Today I'd like to write a piece that is more opinion-based than previous articles that I have written. I will address an observation that I've made concerning social networking, and more specifically the people behind these enterprises. It takes a very unique individual to bring a concept, like Facebook, to fruition. One comprised of blind ambition, stubborn determination, and an unwillingness to compromise in pursuit of the goal. Mark Zuckerburg is a prime example of this kind of individual. His youth gives him a perspective of the world that is almost ignorant of those factors that would inhibit his parents' generations acceptance or interest. Meaning, his parents may have seen less value in social networking, had they heard of the concept, at its inception. The young people brought these social networking trends, such as Facebook and Twitter, into pop culture and into your daily routine. Not to say that the older generations don't "comprehend" this idea, or lack the foresight to predict the "next big thing"; but rather that a younger individual was subjected to very different activities, stimulations, and attention obligations in their upbringing which altered how their brain developed. There are plenty of older individuals who will profit well from these enterprise's (such as investors), but we're talking about who conceived the idea and acted accordingly. In this article, we will be discussing what comprises the individuals behind the social networking "phenomena" and how they differ from their elders. But first, lets look at some examples of how their creations have effected society in the modern age.
Having the ability to connect both directly and in real-time on this social networking platform is taken for granted in the "Land of the Free". But in more restrictive countries, such as Egypt, this pervasive concept is relatively new. When their youth get access to this kind of technology, things begin to change. Suddenly, bureaucratic censorship and communication restraints can't contain the message at large, and 15,000 people can all agree to congregate somewhere and riot in real time. What an incredible milestone to witness being achieved. This societal alteration, as it becomes more prevalent in the global fabric of an ever-more connected world, is quite possibly the largest impact that social networking will make. Sure, the return on investment is good for the American/world economy, and new markets have been created to make advertising more effective, where jobs are thus, created, and Mark Zuckerburg grows his net worth into the billions by the time he's thirty; But the everlasting change that will be chiseled on the wall of time is much greater. The ability to furnish the masses with open communication allows the masses to share ideas and information, which expands their presence in society and loosens the immediate grip of power.
History is filled with prime examples of people, in times of physical and intellectual growth, who utilize their enhanced perspective to create something monumental in history. Take Nicola Tesla, for example. As he formulated an innovative way to harness the power of energy in a useful manor, the world was about to change in a very major way. And for an interesting parallel, Tesla sought a world where all power would be locally generated (Wardenclyffe Tower) on a globally interconnected network. And without global connectivity (the Internet, in this case), the tech-boom could not have occurred, nor would there have been a reason for this occurrence. But Zuckerburg was raised in the 80s and 90s, in the height of technological innovation. The innovation especially occurred within the field of information systems, and that was the world, as he understood it. The concept of global connectivity via local interaction was not so far out. Where many parents dismiss Facebook, Twitter, and the like, their children only know a world where this activity is the norm (and often 5-10 times a day). Zuckerburg saw value in trusted access to so much willingly-disclosed personal information, and this good foresight has snowballed into one of the world's largest companies. What a phenomena, right? Perhaps to the masses; but in Zuckerburg's mind, I'm sure this prophecy fulfilled itself just as he intended.
Old heads describe the "me" generation as one that desires immediate contentment and lacks self-discipline. This is certainly true, though only to an extent. In 1993, had I wanted to find a particular clip from a movie, I would put the VHS in my VCR and rewind/fast-forward to my desired point. Then came DVD, where i could skip chapter by chapter, making the process faster and more organized. Then came YouTube, where I could get on my computer and hope my desired scene had been uploaded by one of the hundreds of millions of site contributors. Now I have the YouTube app on my iPhone and I access it immediately, 3 times a day. We constantly strive to simplify our lives and streamline the chaos of information that is coming into our heads. And though there is nothing wrong with checking Twitter 8 times a day, this action must be compensated by a clear understanding of priorities and the ability to free yourself of the distraction, should that balance fall out of harmony. Perhaps, the one upside to the "instant gratification mentality" is that our ideas are shared more freely. This causes factions to unite and change can be accomplished. In the tech acceleration of the 1980s-2000s, the youth is growing up in a totally different world and this shapes the way their mind functions, for better or for worse. But it takes these kinds of individuals to innovate, in both business and society, and change our lives as a result.
A Different Perspective
Monday, February 28, 2011
Wednesday, February 9, 2011
"No" Today Doesn't Necessarily Mean "No" Tomorrow
As we've all seen in the past 4 years, the housing market has declined, to say the least, and hit a sensitive economic nerve that hadn't been strained in years. In mid-2008, there were less than 1.4 million houses in foreclosure and the economy was already feeling the powerful, preliminary effects of the imminent "Great Recession". In January of 2011 alone, 100,000 home-owners were expected to face this gruesome process; bringing the total number of homes subject to foreclosure to over 5 million. 4.6% of total U.S. households are at risk or currently undergoing the process, which translates into nearly 1 in every 20 homes. That is a sobering figure and putting it into a micro perspective (1 in 20 homes) may cause you to wonder which of your neighbors are struggling with their own finances. Bloomberg.com quotes industry professionals predicting over 6 million homes getting seized by the banks by 2013. Right in the heart of the credit bubble preceding the recession, home values increased at roughly twice the rate of median household income. For future generations: this little indicator is an easy way to predict that a storm is brewing and should have been the obvious handwriting on the wall.
Whether deserved as a consequence of their own actions or brought on by misleading sales tactics of an over-ambitious agent, the number of individuals who possess properties that are classified as "under water" (aka the property value is less than the current value of the mortgage) or, perhaps, subject to the premium spike of the adjustable-rate mortgage, are increasing as the months progress. But are we not emerging from economic instability? Has your 401k not returned a well-missed 30% in the past 4 quarters? And though jobs are slow growing, the massive wave of lay-offs have generally subsided, correct? Yes, all of those things are completely true. But please don't think that housing has stabilized. Thankfully but perhaps arguably, President Obama instituted federal policy (i.e. first time home buyers credit, temporarily freezing foreclosures, etc.) that gave a crutch to an injured sector of the economy, while giving hope to those failing to see the bottom. In reality, we have yet to see the true bottom of the housing market. These government programs are expiring and the layer of obscurity consequently produced by them will no longer taint accurate market valuation . The only thing that can heal the wounds inflicted on American property values (via Mortgage Backed Securities/CDOs) is time, and time alone. For better or worse, we enacted policies that allowed the market to cease free-fall and, thus, stabilize. The time has now come to accept the impending thorn of a transactional technique known, euphemistically as, the "short sale". This is the most feared word in the vocabulary of a Wall Street banker or investor in MBSs/CDOs, as it is the short sale that will negate profits at earnings calls through 2011 and the coming few years and devalues the asset. The short sale process leverages loan liabilities against each other to receive a grant of "forced forgiveness" on a percentage of that (or those) loan(s). As of quarter 3 in 2010, almost a third of all residential transactions were short sales. Some sources predict this trend to accelerate to 60-70% over the next 12 to 18 months, based on the fact that . This means that the majority of real estate deals done, in a residential capacity, will be short sales.
The road to recovery is not a road without struggle. The folks who refinanced every 3 years there for a while, in order to access their "home's liquidity" have learned this tough lesson the most. Whether we like to admit it or not, America put itself in this financial predicament and that effect has resonated throughout the networked global economy. The time is now, from an investment standpoint, to utilize the short sale to your advantage. Soon, the business arrangement with such a negative connotation, will receive a fresh coat of paint as the new "normal". Real estate no longer has to be overlooked, as if it's day as a formidable investment, has come and gone. A true market correction is not only an accurate glimpse of real value, it is a time that allows one to acquire property at a discount. With opportunity under so many rocks, a savvy investor need not leave any unturned. Pursuing a short sale could spawn your next deal and give you experience that you will use for several years to come. Banks beware! Offers you refuse today WILL be accepted sooner than later and will require everyone down the line to flex. And though a temporary sting to ROI on the annual balance sheet exists for these financial institutions, they can be at peace knowing that they are rid of a bad asset. And a short sale will assist the defaulting home owner, who otherwise, may face bankruptcy by relieving them of a bad asset. Unfortunately this all takes time, and time is the only way to revert to what we once thought was a flourishing housing market. Above all, a house is more than an asset backing a security. It is a real person's home and that is their life. Regardless of how we got here and thinking past how to pass the blame for our predicament, denial of value purchases,such as short sales, by the big banks are going to decline in direct correspondence with the rise in foreclosures. Thanks for listening...
Whether deserved as a consequence of their own actions or brought on by misleading sales tactics of an over-ambitious agent, the number of individuals who possess properties that are classified as "under water" (aka the property value is less than the current value of the mortgage) or, perhaps, subject to the premium spike of the adjustable-rate mortgage, are increasing as the months progress. But are we not emerging from economic instability? Has your 401k not returned a well-missed 30% in the past 4 quarters? And though jobs are slow growing, the massive wave of lay-offs have generally subsided, correct? Yes, all of those things are completely true. But please don't think that housing has stabilized. Thankfully but perhaps arguably, President Obama instituted federal policy (i.e. first time home buyers credit, temporarily freezing foreclosures, etc.) that gave a crutch to an injured sector of the economy, while giving hope to those failing to see the bottom. In reality, we have yet to see the true bottom of the housing market. These government programs are expiring and the layer of obscurity consequently produced by them will no longer taint accurate market valuation . The only thing that can heal the wounds inflicted on American property values (via Mortgage Backed Securities/CDOs) is time, and time alone. For better or worse, we enacted policies that allowed the market to cease free-fall and, thus, stabilize. The time has now come to accept the impending thorn of a transactional technique known, euphemistically as, the "short sale". This is the most feared word in the vocabulary of a Wall Street banker or investor in MBSs/CDOs, as it is the short sale that will negate profits at earnings calls through 2011 and the coming few years and devalues the asset. The short sale process leverages loan liabilities against each other to receive a grant of "forced forgiveness" on a percentage of that (or those) loan(s). As of quarter 3 in 2010, almost a third of all residential transactions were short sales. Some sources predict this trend to accelerate to 60-70% over the next 12 to 18 months, based on the fact that . This means that the majority of real estate deals done, in a residential capacity, will be short sales.
The road to recovery is not a road without struggle. The folks who refinanced every 3 years there for a while, in order to access their "home's liquidity" have learned this tough lesson the most. Whether we like to admit it or not, America put itself in this financial predicament and that effect has resonated throughout the networked global economy. The time is now, from an investment standpoint, to utilize the short sale to your advantage. Soon, the business arrangement with such a negative connotation, will receive a fresh coat of paint as the new "normal". Real estate no longer has to be overlooked, as if it's day as a formidable investment, has come and gone. A true market correction is not only an accurate glimpse of real value, it is a time that allows one to acquire property at a discount. With opportunity under so many rocks, a savvy investor need not leave any unturned. Pursuing a short sale could spawn your next deal and give you experience that you will use for several years to come. Banks beware! Offers you refuse today WILL be accepted sooner than later and will require everyone down the line to flex. And though a temporary sting to ROI on the annual balance sheet exists for these financial institutions, they can be at peace knowing that they are rid of a bad asset. And a short sale will assist the defaulting home owner, who otherwise, may face bankruptcy by relieving them of a bad asset. Unfortunately this all takes time, and time is the only way to revert to what we once thought was a flourishing housing market. Above all, a house is more than an asset backing a security. It is a real person's home and that is their life. Regardless of how we got here and thinking past how to pass the blame for our predicament, denial of value purchases,such as short sales, by the big banks are going to decline in direct correspondence with the rise in foreclosures. Thanks for listening...
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