Investing in social networks. To be overvalued, does not mean that they can not be profitable.

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As now you have read, Warren Buffett totally discouraged investment in social networks, that in his view they are overvalued. Mr Buffett, a, I believe, by their principles is probably the best investor that currently exists on the planet, despite recognized it as a "clad in ancient" investor, true is that the game of the stock market has not changed since its inception.

Invest on the stock exchange is to speculate with a value, buy at a price and sell at a higher price. That we, over time, with new technologies, with the new traders and the ease of sending orders for buying and selling to the market, can it be in front of some changes in the behaviour of the actions. How to know if a value is expensive or cheap how to know if a company is overvalued?. Regrettably, today day, technical analysis is not reliable to deduce that, because a company isn't overrated if there are people who want to buy at that price.

Today, an apartment for 150,000€ is expensive, since few people are willing to pay that price. On the other hand, 4 years ago, this same apartment € 230,000 was a "bargain". Measure the overvaluation is complicated, but is true that we cannot foresee a bubble if we use common sense.

Do are worth the price in which markets have valued them Facebook and Twitter?

The truth is that both Facebook and Twitter can be worth even much more than the price that has been given, which capitalize on these business opportunities are infinite (today). What will happen tomorrow is the unknown.

I even think that we cannot talk bubble with these social networks, but rather a fashion that at any given time could happen. Who tells us that morning, millions of users is not tired of the use of social networks? who assures us that they will not appear in 6 months most complete that move to the current social networking?

Internet is moving at breakneck speed, which is why websites and social networks of fashion today, within a couple of years might be remembered as inventions that were successful but become passé.

Investors are not prepared to analyze companies in stock market have no physical branches of direct selling and whose profits depend on something that could go down in history. Until recently, even unthinkable was that an internet company could get to bag.

This does not mean that if tomorrow same Facebook go to bag, probably it would be one of the most profitable in the short term investments, since its value would not stop while investors consider that they can continue speculating.

That Yes, Facebook is so delaying his departure to bag that could be the case of losing much of its value when read out to the market.

This only to say that a company is worth the price you are willing to pay. Precisely this definition I give is to form the speculative bubbles, and a bubble is not bad if you get out you with benefits before that it explodes.

In this case, Buffett is not wrong, Facebook will explode one day, but... until that explodes, profitability can be obtained by choosing a good moment of entry. However, Zuckerberg is not for the work to earn money with the speculation of their product and it will draw its social network to bag when you have very little to speculate.

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