

Buffett: Social-Networking Sites are Overpriced Ahead of IPOs - gatsby
http://www.businessweek.com/news/2011-03-25/buffett-says-social-networking-sites-overpriced-ahead-of-ipos.html

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MartinCron
The fascinating thing about Buffet is that so many people claim to respect him
and his opinions while they do the exact opposite.

Fundamental value investing? Investing only in companies that you really
understand? Taking a long view? All seem to be horribly out of fashion the
moment people start feeling exuberant. While people are investing millions in
yet-another-photo-service, what was the last big thing Buffet bought into,
railroads?

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bradleyland
It's hard to compare tech investors to Warren Buffet. He doesn't do tech
because he doesn't know it. He invests in what he knows, which tend to be
companies that have a physical deliverable.

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juiceandjuice
I think he knows about tech. I think he doesn't invest in it because it's
volatile.

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tsotha
In the past he's pretty much said straight out he doesn't understand it. You
can take that a couple of different ways. I doubt he's a technophobe, but I
wouldn't be surprised if he didn't really understand the difference between,
say, an application and and operating system.

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bfe
As noted in the article, Buffett also shuns tech investments - and Buffett has
said he doesn't invest in something he can't understand well, and he doesn't
understand tech.

And he's not wrong. Nobody understands the conditions for the future success
of companies on the edge of new technologies on the kind of level that makes
Buffett comfortable enough to invest.

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c2
Exactly, Buffett's whole investment philosophy revolves around margin of
safety. What's the margin of safety in a fast growing speculative space such
as tech? Zero.

Not to say that you can't pick winners, but it is wholly different from buying
a controlling interest in a company which has the potential to reap high
profits with tighter management (see, Coke, Wrigleys, Wendy's, Railroads,
etc).

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woan
Really can't argue with the Oracle that there that the majority of these are
over-valued. In a sense that just means they are priced for success though we
know many will fail or be limited niche businesses.

The key statement though as it relates to a specific company is: “Some will be
huge winners, which will make up for the rest.”

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VladRussian
while i thought only atomic bomb explosion can have such dynamic, it happens
Groupon valuation too:

from [http://www.bloomberg.com/news/2011-03-17/groupon-is-said-
to-...](http://www.bloomberg.com/news/2011-03-17/groupon-is-said-to-discuss-
ipo-valuation-of-up-to-25-billion.html) :

Groupon Inc. has held talks with banks about an initial public offering that
would value the online-coupon company at as much as $25 billion ... Groupon
was valued at about $1.3 billion last April, when it raised $135 million from
investors, including Digital Sky Technologies. It contemplated more funding at
a $3 billion valuation in November, shortly before Google’s offer. An
investment of $950 million, completed in January, pegged Groupon’s worth at
$4.75 billion.

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dbs
Buffett has said before that he doesn't invest in tech because he doesn't know
how to evaluate the pricing power of these companies and because they are more
prone to industry change.

