If we use the SP500 as a benchmark for RSU valuation, in 2020 those regressed, at their lows for the year, to mid 2017. They are currently at September of last year. In the past year, SP500 is up a quarter percent. I don't think tech workers were doomed in 2019, and nobody was buying a house on the assumption that RSUs would appreciate at 50 percent per annum.
> If we have layoffs, in FAANGs, I suspect a lot of folks will not be able to pay their mortgage.
Indeed million dollar mortgages are high stakes. If foreclosures actually become an issue I imagine the politicians will step in to bail someone out. Maybe the lenders, but probably homeowners directly since they vote. It's entirely possible we see a democratic congress throw out the SALT limits from the tax reforms.
[1] https://www.washingtonpost.com/business/on-small-business/we...
The problem with a lot of startups is that they aren't making a profit when everything is going fine, let alone during a world wide pandemic, sometimes for years.
I see it as a wake up call for tech. It will suck for many people but in the long run it might be positive for the industry.
As soon as things pass, money should start to flow back into startups.
This may not be soon.
Says who? Are you really claiming knowledge of what the future portends?
If you are certain of the future-- you would make a bit bet. Have you bet money on it? I doubt it. If you truly thought this was the case, you'd have purchased some options ;)
The FED and Treasury have "united" in some sense, and we have unlimited (trillions) QE flowing into equities. So unless the FED stops the money printing party, I'm not so confident this will happen.
Startups are having massive layoffs right now, and each week bring companies further and further down the chain lay people off. I strongly suspect we'll see more major layoffs next week.
Most big tech companies are driven by either consumer spending and advertising. Before 2008 at lot of these companies still had not capture their full market share, so even in a recession there was room for growth. Now profits in these companies are based on market dominance. Even the big names will likely take a hit as the severity of this recession starts to take hold.
Finally in the Bay Area there's the looming problem that huge amounts of everything is paid for in RSUs (restricted stock units). The more ridiculous those total compensation packages may seem to outsiders the more they are built up from RSUs. In theory you should just live off base salary and RSU are the (very thick) icing on the cake, but this is unrealistic in SV. This stock part of the compensation goes a long way to paying for the insane housing in that region. Stocks drop and instantly Bay area income does to.
Tech will be effected, but a combination of naiveté and denial make conversations here seem like tech is safe.