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May 17, 2012 at 12:00 PM
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.
