Warren Buffett said earlier this week on Social Media IPOs (initial public offering):
“Most of them will be overpriced,” Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., said today in New Delhi. ”It’s extremely difficult to value social networking site companies,” he said, without specifying companies. “Some will be huge winners, which will make up for the rest.” – Busiessweek
However I am surprised this was such an important headline as Buffett is known to not invest in industries he does not understand himself. This is part of the reason he has stayed weary of derivative investments and invested mostly in textile, insurance, and more traditional companies.
In fact he has been quoted not being favorable towards IPOs:
It’s almost a mathematical impossibility to imagine that, out of the thousands of things for sale on a given day, the most attractively priced is the one being sold by a knowledgeable seller (company insiders) to a less-knowledgeable buyer (investors).
So, when one of the richest men in the world gives an opinion, you should probably listen up and take note. He could be right on that there is a bubble forming around social media companies. But what can you learn from his opinions?
What are you invested in that you don’t understand? Can you explain your insurance plans? Do you know you loan your money to banks for zero interest and borrow back rom them at 18-29% using their credit cards?
Know your investments and financial products you are buying and using… but just my opinion.
I ran across this cool info graphic today in my Google Reader. It come from KISSmetrics, an awesome web analytic company.
It provides some insight, analytics and case studies into why small, local services should use social media to increase sales…. Very good info.
Here is the graphic from the KISSmetric blog post:
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