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I don't think this analogy works, given the significant differences between investing and product adoption. Just because a product has become mainstream doesn't indicate that the "end is near." In fact, I would argue the contrary, particular in this case. There are significant network effects in social networking. As the number of Facebook users increases, the value of Facebook to existing users (those already on the network) increases. Now, not only can I use Facebook to communicate with my college and grad-school friends, but I can use Facebook to stay in touch with my extended family, more distant friends, acquaintances, etc. If I want to maintain these relationships, I'm forced to either stick with Facebook, or rebuild my social network elsewhere. If I wanted to rebuild my network elsewhere, I would have to convince most of my social network to defect to the new service, otherwise the new service is of little value. Facebook's recent moves around privacy (and changes in functionality) are clearly unnerving its customers; however, this alone won't cause the collapse of the service.

I think it's bubble-nomics. People sign up for services for the same irrational reasons they buy stocks -- they perceive a future value.

That's funny, I often think of a similar maxim in the book "Groucho and Me" by Groucho Marx. Essentially, he said that in 1928-29, he knew it was time to get out of a certain stock once his taxi driver started talking about it.

It's a great book, you can find most of the text here : http://books.google.com/books?id=tFsnGr2SQJ0C&printsec=f... though I can't find the section about the cab driver. The whole part about the 1929 stock crash is great.

Recently, I started another side business. One of my cousins who knows almost nothing about technology came to me and said, "Let me tell you something. I know how you can get your business started and I want to tell you about it."
At this point, I was already skeptical, but she continued... "There's this thing on the internet called Facebook and millions of people use it and you can make millions of dollars there..."

Oh no, I thought.

Another negative indicator for FB: I've also had some of my more tech-savvy friends tell me "I don't really use Facebook much anymore, I've switched over to Twitter".

I'd suggest that "losing early adopters" might be an even better indicator of decay than having random laypersons tell you about a company.

My technically inept family members have been using Google for years. But I don't see their shares tumbling.

I don't think he is referring to facebook aboption as an indicator here, rather the fact that someone clueless said that there are so many people using it and millions can be made

I'm sorry, I don't see your point. Could you elaborate?

I think it's a false dichotomy to compare the tech bubble with facebook. The former was an economic phenomenon that was dependent on the continued supply of new money from increasingly clueless investors (essentially a pyramid scheme, like all bubbles). The latter is a business with a ton of users and a disturbing amount of information on those users. They have several options for further monetization that don't necessitate unsustainable growth.

I do hope facebook fails because of its stance on privacy, among other issues. But I don't think its situation is at all comparable to that of the tech bubble.

You've known for years that the end is near for Facebook and yet facebook has been and is growing insanely. I am tempted to repeat jacquesm's comment about all os us dying above..

No, now... You're putting words into my mouth. I have known for years that people would complain about facebook's privacy violations and their pressure to make money would cause a user revolt. I've also said they will change their privacy policies to the worst interest of their users.

Don't discount the validity of that prediction simply because I did not put a time stamp on it.

Many people have said, and probably will say soon, that facebook will always be around and always be part of our lives and as integral to it as television. Those predictions are bad predictions, yet people argue them.

I did put some date based predictions in another comment above, what is your prediction?

I have not seen anyone predict that Facebook will last forever. I personally wouldn't say that about any company.

I myself predicted that apps would be the demise of fb. I received so many invites that I couldn't keep up - and it was accelerating. But they solved that problem by taking apps off of peoples primary pages. App developers complained and some probably missed showing what kind of ninja they were, but looking at it now, it looks like they made the right decision. I wouldn't be surprised if they manage to fix current problems as well.

Facebook is not sticky? hundreds of millions of people logging in every day and consuming the site for a high number of pageviews redefines sticky.

I think whether it is sticky or not is not the right item to focus on (though it obviously is). The question of whether or not they have serious user churn is the interesting one.

I don't believe it is and here's why. It's easy to link to your facebook profile. If you create an orkut profile, you can add a link to your facebook profile there and simply stop using facebook.

Eventually, it'll get too costly to maintain the infrastructure to support facebook or the customers -- that is, the advertisers -- will think another ad network is hotter and people will forget about facebook.

You could say, "But all my messages are in there. All my photos and my farm..."

But I'm a techie and I have had computer hard drives fail and take my life with them. Within a week, I forgot all about it. Sure, I wish I had that awesome paper I wrote for some class or another or the code for some program I wrote in high school that drew pretty pictures with mathematical formulas, but I'm okay with out it and life goes on.

And life will go on without facebook. Life goes on without myspace and linked in and friendster and...

It will fall, no doubt about that, however you are early on the curve and thus are underestimating the amount of time it will take to first hit its apogee and then decline.