Hmmm,it was not no profit dot.com company!
My friend had all the stocks of Sun Microsystems. It was rock star during dot.com era
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Recalled most shares are overvalued during dotcom era, P/E varies from 60+ to negative. Today, P/E of hot stocks are lower, AAPL 17, FB 38, GOOGL 31, AMZN 182 
, TSLA -75 
, NFLX 193 
Look like some stocks are not so safe today too 
Nowadays, people are going towards growth of P/E ratio, i.e., the PEG ratios. P/E provides current while PEG indicates future growth pointers.
Has always being about PEG for growth stocks. Growth are estimates, can be changed by economic conditions.
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Iām not sure if Jilās friend did the same as me. Jilās explanation of his friendās ordeal is quite confusing. What I did is that I used margin to acquire real estate, but these real estate are not a collateral to the margin. So if the stock market crashed and I lost all the stock to the margin call, my real estate are here to stay!!! On top of that, I have couple HELOCs to back the margin in case the stock market dived, so Iām in no danger of caught swimming naked because I will just transfer the money over from the HELOCs in case they call the margin on me.
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Sound like your position is carefully hedged. é«ę
I presume you can pass the stress test?
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I think Iām pretty solid. I extrapolated a market crash scenario and my assets can sustain as much as a 50% crash. And thatās when I have some money held up with flipping. Once I sold my flip I can sustain a 75% crash no problem.
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He did like this for the down payment amount, keeping his vested stocks as collateral for down payment amount thinking that stocks are growing faster than real estate. It went down drastically, bank sold this collateral, but he did not sell his options, lost entire stake.
Rest of the 80%+tax portion he had regular mortgage which he could have paid off by selling his stocks after paying tax. He did not sell until it became underwater, lost all stocks value !
There are plenty of people like that during 2000, watched their stocks go up and down.
The nasdaq went down 68% from the peak during dot.com burst and many companies vanished. It was big impact to Bay Area economy. Around 500000 people,left the bay area between 2001 and 2003 time frame.
Exactly.
If you remember that many of us buying home thinking that it will grow in future say 10 years,paying premium.
Same way people pay premium for the PEG. To some extend software are helping them to analyze the growth. Even though they are estimates,computerized algorithms help them hit 90% standard deviation accuracy.
As long as overall economy is doing good, during bullish times, the companies grow as expected no matter whether they are AAPL or AMZN or GOOGL or TSLA.
Was it really 500k people moved out Bay Area from 2001 to 2003? Thatās over 10% of the core BA population. Why didnāt the housing market crash from 2001 to 2003? If housing market can sustain a 10% population loss, I am much more confident about BA housing now
Even though your friendās story is tragic, he probably did the right thing. He only got the wrong results. If his company were not Sun Micro but were Apple or Google instead, he wouldāve become a multi millionaire.
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Why didnāt the housing market crash from 2001 to 2003? ==> Those period norm was 20% down payment and well documented income. Still RE crashed but not like 2008-2011.
There were no zero down mortgages and sub-prime loans which was the main reason for 2008 real estate downturn.
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Competition Kills. We need clear moat for companies to grow. Sun had strong unix presence, but linux (open source) killed it.
Apple has equal competition, even higher market share, with Samsung. Having low cost, high quality and cash rich company, it is able to survive the wind. Apple has been unique strength to compete Microsoft (appleās own supplier) and Samsung (appleās own supplier).
Googleās formidable competitor is Facebook, but Google manages by its prominence in everywhere venture capital.
Itās tiered rate. Just borrow more and the rate will get lowerā¦ 
If I read @Jilās story right, the friend didnāt lose everything. He had at least a houseās downpayment. The proper comparison is with his situation before he invested in stocks, not at the peak. So letās say he began his margin trading in 1998, and he ālost everythingā in 2001. Was he poorer in 2001 than 1998?
I didnāt put a single cent into my stock account for 5 or 6 years now. I intentionally want to make it grow or fall on its own. All my fresh money I put into real estate. So if I really ālose everythingā it will be a pretty tiny amount.
I have not put any new money into stocks since 2012. I did a couple minor adjustments (i.e. LNKD got bought so I used the proceeds to purchase NFLX) but the big picture is about the same.
I have not put any new money into real estate since 2004!!! I borrowed all my money to purchase rentals and flips.
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If you did not put any new money into stocks or real estate, where is your earned money from work, flip and rent?
They all go into my extravagant consumption habitsā¦ donāt worry I keep good account of my budget to make sure I donāt overspend 
Do you borrow hard money for downpayments?
I was told by survivors that everyday, plane loads of ex-H1Bs leaving during that period.
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Not at all. Why borrow hard money? Their 10% interest is not worth it.