Alibaba IPO question

GDS_Starfury · September 08, 2014, 11:27:37 AM

just what do our economic specialists think of this?

http://online.wsj.com/articles/alibaba-to-set-ipo-price-range-at-60-66-a-share-1409946492

http://www.reuters.com/article/2014/09/08/us-alibaba-ipo-roadshow-idUSKBN0H31I520140908

LongBlade · September 08, 2014, 01:36:35 PM

I'm not hopping on, but YMMV.

I have concerns. Mostly that it's Chinese. The Reuters article calls out my issues - transparency, execution.

On the upside, it's supposed to be the Amazon of China.

As an alternative, you might consider buying a fund that invests in either China, or Asia in general. International diversification can actually lower risks and increase returns. But I, personally, am not hot on that specific stock. In fact, I'm not sure there's a specific stock in China that I'd buy given China's current corruption.

LongBlade · September 18, 2014, 10:23:57 PM

Was watching Charles Payne tonight on Fox Biz.

He personally isn't recommending it to his investors as he fears the volatility will move faster than he can send out alerts to his clients.

But, as a general rule he advises the following.

If you can buy the stock at the following numbers and you're that type of investor, he recommends a buy:

Buy @ $68 if you're a trader/investor
Buy @ $80 if you're a short-term trader
Buy @ $90 if you're a seasoned day trader
Over $100 you should avoid.

Most of his guests were quite excited about the stock, but they seemed unanimous that it would be a wild ride.

One recommendation was to wait at least a week before you made a decision to buy as it could go all over the place.

I dunno what it's going to do, but as I said before, I'm wary of the trustworthiness of the Chinese.

GDS_Starfury · September 18, 2014, 10:51:04 PM

Im trying to talk some people out of it.

LongBlade · September 19, 2014, 12:46:27 AM

OK, I'm posting late at night without proper research and, as usual, probably have a defective memory.

Even so, there are always exceptions to the rule. If you happen to be circa middle aged and have a business background you know that there are certain "normal" measures for the value of a stock.

One of the simplest is the P/E or price/earnings ratio.

In the olden times a normal P/E was ~ 15 more or less, etc ad nauseum.

But in today's crazy world there are stocks like Amazon (OK, I logged into my IRA to look at the numbers) where the P/E is, as of now, 851.4.

That means the the stock is trading for 800 times the value it is taking in.

IN other words, it's crazy.

Yet it's been a "good" stock.

"value" in a capitalist society is all relative. That said, stocks like Amazon I've tried to avoid. I have bought some Apple simply because I'm betting (on the short term) on the emotions/ignorance of the masses.

It is possible to make money on these whacky stocks, but I, personally, wouldn't count them among a crop of standard investments. Long shot/speculative? Sure. Just be sure your investment balance reflects an appropriate understanding of risk.

GDS_Starfury · September 19, 2014, 12:50:31 AM

one of my biggest problems is the initial price. she wants to spend less then $10k yet expect a huge reward. for roughly $60 a share that isnt all that much.

now if I had just kept the apple stock my uncles and grandparents got me as a kid for $3........

LongBlade · September 19, 2014, 01:01:21 AM

Quote from: GDS_Starfury on September 19, 2014, 12:50:31 AM
one of my biggest problems is the initial price. she wants to spend less then $10k yet expect a huge reward. for roughly $60 a share that isnt all that much.

now if I had just kept the apple stock my uncles and grandparents got me as a kid for $3........

Gotcha.

Yeah, the coulda/shoulda/woulda will haunt all of us.

Is $60 a share a good price?

I'd say yes except for the fact that none of us knows where it's going to go.

If you can get in at $60 and make money if it moves to $80 you have to ask yourself if that's an acceptable profit.

Strategies for the stock market should never be based on what you might have made or lost. They should be made on a consistent strategy.

How many percent can you afford to invest in a volatile, unknown IPO? I don't know that number, but you (she) should.

Then you must ask: what's an acceptable loss/gain? 10%? 20%? That's up to you. You must decide when to cut your losses and/or sell at the point where you think the price has topped out.

Investment is about living with the raw consequences of your decisions.

I have made some smart moves and declined to take profits when I should have. Everyone has a personal threshold of risk and reward. You've got to figure that out for yourself.

LongBlade · March 03, 2015, 03:15:21 PM

FYI:

QuoteOn Tuesday, shares of the Chinese e-commerce giant were down more than 2.5% to trade below $82 for the first time since the company went public in September.

Since hitting their all-time highs in early November, shares of the company are down more than 30%.

And a report in The Wall Street Journal published on Monday certainly isn't helping the stock.

The Journal reported that the company was being plagued by "brushers," or users who are paid by vendors to buy products at cost and then write positive reviews in an effort to move a vendor's listings higher up in search results.

The practice of "brushing" is illegal in the US and China.

source: https://finance.yahoo.com/news/alibaba-shares-time-low-people-155123985.html