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Weekend: Don't Buy the Hype Behind Facebook

Written By Brian Hicks

Posted January 8, 2011

Welcome to the Wealth Daily Weekend Edition — our insights from the week in investing and links to our most-read Wealth Daily and sister publication articles.

See you around, Mark Zuckerberg…

You may be Time‘s Man of the Year for 2010, but I have decided to “de-friend” you. Your $50 billion network has been an occasionally interesting diversion, but I’ve decided it contains virtually no real genius.

Once I had taken a few months to burn through the nostalgia effect, I knew your days were numbered — especially when I got tired of spying on that ex-cheerleader.

In the end, all I learned was that she shopped quite a bit, watched way too much reality TV, and was obsessed with creating a really cool but imaginary farm.

I also learned that sometimes the best roads in life are the ones that begin with a sudden detour. As it turns out, getting jilted in that Burger King parking lot in ’79 wasn’t so bad after all…

So, a few weeks before Christmas, I announced to my 253 friends that I was going cold turkey.

I was going to delete my Facebook account and go dark again.

Sunrise or sunset?

What surprised me as I said farewell to my network of friends was how many other people said they were thinking of doing exactly the same thing…

Facebook, all of them seemed to say in one way or another, was a pretty poor substitute for the “real thing.”

My friend Laura actually put it the best: “It’s like eating a bag of Cheetos,” she said with a crinkly nose, “There is no there there. A lot of times what I find on FB is really kind of pathetic.”

That, to me, was something of a surprise. As gregarious as Laura is, I was actually expecting her to be the one friend that would give me a hard time about it —but she didn’t.

That’s when I realized the Facebook phenomena has probably peaked.

(Of course, seeing Zuckerberg’s freckly mug on the cover of Time was its own clue. Say what you will, but the cover curse has claimed its fair share of victims.)

But on my way out the door of the social media world, I learned the vampire squid was headed in.

And in a way that only a stock jockey can, I laughed my fool head off when I realized some more sheep were about be shorn. The hype machine was shifting into overdrive.

It was proof, I thought, of the old saw, “Wall Street people learn nothing and forget everything.”

I mean, didn’t anyone remember the day Rupert Murdoch bought MySpace at its peak for $580 million? Five years later, I’d bet that’s one he’d like to have back.

But that’s the nature of this type of business. It’s littered with the corpses of the last “next big thing.”

Let’s face it, Facebook is a great name — but the fact is its most basic reason for being is imminently repeatable.

fb cartoon

As I type, thousands are undoubtedly planning the next social media arena. And eventually, someone will pull it off — the same way Zuckerberg did when he knocked off MySpace.

Even still, Goldman Sachs took the plunge because they know they will turn a nice profit when this one hits the IPO circuit.

According to the deal, the Wall Street powerhouse has invested $450 million in Facebook, while Russian investor Digital Sky Technologies added an additional $50 million.

That values the social networking platform at cool $50 billion — more than any other entertainment conglomerate with the exception of Disney…

Walt’s old firm still tops Zuckerberg by $21 billion.

Peak Facebook

But if history is an indicator, I’m guessing Disney’s spot at the top is as safe as it comes, based in part on something my friend Laura told me over drinks.

When I asked her if she expected to be trolling around on Facebook 20 years from now, she was pretty quick with the reply.

“Not a chance,” she said. That about summed things up for me.

These days, when I want to catch up with an old pal, I do it old school all the way…

I pick up the phone and give them a ring.

It turns out that this method of contact is a million times more satisfying — and it’s completely private to boot.

As for Mark Zuckerberg, he seems like a nice enough dude. My advice to him: Take the money and run, kid.

Eventually, the caravan moves on and the human circus pitches its tent in a new neighborhood. It happens to the best of them.

Just ask Steve Case.

As for places to invest your hard-earned money that will stand the test of time, check out the week’s top-read Wealth Daily and Energy & Capital articles below.

Your bargain-hunting analyst,

steve sig

Steve Christ
Editor, Wealth Daily

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