Wednesday, May 23, 2012

The Definitive Answer on Whether or Not a Person Should Buy Facebook Shares – And A Commentary by National Review’s Rich Lowry With Which We Agree

Yes, The William F. Buckley Descendants Do Have An Occasional Good Idea and a Great Commentary

The financial news has been all atwitter (no, don’t pardon the pun) with the initial public offering of Facebook.  The company is a natural monopoly, meaning that the economics of social networks mean that only one company should exist, there is no need for duplication and competition.  As a natural monopoly, and an unregulated one at that it is natural to assume that Facebook has a rather high value.  And it does.

But what about the product it produces.  The National Review is the publication started by the late William F. Buckley, and it mostly sets out the inane right wing views of its heritage.  But surprisingly its take by Editor Rich Lowry on Facebook is right on. (Thanks to David Frum’ blog for this one)

If time be of all things the most precious,” Benjamin Franklin said, “wasting time must be the greatest prodigality.” But he had never heard of a status update.

Facebook is the world’s foremost purveyor of information you shouldn’t care about. Facebook founder Mark Zuckerberg is to uselessness what Henry Ford was to the automobile. He has mastered it on an industrial scale and is riding it to a vast fortune. At more than $100 billion, the valuation of Facebook equals the annual GDP of Morocco or Vietnam, countries that don’t top anyone’s list of economic powerhouses, but do actually produce some things of value.

Can 900 million people, the roughly one-eighth of the planet that uses Facebook, be wrong? If they are passing around photos of pets in party costumes, telling us whether they are having a good or bad hair day, and playing the farming-simulation game FarmVille, the answer is, “Why, yes they can!”

Facebook has transformed oversharing from an annoying habit of the poorly socialized into the very stuff of daily interactions. No thought is too banal, no event too minor, no mood too passing, no photo too embarrassing to be posted on Facebook. One of the great self-regarding egotists of all time, the late author Norman Mailer, might have blanched at the unrelenting self-exposure of it.

Does that sum it up or what!  The phrase Mark Zuckerberg is to uselessness what Henry Ford was to the automobile is surely one that should live in the Phrase Hall of Fame.

As for the question of whether or not an individual should buy the Facebook shares, there are probably more than 10,000 opinions available on that issue.  And while there has been no categorical count of the positions in those opinions, one can safely assume that between 40% and 60% of them advise buying the stock meaning between 60% and 40% advise not buying the stock. 

Ultimately everyone will know whether or not buying the stock was a smart move.  This means that 4,000 to 6,000 of those opinions will have been dead right, and the authors will crow about their expertise, when in fact the law of large numbers and pure dumb luck is really the cause of their accuracy.

As to the question of whether or not one should actually buy the stock, here is the correct answer.

I don’t know, you don’t know and no one knows

Not that hard, was it. 

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