “two orders of magnitude.
Go back and read your own errors about how ZNGA is tanking and all the jokes you made. You had no clew or concept about the effect the FB IPO announcement would have, or the Zynga revenue percentage announcement. None.
I think you’ll find my statements fully supported by the public documents.
wrong. far from it. Here’s a bad one, by you, “It was decent hiring by tech companies, but with Zynga falling on its first day from a valuation that had already been halved, it’s going to be more of a struggle for tech companies to raise money going forward. We’ll probably start seeing some of them lay off next year to match their funding prospects”
2. Not every employee who gets stock gets enough to make that person a millionaire.
nobody said it. Indeed, flow charts have even been linked to showing otherwise: http://articles.businessinsider.com/2012-01-12/tech/30618875_1_millionaires-facebook-s-ipo-facebook-pr
3. Not every shareholder lives in the area.
According to the Almanac News FB’s own study shows 27.4% of its employees live in SF: http://www.almanacnews.com/news/show_story.php?id=10592
4. Banks will lend against RSUs for a home purchase. No one has needed to wait. Anyone who has waited may wait even longer or not buy at all.
There’s needing to wait, and there’s letting things take their course. Getting a loan against RSU’s is in effect paying an extra fee. So some may do it if they see something they absolutely love, sure. But implying that because it’s possible most would do it is just silly.

“[begin snark]The desolation and misery caused by multi-billion dollar IPOs can be felt all around the peninsula![end snark]”
Careful not to ingest too much negative silver. Makes your objectivity shrivel!
23 offers meaningless aint’ “you want cole valley to burn” and facebook’s not popping up SFRE ain’t “desolation and misery”
From anon.ed even, only a few thousand total, not all got enough stock to even make a million, only 27% in SF and if people wanted a loan off of RSUs it’s just a fee. (And seriously if a guy’s valuable enough to drop a seven fig pay package on you don’t think FB can figure some way to get the guy DP money?)
What guys you got left are guys with the millions in SF that didn’t want to pay the bank fee. But if a bank fee’s blocking them how much are they going to be willing to bid up prices?
Mathiness!

The desolation and misery caused by multi-billion dollar IPOs can be felt all around the peninsula!
Yes, but compared to the multi trillion dollar collapse of the loans-to-anyone-with-a-pulse market, it’s a drop in the bucket. It helps, for sure, but it isn’t going to solve that problem.
And it’s only a short term help. This is 5 years worth of pent up IPO demand coming to market at the same time. After the headline companies, there aren’t many big IPOs in the pipeline. So even if this has a net positive effect for a period of a few months, what happens after the blockbuster IPOs?
It’s not like dot com days with an endless supply of profitless companies generating a thousand internet millionaires a month, with no end in sight. Today, it’s a couple of big IPOs and then we’re back to begging for money from the fed and $5K bennies from uncle sugar.
Competing against a short term supply of riches doesn’t seem like the path to success in real estate investing.

“Words Fail”
Honestly, he has a point. If someone isn’t going to pay 5% for a half a year on a 30% loan secured by RSUs for a downpayment on a $5M home, which will cost $37K, what makes you think they are going to throw caution to the wind and pay more than $5,040,000 for the same home after the IPO?

“Also, the loan against RSU, while possible, is risky if you don’t know when you will ever see liquidity.”
Buying a house is risky too. A lot of guys from 07 don’t know when they’ll see the liquidity in their house.
And the real risk is in the house. If the house price goes up who cares if your stock value goes down. If you think the house price is going down, why buy?

^ Apart for highly-skilled professionals, a house is often a poor investment vehicle. People who buy have other factors in mind. Family needs, lifestyle choice, social statement, diversification of assets. Not all are rational, but all must abide to the rules of supply, demand and local constraints. Right now demand seems strong and supply seems low in some good SF neighborhoods. Also, the psychology has changed I think.

“To some people these losses are not significant”
Sure, but for these guys then why do they care about potential losses on their stock between buying the house and IPO?
Not saying no risk. Risk is in the house. Not the Stock.
“And again, the “facebook effect” is a broad term that I presume covers the entire growth tech industry.”
If the “facebook effect” is a broad term about General Sunshine and Happiness spreading around SF. Sure! Great!
But what does that have to do with pre-IPO liquidity?
If the “facebook effect” is a visible bump in SF home prices right after the lockup. You gotta say “Hmm if guys can get liquidity if they want it and they think prices will pop post IPO, it makes sense that more people would grab the liquidity to get in before the pop”
If you’re talking something that won’t show up in the stats then I don’t care. If you’re talking something that will show up, seems important that most folks already had the option to pull the trigger.

The facebook effect is actually a book and a term coined long ago that was co-opt’d here with loose context for the the title of this thread. But the irony here is that the editor is making a very good point about the overall strength of the market having a more concrete impact on the SF real estate market. And to this point, I largely agree that no single company can have any macro impact on the entire real estate market. So I don’t really expect anything to materially show up on the stats as a result of any single company.
Hey, the S&P peaked at 1,371.94 today and is currently trading at a 52 week high. How about we just embed a ticker on the front page of SS so we can all know the real time impact of the stock market on SFRE!

@lol
Regarding your first paragraph, see my comment from Feb 24 at 5:42 PM on this thread. But in summary, we are much closer to 2008, than 2002 or 1993, and the causes of the collapse are all still there, and many of them now worse.
For your second comments, just because you disagree with somebody doesn’t mean they are in an alternate reality, or even wrong. Suggesting somebody you disagree with leave the country is one of the weakest arguments out there.

1) You are wrong about that. We deficit spent during WWII. Our debt/GDP ratio peaked in 1945-46, and quickly declined almost immediately after the war ended. The 2 years following the war saw fairly sizable surpluses and the budget was roughly balanced after that until about the 60s, at which point the deficit started growing
2)
“wants the US to close itself off”
He wants us to stop going to war for oil control and stop being global bullies, which I certainly agree with.
“… shrink government… ”
Great! Totally agree there.
“… remove essential financial flexibility… ”
That is so vague as to be meaningless. What “essential financial flexibility” is he trying to remove?
“… let everyone fend for himself in a pure Darwinian fashion… ”
???
The rest is just a rant, so I’ll ignore it.

lyqwyd,
Sure there was a bit of a rant there. I have seen good friends go to the dark side (from Dem to Paulhead) and it is a bit disturbing.
WWII ended and THEN the US government spent huge amounts of money to build up the infrastructure. WWII expenses were non-constructive, a bit like the boom/bust cycle of 2002-2009. Plus the war brought back many millions of men to a country that had lived without them for 3+ years. The GI Bill and other government financed programs were “pay it forard” investments

One of my ex employees went to google pre IPO (2001). She made just under $100K off the options, and probably took a salary hit of about $10K per year for 4 years.
Wow, she really had some bad luck there tipster.
Have you heard about the Google cook who got over $26M in stock from 1999 to 2005?
http://blog.techdreams.org/2007/10/charlie-ayers-millionaire-cook-and-ex.html
I have a friend who is a programmer that started in 2001 and stayed just less than four years and came out with more than that cook. He started with about six years of experience and was kind of in the sweet spot of age and experience for a pre-IPO company to want him, so they probably bid high. He also had a job at the time with Akamai, forcing them to make a good offer if they wanted him.
So while it is certainly true that not everyone made out like bandits at the Google IPO, a very large number of people did. Most estimates were around 1000 though that number must have increased as Google’s stock went from $80 to $400.
Most estimates for Facebook are another 1000 millionaires. It is hard to say how many and the people who know for sure aren’t talking. It is fun to talk about though.

And in the March issue of The Noe Valley Voice (not online yet), there’s a front page article with the headline “Here Comes a New Generation of Tech Workers: Don’t Be Surprised If You See Home Prices Rise.”
Features quotes from a guy paying $2500/mo for a furnished studio apartment on Grand View (yikes!), and a couple who just bought a place on Sanchez St for 1.4M––the husband commutes to Sunnyvale and likes the easy freeway access, the European feeling, the nice family feeling, and so on.
From the article, “Now our quaint urban village is in line for a new wealth infusion, thanks to a dramatic growth in well-paying jobs in San Francisco and the prospect of instant millionaires when Facebook this spring holds an initial stock offering that will raise billions of dollars for the company and its employees.”
I think it’s fair to note that a majority of the ads in TNVV are related to real estate. Also, it is quite possible that I am the only potential Noe buyer who actually reads TNVV. (Hey, I like to keep up-to-date on the crime reports ;). In any case, I was amused to see the article after all the back-and-forth on this site about the Facebook Effect.

Twitter’s IPO: An almost doubling of the share price in the first hour.