Chinese BABA - Hold/Sell/Accumulate?

by smArtha Tue Sep 29, 2015 6:00 pm

A few months ago moved about 20% of my IRA portfolio into BABA. That was my only direct exposure to Chinese economy too. Picked the stock at close to the IPO price. Based on where the stock price is now (about 2/3rds of the IPO price) it is tempting to ramp up the position. However, holding back due to the Chinese economy concerns in general and negative news on Ali Baba in specific. Propa or anyone who is playing in this area or has insights - what's your reco on Buy/Hold/Sell?

by Propagandhi711 Tue Sep 29, 2015 11:16 pm

smArtha wrote:A few months ago moved about 20% of my IRA portfolio into BABA. That was my only direct exposure to Chinese economy too. Picked the stock at close to the IPO price. Based on where the stock price is now (about 2/3rds of the IPO price) it is tempting to ramp up the position. However, holding back due to the Chinese economy concerns in general and negative news on Ali Baba in specific. Propa or anyone who is playing in this area or has insights - what's your reco on Buy/Hold/Sell?

I'd hold and not add to portfolio, too many negative headwinds for chinese stocks in general and baba as well. I was thinking of buying some at 70 when the stock came off it's euphoric post IPO highs but glad I didnt.

I'm completely in cash in my non 401k & 1 of my IRA accts ** since may and it's been a good call so far. most of the momo stocks I was holding tanked big time as they tend to do when it's risk-off in the market.

** except for facebook which I never sold, I think the company is going to dominate in a big way so looking for a good price point to add more. over next few months I'll add some metals and oil gradually along with new tech assuming we have a good drop in the market.

by smArtha Wed Sep 30, 2015 10:40 am

Propagandhi711 wrote:

I'd hold and not add to portfolio, too many negative headwinds for chinese stocks in general and baba as well. I was thinking of buying some at 70 when the stock came off it's euphoric post IPO highs but glad I didnt.

I'm completely in cash in my non 401k & 1 of my IRA accts ** since may and it's been a good call so far. most of the momo stocks I was holding tanked big time as they tend to do when it's risk-off in the market.

** except for facebook which I never sold, I think the company is going to dominate in a big way so looking for a good price point to add more. over next few months I'll add some metals and oil gradually along with new tech assuming we have a good drop in the market.

Thanks for the suggestion. I'll hold the temptation to buy or sell for now. Also, all cash in portfolio since May?! How does a retail investor even make such a call confidently? The only way I end up holding cash is that I haven't made up my mind what to invest on after funding the account. On FB, I have had more ideas how they can dominate than what I had seen them do since 2012. Which gets me concerned if they will ever get it right.

by Propagandhi711 Wed Sep 30, 2015 2:15 pm

smArtha wrote:
Propagandhi711 wrote:

I'd hold and not add to portfolio, too many negative headwinds for chinese stocks in general and baba as well. I was thinking of buying some at 70 when the stock came off it's euphoric post IPO highs but glad I didnt.

I'm completely in cash in my non 401k & 1 of my IRA accts ** since may and it's been a good call so far. most of the momo stocks I was holding tanked big time as they tend to do when it's risk-off in the market.

** except for facebook which I never sold, I think the company is going to dominate in a big way so looking for a good price point to add more. over next few months I'll add some metals and oil gradually along with new tech assuming we have a good drop in the market.

Thanks for the suggestion. I'll hold the temptation to buy or sell for now. Also, all cash in portfolio since May?! How does a retail investor even make such a call confidently? The only way I end up holding cash is that I haven't made up my mind what to invest on after funding the account. On FB, I have had more ideas how they can dominate than what I had seen them do since 2012. Which gets me concerned if they will ever get it right.

fact is no one knows what's truly going to happen so it really comes down to coinflip type binary decision to buy or sell. at that time I was pretty convinced the market was going to tank for the following reasons: a) there was no significant correction since 2011 which is a LONGGG time b) rest of the world's going to shit, dollar getting stronger, oil getting weaker, commodities showing weakness while it was looking more and more like the low interest regime was coming to an end....usually those are a recipe for stock market drop so I decided to move to all cash.

if I were actually invested in high quality stocks I wouldnt have made that move but my outside money was in speculative, momos which will hurt you in a big way should the market drop or even decide it wants to go to quality stocks. that made my decision a lot easier. I was also in the process of moving my IRAs from one place to other so decided to stay in cash until things settle down before reinvesting, am not claiming some great clairvoyance here.

by TruthSeeker Mon Oct 12, 2015 8:00 pm

Homie - To me, the bigger Q is - How much do U expose yourself to a specific stock vs. Diversify. When I gave the control to manage my portfolio to a desi Gujju CPA, he never bought any position for more than 4% of total value. If and when one plays on a single stock, relatively big time, one may succeed or fail, big time. More risk.

Playing 20% of your IRA on a single stock, just tells me that either you have a lot more invested in other accounts, and your IRA is a % of your total investments in the market. I don't have an IRA, only 401K.

As for BABA, I feel it will come back in intermediate term. Though I do not feel that Chinese have a long lasting strategy when it comes to Stocks. They copy successful business models from US (Google, Amazon, eBay..), and then make their own (and just ban US sites for use in China, I learnt it hard way when I was in China that gmail is blocked there!).

This copy/ban model wont work for too long.

My thoughts as a longer term investor,
TS.

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