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Why Do People Hate California?

NEW YORK ( TheStreet) -- I moved to California in September of 1999. Spent seven incredible years in San Francisco. Lived two years apiece in Orange County and Los Angeles. And I have been in Santa Monica, where I hope to stay at least another decade, for almost two years.

With a handful of exceptions, I cannot imagine living anywhere else. When my kid graduates high school, my wife and I will likely end up back in San Francisco if we don't stay in Santa Monica. Knock on wood.

I always qualify my California history and aspirations with a superstitious knock on wood. It's a must. Because, unless you can maintain, at minimum, an upper middle class salary, the worthy portions of California (most of the North, South and the coast) end up being impossible places to live.

If you somehow manage to pull it off, without independent wealth or a sugar Daddy or Momma, it can be a miserable existence for any extended time period.

Like Manhattan, the cost of living makes the most desirable portions of California somewhat exclusive. At the same time, the most "progressive" Californians love to claim that the state is incredibly diverse culturally and economically.

Enough of that euphemistic garbage.

There's no doubt, we not only tolerate a wide range of ethnicities and lifestyles, but openly accept them in large chunks of the state. However, California is less economically "diverse" as it is unequal; we'll take the have-nots who make many ethnic neighborhoods worth visiting, as long as we can insulate ourselves from them in our relatively posh enclaves.

At a moment's notice, though, we'll gentrify the living hell out of ethnic neighborhoods (and kill the character that attracted us in the first place) if we like them enough (see, e.g., San Francisco's Mission District).

That sounds harsh, but it's brutal honesty. That's the way us "liberals" roll in California. Same goes for Manhattan. It's easy to accept everything and everyone when you call home a playground for well-educated, upper-income Whites and Asians. Few of us are willing to set up shop in East L.A.

Entrepreneur Envy

I think it's this very high and mighty existence that prompts the rest of America -- really just Middle America -- to hate California so much. The weather is great here every single day. I can smell the ocean when I step out of my house. There's nothing you cannot do in this state professionally and culturally if you have money, education and time. And all I really worry about is getting cancer or experiencing a major earthquake.

That's the new American dream.

The rest of the country wishes it could live the somewhat hypocritical good life we lead in Northern and Southern California. The disdain this coveting sparks is akin to what Howard Lindzon called "entrepreneur envy."


At the moment, the envious do not even realize that they're green. It would require a whole team of mental health professionals to get them to acknowledge, let alone understand this.

Facebook (FB) hate, cat calls about another Internet "bubble" and yelps that every social media IPO is little more than a fad -- it's all entrepreneur envy. We have this backward tendency in our society to want to cut down the people who not only make things happen, but make our lives better. Instead of aspiring to be, we go to great lengths to poke holes in the private and public lives of great visionary entrepreneurs and their world-changing companies.

A similar, interrelated dynamic is in play with regards to California envy. In all seriousness, if it were not for California (and Seattle, Manhattan, Boston, Austin and a handful of other "elitist" hubs full of gays, vegans, Prius-drivers and highly-educated snobs), the rest of the nation would lead relatively boring, less fulfilling lives.

California produces most of what we watch on television. It birthed and/or hosts Apple (AAPL - Get Report), Netflix (NFLX - Get Report) and Facebook, just to name three. And let us not forget our friends in California's "fertile" Central Valley -- the home of pesticides and the religious right. You can eat "fresh" Caesar salads in Philadelphia thanks to California. We also introduced the rest of the country to reasonably priced avocados.


Generally, this type of phenomenon would not trigger a response from me. I can no longer hold back. If you hate California -- and allow this hatred to impact your investment choices -- this behavior could limit or, worse yet, seriously damage your portfolio.

The Wall Street Journal published an interesting piece the other day noting that:
As of April, 94,100 people in the . . . San Francisco metropolitan area -- worked in the employment categories that typically include tech jobs, according to data from California's Employment Development Department. That was up 10% from 85,400 a year ago.
The same employment categories in the San Jose metropolitan area . . . consisted of 211,000 people, up 3% from 205,000 a year ago
.

Of course, the San Francisco and San Jose metros span from Marin County across the Golden Gate Bridge through the City of San Francisco, along the peninsula through Silicon Valley and south past San Jose.

That sampling from the North only begins to illustrate what a dynamic state California is. Bark all you want about deficits, cost of living, taxes, etc. (My gas and electric bills come to about $30 a month! Property tax is just over 1%). Most importantly, however, if you're an investor who experiences even a little bit of California envy, set it aside. These distractions and barbs cause you nothing but harm.

There's a reason why companies ranging from Salesforce.com (CRM) to Zynga (ZNGA) to Pandora (P - Get Report) locate in California.

It's one of a handful of places you need to situate yourself if you wish to attract the best and brightest because the best and brightest want to live in San Francisco, Los Angeles and like-minded places such as Seattle, Manhattan, Boston and Austin.

Investors should never bet against the best and brightest.

So when Twitter (San Francisco), Pinterest (Palo Alto) and other disrupters of the present and pioneers of the future go public, try not to greet them with Facebook-style hate. Or entrepreneur envy. Or California envy. Rethink your position on mobile monetization, social media and Wall Street's future $100 stocks.

Pick your spot and get long. Not only should these types of investments pay off come retirement, but they should afford several dream escapes to California along the way.
At the time of publication, the author was long FB, P and ZNGA.

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