The cooling Silicon Valley real estate market


#61

They are obviously not. In bay area real estate nobody ever lost money. We have plenty of stocks (e.g. Yahoo) that ended up at 15% of their peaks. So you need to be alert in the stock market. Remember Cisco was like Apple 20 years ago. If you hadn’t sold your cisco stock in early 2000, you would have lost big time. I know people who sold half of their holdings and bought homes at the peak. They are regretting that they didn’t sell all.


#62

:+1::+1:. In real estate it is wise to play the long game. Let time and inflation work to your advantage. Look for long term positive structural trends that work for you.

Investing in companies is a different beast. One of the maxims that Jeff Bezos uses (paraphrased) - “Our company will go bankrupt. That is a given. It is our job to figure out a way to delay that for as long as possible.”


#63

Staying in rent control apartment :grinning: and driving a 10-year old car :joy:


#64

These guys knew something we don’t?


#65

CISCO P/E (ttm) is about 100-200 riding on the internet hype :slight_smile: AAPL current P/E (ttm) is 17+.
Ditto for YHOO & many now defunct net stocks.


#66

Everything Marcus said already.

Going forward mortgage rates are increasing that pushes down eligibility, real estate prices until recovery comes. This means you will likely see prices down further, and no one knows the bottom.

Your issue is on location, Sunnyvale and Menlo park, which are really tight and very unlikely (or visibly) see the prices coming down as every home will have some buyers.

IMO, if you delay for one year or two years thinking prices will be down, you may likely see, but with higher interest rate.

If I guess, next time we may likely see tough stock market in 2020 Nov election time, volatility over elections, higher interest rate, possibly economy fully impacted with FED rate hikes…etc.

This is my guess work, as there is no guarantee whether prices will be down or up in future. It is 50% correct and 50% wrong.

Even I have seen few homes attractive to me, but no one will give me loan for another 18 months, keeping quiet. These are the two I like it, but no way to move forward as I do not want to sell any of my existing homes!

https://www.redfin.com/CA/San-Jose/1515-Rosecrest-Ter-95126/home/1804020
https://www.redfin.com/CA/San-Jose/1128-El-Abra-Way-95125/home/1256729


#68

I am not saying that Apple P/E is high today. I am just saying that Cisco was a very hot company in late 90s with the stock pretty much doubling every year until 2000, and then it never regained that level. Same with Sun Microsystems, the company was called the dot in the dotcom. Companies do vanish and it’s a risk you need to be aware of.


#69

What’s the PE for IBM and HP?


#70

Not following the drift again :stuck_out_tongue_winking_eye:

Bad examples because I dump them during dotcom immediately when things start to go bad. They are clearly over-valued during dotcom era, heard their overpaid their engineers too (I was in Singapore so can do some scuttlebutt).

Almost every company during its “hot” status do that, not just SUN and CISCO. Btw, those period of AAPL is over too. It is climbing very slowly, slightly faster than value stocks but much slower than growth stocks.


#71

You can not use the analogy for apple as it survived many turns, first Jobs vs Gates, then Google vs Apple…etc.

Other companies did not transform quick with innovations. Kodak has failed to transform and catch up market, but AT&T took over TWR.

Apple has transformed towards market.

I understand Apple has grown very big at 100B/qtr level. It needs to change to new avenues or getting settled/stabilized as dividend aristocrats.

On any case, Apple has long way before getting into such stagnation level.


#72

I am not saying Apple is stagnating. I am just saying that things can change quickly for tech companies.


#73

Sun and Cisco were the last ones to fall during dotcom crash. I sold Sun early in 2000. It went up 50% after I sold it even though others like webvan, pets.com started going down big time. Then in 6 months it became 1/10 of what I sold at. :smile:


#74

This is where I trust Warren Buffet ! Unless he sees long future in AAPL, he won’t put his $52.3 Billion into it. They apply rigorous algorithms and financial study to ensure their investment is protected.

During 2008, he understood about BAC and invested. In his recent interviews, he informed that BAC is ready to give more than 6% interest on his preferential shares at that time, but WB team calculated that BAC can not sustain if they ask for more returns. Warren buffet , then, decided to ask for 746 Million BAC 10 year stock options which he later exercised it.

See now GE, he came out in peak time when he realized GE may not recover.


#75

Normal stock market behavior. Third tier starts to drop first, then 2nd tier and finally blue chip. In this cycle. the bluest of the blue chip, AAPL is the last to correct. Similarly, when rallying, the blue chips rally first, then 2nd tier and then third tier.

The rally before current correction is led by FAANG. The next rally after correction would be led by another set of companies (usually leaders won’t be the same).

The strongest growth in stock appreciation is during iPod era. Many mistook iPhone as the strongest growth.


#76

@notabene, here is another perspective.


#77

I know, I saw the article this morning and wanted to send to my buyers. :smiley:


#78

Are you a full time realtor?


#79

Huh? No. We’re just selling our primary. :slight_smile:
(Funny, I should tell my wife that someone on this forum asked me if I’m a realtor haha)


#80

@notabene, Are you moving out of area or speculating on prices to go down.?


#81

Neither. Im moving from one place to another. Not speculating about prices either - just that in winter season, the inventory is tiny to choose the right home from. I plan on living in the next place for at least 10yrs, so don’t really want to buy the crappiest shack next to a train track, hoping for appreciation.