SINA (NASDAQ:SINA)

CAPS Rating: 3 out of 5

An online media company and value-added information service provider in the People's Republic of China and the global Chinese communities.

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Player Avatar BuffettJunior1 (97.57) Submitted: 8/29/2011 9:17:02 PM : Underperform Start Price: $96.89 SINA Score: +53.83

All of these social media stocks are over-hyped, kind of like the internet stocks of the late 90's. Eventually something new will come along and everyone is going to start using that. Social media companies like face-book, twitter and others have no moats. In other words, there are no barriers to entry. They don't even earn that much money on an annual basis to account for their ridiculous valuations. I'm sure when face-book IPO's next year it will have a 200 million market cap within 1 year, maybe more. That will make it worth more than Coca Cola, arguably the greatest business on earth. What I'm trying to say is that investors should study history, because it constantly repeats itself. Look for companies that operate in industries that change very slowly and have high barriers to entry. Look for companies that have a competitive advantage. Then buy these stocks when they are trading at huge discounts to their intrinsic values. Once you do find a stock that meets all of those qualities, buy as much as you can. Also, be prepared to hold those shares for a very long time (decades or even a whole life-time). One last thing I want to say is that most, if not all, of these social media companies won’t be around 10 years from now. All the speculators that invest in these companies will lose lots of money that is assured!

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