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I have no position in BABA - thank god.
DISCLAIMER: All of Tom's trades, strategies, and news coverage are based on his own opinions alone and are only done for entertainment purposes. If you are watching To'ms videos, please Don't take any of this content as guidance for buying or selling any type of investment or security. Tom Nash is not a financial advisor and anything said on this YouTube channel should not be seen as financial advice. Tom is merely sharing his own personal opinion. Your own results in the stock market or with any type of investment may not be typical and may vary from person to person. Please keep in mind that there are a lot of risks associated with investing in the stock market so do your own research and due diligence before making any investment decisions.
So was i wrong about alibaba? Am i a hypocrite? I've been on record saying that alibaba is a fundamentally insanely good company, so why the hell am i tweeting that i would rather invest in enron than in alibaba right now. So let me explain and clarify how this actually works. So nothing has changed from a fundamental perspective. Alibaba is probably one of the better companies.
You can look at their growth, their revenue, their business model. I mean it's a phenomenal company. Nothing has changed, they've been losing a little bit of traction, but in general i mean they're great company. The problem is you can't analyze and value companies just based on numbers and financial reports? Only you have to look at the financials, but you also have to be aware of the demographic of the joke.
Political risks it faces, and then the geography it operates in china is extremely unstable. I mean i don't have to tell you that china is is very unstable. This geography i mean the chinese communist party - is unpredictable. It's a erratic and it doesn't make rational decisions.
Just look at what just happened in the last few months right with the chinese tennis player, jack ma dd cancelled, you know, alibaba fine by 3 billion. So, like the kids who can't play video games more than an hour, i mean the decisions that they come up with. It's it's just so erratic and unpredictable. I can't put my money in a geography where my investment is going to be at risk externally of what the company is doing.
If i had to bet on alibaba in the us, probably one the better companies to invest in but alibaba in china, like every other company in china, it's just too much of a problem. The chinese government can just literally wake up one day and decide to take away alibaba as simple as that and by the way, if they decide to do it, you have no recourse, unlike investing in u.s stocks or european stocks, or even russian stocks. God forbid, when you invest in the chinese stock, you invest in a vehicle called the vie. You should google what the vie is because, essentially what it is you don't actually own any stock in those chinese companies and that's intentional by the way you own a stock.
In what usually is a cayman islands - parent company that owns another hong kong subsidiary that owns another chinese subsidiary? That owns the actual company, you think you're investing in so you have no ownership in the company you're holding share of which is essentially as good as buying a new car, not getting a title for it and basically letting some other do tell you well, you can Drive the car no problem as much as you want, but i own the car and you pay full price. So that's essentially what investing in chinese company is, because, when the chinese government eventually decides to pull the plug on these and based on what i'm seeing right now, it's not far-fetched that they will. You have no recourse, because you don't actually have any standing in this. Legally, because you don't own any shares in the company, you think is, being you know, cancelled or abused or pulled into plague by the chinese government. You are a shareholder of a company, four tiers away that has no rights, no recourse against any actions against the company. You think you're holding, so i think, there's a huge difference between contractual rights for profits and whatnot and actual ownership rights. I think it should be priced in in every transaction you're doing including in the stock market, and that's why i feel chinese companies are overvalued, not to mention the fact that they're located in authoritarian government jurisdiction, which has proven to be extremely erratic and unstable. So that's why great companies like alibaba ain't, going to see a dollar of my money, because the risk is just too big.
I think there are better investments out there more secure, more stable. You don't have to buy chinese companies. There's thousands of companies out there with better prospects and better geographies, just my opinion - might be an accurate might be wrong, might be the running of a madman. You got to do in research, you know tell me what you think below.
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Not only did I sell all my Baba, Nio and Xpeng, I also stopped my monthly automatic saving in a China focused fund. As you say they all might go up a lot, but I just don't want the additional headache of being like Charlie Munger and "hoping" that the Chinese government will act rationally. There are other fish in the sea.
I'll admit I'm modestly invested in JD but only because they seem to stay in line in terms of not getting CCP attention.
My thoughts exactly. If political conflict beween China and the US escalates China could simply make the VIE's illegal something that would be all too easy for them to do. What the hell was Charlie Munger thinking?
You are right about the risk, which is why BABA is the only Chinese company I put money into and I limit the amount I buy.
The upside is so much greater than the risk though. If I am wrong, I lose a certain percentage of my portfolios, if I am right BABA will most likely 5x in the next 5-7 years. The CCP won’t destroy the company, it’s making them too rich. The regulatory stuff is just FUD, they’re still growing and making a lot of money.
Even with the last earnings call, it still grew 30%. A 20 PE company with 30% growth? Seems like a no brainer.
The risk is present though..
It's pretty much the same as trying to own real estate in China if you're a foreigner. The CCP lease out the land so they can take back anytime they want. Also with their finger on everything, profits and IP goes right back into the military complex in the name of nationalism. They're having to deal with corruptions due to the nature of the system they have setup. Look at the donation they are making the Chinese billionaires pay to the CCP. Why would you want to put money into such a country?
Corruption starts at the foundation and the Chinese government's is built on sands.
A few times I’ve used Tip ranks and I get “Ooops something went wrong” when checking GIG capital and others, don’t think I’ll buy full version if I can’t view all my picks
Will you do another updated video on HIMS, the underlying financials seem to get better an better every quarter and the stock keeps going down, today the stock is almost under 7$, I picked up 500 shares today, thank you for your time!
In an international context, your arguments are also applicable to the US when donnie was still in charge. Cheers from germany.
What about Charlie Munger buying over $50 million in Alibaba stock? Why would he do that Tom if he was worried about what you describe?
I agree, one of the reasons why I sold out was because if the ccp doesn’t like what it’s doing they will shut it down. And I don’t want to risk my money like that. Rather invest in cannabis stocks than the CCP.
The Chinese economy is crashing due to the housing market crash. And inflation is sky high due to the money printing and commodity price hike. The rich people in china can still afford to spend money, but 90% of the people are living pay check to pay check and are already in default from the extended covid shut down. E-commerce will start seeing their earnings get negatively affected very soon if not already. Don’t touch Chinese stocks if you are a long term investor. Or at least do enough DD so you know what you are getting yourself into.
Far too many great American companies to mess with China. And Singaporean opportunities as well…I really like my $SEA (up 93%) Just buy $TSLA people. And maybe some $FOUR
If you are talking about a country with a powerful central government… they will attack anything that threatens the power of that group… in China it’s the CCP. It’s happening here too… but it’s done through controlling who the banks lend money to and government regulations.
BABA as a company is an awesome company. BABA being a China company makes it sketchy though especially if the CCP does make it so they can stay in power forever and then they can continue to screw with their chinese companies.
I hold a small amount of BABA after this last run down picking up some at lower 140s.
I got out of Alibaba back in February, after it recovered a bit from the January selloff. I am glad I cut my losses, as it is down a lot more now. China is uninvestable.
Charlie Munger told us to ignore the noise and focus on the fundamentals only. So I did, and Baba is my largest position by far
Not to mention that it's morally questionable to invest in any Chinese companies. Also, if the US decides to use the only non-nuclear solution and kick China out of the FIAT currency system you'll have to choose a side and I know which one I want to stay with 🇺🇸.
I won’t invest in any Chinese company. I think we learned quite a while ago that we can’t trust the Chinese government not to screw with US stockholders.
Tom so does that mean u will never invest in NIO even though it’s a great company and sitting well under LCID and RIVIAN?
What are your thoughts on Cathy Woods prediction that the Chinese market will have a major market slowdown….think it will effect the US market? Ps get a dash mount camera holder…it's safer especially with maps and camera angle is better.
I only realized after watching the video that when Tom says he’s “wrong” he’s being self-effacingly click-baity. I dig your humor. 🤓😁😆
I don't mess with Chinese stocks anymore, regardless of how good the company is. It's just too much added risk, on top of all the usual risk you already have with all stocks.
Right on, Tom. You tell it as it is. Amazing how many people don’t want to face facts or want to tell themselves it will never happen. I’d rather invest in Amazon than Alibaba, in Tesla than NIO, etc.