[ljd]

As most of us in the weeks leading to the FB IPO, I was also asked by friends and family if they should buy stock and the best answer was not to give hard yes/no's because I simply didn't know how the market will react to something this unprecedented.

However, coming from a value investment and algorithmic asset valuation background I explained the problem to them this way:

A Honda Civic is a great car at $20k? Yes.

Is a Honda Civic a good car at $90k? Probably not.

Could you find someone to buy it at that price? Probably.

Should you buy it at that point? That's what buying FB at a $110bn valuation is.

It's still a great car but I'm not going to buy it for that price.