Warren Buffett Won’t Buy Facebook Stock

May 6, 2012 by
Filed under: Economic News 

Warren Buffett Won't buy FacebookEven with the more than huge hype surrounding the impending Facebook IPO somewhere around May 18th, billionaire Warren Buffet will not be buying Facebook stock. Buffett’s partner at Berkshire Hathaway Charlie Munger will also not be investing in the social network with more than 900 million members. As for a reason why, Buffett says:

“The idea that something coming out…that’s being offered with significant commissions, all kinds of publicity, the seller electing the time to sell, is going to be the best single investment that I can make in the world among thousands of choices is mathematically impossible.”

And Munger goes on to say:

“I don’t invest in what I don’t understand. And I don’t want to understand Facebook”

But don’t think the two Berkshire partners are all that negative on Facebook, in fact, they think they are fantastic companies along with Google and Apple. The problem they say is that they cannot come up with a good projection as to where these companies will be in 5 years. That could be good advice as anyone else considers buying into the Facebook IPO as the web is still relatively new as a business medium and change is about the only constant online these days. Just take a look at MySpace. Just a few years ago it was the social network to be a member of, but with the growth in popularity of Facebook, its decline was fast and furious.

While Apple is likely to be a contender in 5 years because they have real assets and produce a physical product, Facebook and Google on the other hand are pretty much digital businesses and no one really knows what will happen in 5 years in the web.

Source: CNN.com


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