Places Where the Silicon Valley Bubble Could Pop 107
waderoush writes: "If Silicon Valley is in a bubble — which it is – how will it finally burst? Where is the bubble's membrane being stretched so thin that it's in danger of tearing open and letting the real world rush in? This commentary from Xconomy picks real places around the San Francisco Bay Area embodying tensions, imbalances, injustices, or dangers that could escalate into a show-stopping crisis for the technology economy. One is Bank of America's former headquarters in the heart of San Francisco's Financial District; another is an elementary school in Oakland that happens to sit on the Hayward Fault. 'If we can identify the fractures that threaten to destroy the innovation machine, we might be able to patch them up and keep the system going for a while longer — and maybe even point it in a smarter direction,' the piece argues."
I Read TFA... (Score:5, Informative)
It was disjointed and didn't really seem to have any sort of point or theme. Now I can't get that time back. :(
Re:I Read TFA... (Score:5, Informative)
Thank you. You should have written the article. :)
The housing issues are nothing new. I don't live in the bay area now, but back in 2000 I did live in Santa Clara for about six months. I recall reading an article in the San Jose Mercury News back then about full-time public school teachers in San Jose who were living in homeless shelters because they couldn't afford to rent or buy in the area. I also recall at least a couple of colleagues commuted 2.5-3 hours each way because they couldn't afford to house their families any closer to the bay area.
Re:Me too. I should have stopped at the "which it (Score:4, Informative)
I don't know if I'd call it a tech bubble, it's more of a froth- lots of little bubbles. During the original tech bubble that started in the late '90s, pretty much everything was massively overvalued, and pretty much every shitty startup would go public and see its stock rocket up, even (especially) if they didn't make a profit and didn't have a business plan. It was widespread financial insanity, collective economic madness. The average stock on the S&P 500 traded at 40 times earnings, versus about 18.8 today. In other words, the average company costs about twice as much (relative to its earning potential) then as now.
Today, there are definitely some overvalued tech stocks. Facebook has a P/E of 76, Netflix has a P/E of 128, Amazon has a P/E of 428. Which means that at current earnings levels, a dollar invested in Facebook will pay off in 76 years, that same dollar invested in Netflix will pay off in 128 years, and Amazon stock will pay for itself in a little over four centuries. You're speculating (i.e. gambling) if you buy any of those companies. But other tech stocks are more reasonably priced. Google has a P/E of 28, Microsoft's P/E ratio is 15, Apple's is only 14. We are seeing bubble-like behavior in certain companies and in certain industries (social media, for example) but it's going a little far to say that the entire industry is in a bubble.