Buffett: "One of the things we try very hard to do at Berkshire, is to stay within what I call our circle of competence."[1] It would surprise me greatly if the social network sphere is within Buffett's circle of competence, and it would surprise me even more if he thought it was, and so I would interpret his comments about it accordingly.

[1] http://seekingalpha.com/article/148662-circle-of-competence-...

Everything you say is accurate. At the same time it's worth listening. Buffet's got a great understanding of business models in general and knows a lot more about high tech than people give him credit for -- starting with a close friendship with Bill Gates. Yes, it was a very general statement and I would love to know more but take it for what it is: he's recognizing a couple patterns (most stocks badly overvalued, hard to pick winners) that he's seen; and it seems like nobody's convinced him yet that they're on the short list of winners [or he probably would have mentioned them]. So, while he's not necessarily right, it's still very valuable input from a strategy perspective.