Posted by Leonard Steinberg on January 31st, 2012

In the period between 2004 and 2008 we witnessed the growth of a housing bubble. At the time we didn’t really see it happening although there were clear indicators. This was the new economy, where housing prices could double, triple, and it was all the ‘new normal’……

The first sign of a bubble to me is when everyone says its not a bubble…..when pricing escalates so dramatically, it seems unrealistic, yet you really want to believe its possible. Last year at this time word was that Facebook was worth about $ 50 billion. To-day a year later, just before the IPO, Facebook’s value is being touted to be around $ 100 billion….double! Sounds like Vegas housing prices to me. Now remember, just like the housing bubble of the 2000’s, most lost a lot of money, but some made an absolute fortune. With this IPO comes a bucket load of banker ‘fees’, hundreds of thousands of speculators (many of whom are bound to buy and sell and make some quick money….sound familiar?)…..but I fear the majority will lose. I hear of many de-Facebooking already as it has lost its cool. WIll it be replaced by the next best thing? What exactly is Facebook selling or making? Different questions to housing, yet eerily similar to me.

I believe FACEBOOK is a bubble in the making: I hope I am wrong, although I have to admit I really, really don’t like Facebook. There are elements about it that were fun for sure: at first it had its novelty appeal, connecting to school friends you probably didn’t want to re-connect with, but thought it fun to see if they had gotten bald and fat. Now I receive about 3 friend requests a day, often from people I don’t even know….or want to know. I have always resented friends who had dozens of friends. It diluted friendship for me. Now imagine your friends have HUNDREDS of friends. Surely friendship hasn’t become Kardashian too in its shallowness?

So only time will tell if I am wrong, but if you look at the fundamentals, just like the housing bubble, I really believe we all need to take a deep breath and stand back to see what this Facebook thing is really all about before diving in.