Thursday, March 17, 2022

Random thoughts: Alibaba and JD

 I think Alibaba brought a lot of grief to people. 

From what I read in the blogger sphere, it seems many people "regret" boarding the bandwagon. 

As a silly investor, I would like to give my silly take. 

As Alibaba went south, I followed my rules of engagement of accumulating when price show 20-25% weakness. When it is my third or fourth Tranche, I look for 30-35% correction. 

Mathematically, the third or fourth tranche will be less than 50% of your last purchase price.

The caveat is the accumulation cannot Exceed 5% of my overall portfolio, and my portfolio, I included my cash that are set aside for investment. 

I believe Alibaba cloud business will turn in profits, and its e-commerce still has a moat. I also believe/ hope that regulations will come to an end, and release the pressures on these companies. 

My average price is 146 and I am 30% into the red. I missed the lowest price and my last entry is 96, which is just slightly higher than what the market offers now. At its worst, I am down by more than 40%. 

I do not think I will accumulate further although I still have leeway and room before the 5% ceiling is hit. 

The same can be said of JD, although I waited longer before accumulating because JD results is worse than I expected, (turning in a loss).

I think I am humbled by the HK market, as I am a newbie in it. I didn't experience multiple days of more than 20% swing in price per day with STI. 

My holding of HK counters increased significantly when HK hit bear market, alas, I was 2 days too early, or I would be already be sitting on good paper gains. 

Yet, I reminded myself that my goal is not about bragging rights, but to build a portfolio that is less fragile to shocks, and one of the way to build such a portfolio is to do bear hunting. 

I bought:

1China Shineway Pharmaceutical Group Ltd. 

2Stella, 

3Ping An, 

4ICBC, 

and accumulate JD and Alibaba. 

The point I want to make is this, we can never predict the market, and we will likely learn new lessons from Mr Market, but it is of utmost importance to have a plan or strategy and stick to it. Gather data as you execute the plan, and refine it. 

If we start throwing out our whole blueprint every time the market move against us, and hope to get a new sure-win plan, we are asking for trouble. We should be more concerned about our portfolio, than individual counters. What is the cash flow generating from that portfolio, and is there any buffer to withstand a correction? My last count, my yield of portfolio is 3-4% only, but it is a portfolio that allowed me to sleep well during turbulent times and is better than CPF, OA, without lock-in period.

I hope to be able to improve either the yield or the MOS of my portfolio. Since I am still building up my portfolio size, I am definitely BUYING more than SELLING. The only stock I sold in the last month is DBS, but I agree with SMOL that I can do better at SELLING, since I am too fixated on buying. It is one area that I think I can improves on, but SELLING and PANIC SELLING are 2 totally different matter

I am more a turnaround investor, so my style suit me alone. I am not peddling my way, but encouraging whoever is sitting on Alibaba paper loss, that well, you have a silly companion who is not just silly but also stubborn. 


7 comments:

  1. Sillyinvestor,

    Eh... I don't think Alibaba "investors" will feel better knowing they got a companion who is "silly" and "stubborn"...


    Jokes aside, of course panic selling is not the same as selling!

    The trick is to sell BEFORE one hits our "uncle point" that triggers the panic selling ;)


    When we get better at selling, a pleasant side effect is we'll get better at buying.

    Its all about spotting distributions and accumulations.




    ReplyDelete
    Replies
    1. Hi SmOl, there are many ways to buy and sell. So it might be confusing ig I do not have a plan.

      As long as u are comfortable with what is happening and has data and track records to show, we should not care too much what others say.

      If u are like the story of the 2 father and son trying to sell the donkey and react always to what others say, u know u are not at peace investing.

      Time to think through harder again.

      U was quite shock with a comment at another blogger space, talking about losses at Alibaba and only left 200K and wanted to place in 1 more bet.

      Wow. 200k is almost the whole of my portfolio

      Delete
    2. Sillyinvestor,

      I saw that comment too.

      It's clear that commenter has reached his uncle point and is not thinking straight...

      He is hoping to make another big bet and hoping to use the "dividends" to break even the losses at Alibaba...

      Many confuse the difference between savings and investing.

      Delete
    3. Hi SmOl,

      While I consider myself a investor, and a passive one, since I am very much into dividends investing, I am starting to appreciate what you mean by is a zero sum game, and it is a battlefield.

      Everytime we buy, there is a "sucker" who sell, or we are the "sucker" who bought.

      Although it is possible that both win, I have to remember I am buying over from someone, and he has reasons to sell, and I should be convicted to buy regardless of the reasons of the seller.

      I hope I dun experience uncle point

      Delete
  2. Silly investors don't care about position sizing relative to portfolio allocation or capital size! Some are so stubborn that die die they must win back the same way they have lost by averaging down to longkang!

    ReplyDelete
    Replies
    1. Hi CW, is not easy to admit we made a mistake and cut loss. Sometimes we think it is market that is depressed.

      Is difficult to tell the difference between conviction and value investing, to delusion and gambling.

      After a while, we can tell those at the end of the spectrum, but the line is always blurred at the boundary

      In the sizing, is what save our sanity

      Delete