Warrant Buffet dissuades investments into social networking companies

Warren Buffet, a 80-years old American billionaire, warned investors against sinking their money into replete social networking companies. Chairman and CEO of Berkshire Hathaway Inc, Buffett advised investors to be wary of social media valuations, according to a report from the Bloomberg news service.

"Most of them will be overpriced," Buffet reportedly said, though he didn't specify which companies he was referring to. "It's extremely difficult to value social-networking-site companies. Some will be huge winners, which will make up for the rest."

Bloomberg made a note that Buffet has bypassed technology investments in favor of industrial, financial and consumer-goods holdings in his 40 years at Berkshire.

Dan Olds, an analyst with The Gabriel Consulting Group, said Buffett is offering a reality check for investors looking at the social networking industry and the whopping valuations that companies have been getting.

"Warren Buffet is looking at social networking as an investor and not just any investor, but as one of the most successful investors in modern history," he added. "He's not a guy who will see these companies as having huge values simply because they have large user counts on innovative models. This doesn't mean that he's the be-all, end-all authority on valuations of technology companies. He's missed his share of them over the years. But it is at least a minor shower of cold water for a segment that could be overheating."