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Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: Randy Ellingson who wrote (5563)	3/4/2001 10:03:12 PM
From: Wizard	Respond to of 57684

Hi fellas, checking in on a rainy Sunday evening. >>How about the SOMA condo market? >>I'd like to see what you get for $1,000! $1,000 for anything but a studio in the center of the Tenderloin (worst area) is impossible and will stay impossible until deep into a major recession. I can tell you that the pulse of San Francisco is the opposite of vibrant. SF's housing situation has a supply problem due to the bay and ocean so its not really going to go through a bad period unless the economy is REALLY hurting for a long period of time. The real estate bubble part has faded but vacancies are still below 3%. No longer are people bidding 30% over list for anything but I still see rentals getting rented and houses getting sold for a lot of money. That said, I can tell you that your average SF new-economy employee is sweating big-time right now. An entire ecosystem (inculding social ecosystem) was built around the venture capital funded and IPO-aspiring companies that are now imploding. Its got a large community pretty depressed. It is not just the dot-com's though. There is a large financial community of brokers, investment bankers, hedge funds, aspiring venture capitalists etc in SF that are all dramatically reducing their personal income expectations and this is very, very noticeable. A very high percentage of people in SF make a majority of their income in bonus (financial community types) or in appreciating stock (tech company employees). Both are stock market sensitive. I know more than a few people that have lost their jobs or have some kind of a situation where they haven't lost their job but they work in 'Marketing' and the company has reduced its 'Marketing Budget' to ZERO. They obviously can't feel too secure in that situation. Sapient (SAPE) had a 400 person presence in SF and on Friday, 200 were told to pack-up their personals to be escorted off the premises and not to return. That is 1/2 their presence here. Its one thing for growth to moderate, its another for minus -50% growth. Some of the investment banks have been letting people go as well - no major layoffs yet but any hiring they do usually means at least as many existing employees are pruned 'off the bottom'. But meaningully, incomes have dropped in a material way due to the stock market. This economy is in a bit of a freefall right now off of inflated levels. It may be a "U" and it may be a "V" but we are on the left side of that 'letter' (U or V) and no matter which it is, the left side is deeper than March of 2001. We may bottom in Q2 or Q3 but that is pure speculation given the rate of negative change going on right now. Maybe the new economy is just compressed and it gets really bad really fast and then you grow nicely off of depressed levels. Nobody knows what Q401 will look like but the 'real-time' snapshot of right now has a very significant negative trajectory. I am always amazed at the markets ability to anticipate so I keep a long bias. However, I believe a hedged position is still warranted here. Long some stocks, short some stocks, puts on others. Indeed, the long puts / long franchise names has been ideal for this very uncertain environment. Puts kicking in on really big moves combined with allowing for some buying at dramatically reduced prices.