Is Facebook the next Apple or Google? If you remember, Google went public on August 19, 2004 for $85 per share. It closed trading its first day on the open market up 17% at $100.34. Today, it trades at around $600 — quite a return over the past 7+ years. Facebook promises to be even more popular than Google in its trading debut, but will the euphoria be as long-lived?
Mark Zuckerberg, the 27-year-old whiz bang billionaire, will likely earn $18 billion more dollars when Facebook is sold to the public later this month. With no need of cash, one wonders why the primary owner of Facebook wants to sell most of his shares. Another question: Is it wise to buy Facebook once it’s available to purchase?
An older and wiser American multi-billionaire does not think so. Warren Buffett has stated that he will not purchase Facebook for himself or his shareholders, at least not on the first day of the IPO.
See also: America’s 10 Biggest IPOs
A little history homework reveals manias with Dutch tulips in 1637 and the British Railway in 1845 — and may illuminate why taking the road less traveled, a path that is tailor-made for you and your personal goals may be best.
Still, almost everybody needs to have an asset that could appreciate at a pace that wallops inflation. High-flying companies are truly a double edged sword. The slightest disappointment means they are punished mercilessly by the market; check out Netflix or AOL back in their heyday.
Already Facebook has seen its younger followers migrate over to Twitter and business users choose LinkedIn. Has the bloom already begun to fade from this rose? One huge untapped market for Facebook is China; but two other well established Chinese social media players are already dominating their market.
Markets are fickle (anyone remember MySpace?) and investing is best done with the help and guidance of a professional. With the likes of Ben Bernanke owning annuities and Warren Buffet passing on Facebook, maybe it’s a wise choice to keep it simple and safer with your money too.
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