I didn’t think there would be another blog post until the new year but I did something just now which would have surprised myself a few months ago.
I bought some Alibaba shares.
If you are rubbing your eyes to read that again, I know how you feel.
However, if you have been following my YouTube channel, you would have heard me talking to myself about how Alibaba at HK$80 a share looked attractive even to value investors.
I just didn’t like the policy risks in China and I also didn’t like that they paid so little in dividends.
Well, better than no dividends, I guess.
Alibaba is fully capable of paying higher dividends given their healthy cash flow and balance sheet.
They have instead decided to buy back shares which, of course, increased the value of the outstanding shares.
Alibaba isn’t dreadfully overvalued like Tesla.
Some readers might remember I made a video comparing the two.
I said that if I had to choose, I would invest in Alibaba and not Tesla.
Well, Mr. Market has gone on a Tesla buying spree and ended its brief fling with Alibaba.
Anyway, what made me change my mind?
More accurately, who made me changed my mind.
I had a chat with a friend who is invested in Alibaba.
He knows my stand on Alibaba and he agrees that there are policy risks.
China is not a free market economy.
The many ways we use to value stocks conventionally are not able to put a numerical or monetary value to these risks.
Yet, he is willing to take the risk because Alibaba just looks relatively cheap, a point which I am in agreement with.
When he saw me smiling, he asked,
“Do you think I am kum gong?”
I laughed at that because he obviously watched the video I produced on how a fellow YouTuber called me that for buying shares of DBS at higher prices.
He went on to say that if I was willing to buy Bitcoin after being convinced that the digital currency had value, why not buy some shares of Alibaba?
The important thing is to invest an amount of money that’s similar to what I used to buy Bitcoin.
Or do not invest more than what I feel I am OK to lose if Alibaba gets shut down by the CCP.
I came home and I gave it some thought.
Alibaba isn’t something I must buy but I do like the idea of investing in a fundamentally strong company which Mr. Market dislikes.
Like what Warren Buffett said before,
“Be greedy when others are fearful.”
Well, I am not going to be greedy here but I don’t mind having a sampler.
So, thanks to my friend, I am a newly minted Alibaba shareholder now that Alibaba is back at HK$80 a share.
It helps that we can buy Alibaba shares in the form of SDRs or Singapore Depository Receipts in SGX now.
I like to keep things simple.
I think this will be the last video for the year but, of course, never say never.
If AK can do it, so can you!
