Share the pain 😲

Over 50% down despite averaging down on BABA, Tencent and Prosus. 50% of my portfolio. Lets share the pain. Feeling very stupid right now. :joy: several lessons learnt which i’ll share later.

6 Likes

just because its cheap doesnt make it a good deal and dont invest in china…

3 Likes

Lessons learnt.

  1. Stick to the US.
  2. Don’t listen to macroforecasters no matter how “amazing” they are (Ray Dalio).
  3. Don’t listen to “gurus” about concentration and finding value all over the world (Munger and MP) US value is best.
  4. Diversify and have 15-20 stocks not a max of 5 which are your “best ideas” those ideas can look astonishingly bad very quickly.
  5. A company with a PE of 20 with outstanding economics and moat and no debt can drop to a PE of 10, yes it really can and in a month.
  6. Dont tell family and friends what’s in your portfolio they love to tell you how stupid you are (if it’s going well they say it’s luck)Only speak to those who understand investing.
  7. You’re not as smart as you think you are.
  8. Invest in property too, diversify. I have income producing peoperty and land projects
  9. Have an outlet for stress, mine is weight training and a glass of red wine, otherwise ill go mad.
  10. I’ve decided I wouldnt ever want to manage others money it’s bad enough managing my own.

That’s 10! I’m impressed

23 Likes

Well, I’m only down 49.72% so don’t know if can share the pain, but… :wink:

Yeah, I hear you. I’m down by a lot and to make things worse I started my investing “career” in 2021. Found Saul’s board I little over a year ago, and I’m heavily invested in expensive “unprofitable” high growth stocks.

Although, probably couldn’t have asked for a better (expensive) crash course. Just like a plane crash, you don’t know how you would react until you’re in it.

Most costly and important lesson learned:

Don’t stay invested in something broken and don’t keep averaging down on it. It can be really hard to let go and move on, because the sunk cost fallacy is broader than just money. When you invest or embark on a project, you also invest your time and energy.

5 Likes

I had 90% in BRK for a decade and diversified / divested half between 280 and 350 only to see those holdings decimated. (Meta, Alibaba, Tencent and Prosus) at levels considered good value I feel like 10 years of painstaking investment has been thrown away. Brk gave me 14% compounded from 2012.

Anyway, i have a coffee can approach so will hold and see how it all looks in a dacade. Currently buying Goog, Disney, Intel and BRK sticking to my revised US centric value only stance and will hold the Chinese junk.

5 Likes

I feel your pain. I’ve been riding it down from $145 with additional purchases at $110, $100, $90, and $85 for a cost average of $110. Fortunately only 2% of capital is at risk in this purchase. I decided some time ago that I’m too stupid to concentrate too heavily in anything other than Berkshire. Any position larger than 2% in our portfolio grew to that level.

While this has been a painful ride, I have to believe that this is a be greedy moment (granted, it’s been a very long “moment”) in that the pricing makes absolutely no sense on an operational basis. If this company was headquartered in the US it would never see these prices. The problem is that dumping BABA has become a vote against Xi and China. Fortunately they do not hold the CCP conference more than once every five years. While the rhetoric at the conference has been alarming, I tend to agree with Charlie that the CP leadership is fundamentally pragmatic and wants to improve the Chinese economy and the Chinese standard of living by participating in the global economy, and the private sector has a part to play in that economic growth. The party has shown a willingness to change accounting rules to allow for BABA and other multinationals to access western capital markets, and they probably have an interest in seeing these companies grow internationally, especially in developing regions where their Belt and Road Initiative is impacting regional development.

The market is essentially pricing BABA for an eventual nationalization, and I don’t see that as a real possibility. Xi and the CCP recognize the importance of having international economic institutions that can play in global capital markets. Their challenge is trying to harness and discipline these companies as they grow in success so that they do not become an economic and political power center in opposition to the party and its grand project. This will inevitably result in a significant discount for Chinese firms like BABA and BIDU, but is the current price a reasonable discount? I think not.

I will be holding, and I am tempted to make an exception and increase my allocation in BABA at these prices.

PP

5 Likes

I consider China uninvestable going forward. Too many unknowns whatever the valuation. I’ll keep what i have as you would a share certificate framed on the wall of a company you’ve invested in that’s gone bankrupt as a reminder of my points above.

11 Likes

You can certainly continue to interpret the events in China from the western perspective. But really, who knows? For example, it is hard to make sense of what had happened in Hong Kong. It’s the say of one man and one man only (or whatever the cronies interpret to be in his benefit). Political control takes dominant precedence and nothing else even comes close. As a parallel, imagine someone telling Putin that the Ukraine invasion is not a good idea and that it greatly harms their economy. The priority is different. It is time to get that they just do not function as the western system.

4 Likes

I don’t look at China just through a Western lens. I understand the dynamics of common prospertity, nationalism, the collective and their history.

What makes me more nervous is the ratcheting up of tensions. The latest being the direct funding of weapons for Taiwan.

2 Likes

I think IB summarises recent events nicely in this 6 minute video. Who knows is the answer. My conslusion is too many “???” With added tensions on top.

1 Like

Forgive yourself blackswanny. We all have much more dramatic examples of brain hiccups, at least I sure do! I feel your pain with BABA as my cost basis was 220 or so in May 2021. My position was quite small but I felt good about it, especially after Munger/DJCO bought a large position. Sold half when it dropped 30%quickly, but I still have the rest.

Like golf, sometimes your thinking is relatively sound on the course but the scorecard does not always follow the analysis, but such is investing I suppose. Reassuring that even Buffett and Munger struggled over the years with textiles, Diversified, BCS, Dexter. We ALL are fallible and may learn more from these than the winners.

10 Likes

Kyle Bass is coming on cnbc shortly. He has been spot on , to avoid baba and all of China for years now. He saved me $$ after Munger bought baba, he’s well worth the time. Good luck all.

5 Likes

I do not know if I have the skills to post a cnbc video on this site, but I’ll try later once it’s on the cnbc website. If you can visit the cnbc ap , before you average down or buy China, you really should listen to Kyle very closely. Good luck.

3 Likes

A lot of these fit for me, but maybe 7 is the most apropos. I’m feeling gaslit.

I actually did some things right. I was over 50% cash when correction started, and I put all of that into short ETFs in early January. I was welcoming the drop so I could employ the cash. But the stocks I owned dropped so quickly that my portfolio was still just tracking the market. Then I closed the short position too soon, after a few weeks. But still was over 50% cash. I patiently purchased things on the way down, using puts below current prices that would sometimes expire allowing me to keep the money. When they were assigned I felt good, for a bit anyway. But the things I purchased kept dropping: INTC, too much BABA, META, KMX, BFH. The only thing I’m trusting right now is BRK, which I luckily also purchased in the 270s, and maybe GOOGL. My portfolio dropped more than the market even with all that cash on the sideline. That takes a special skill.

10 Likes

China’s Xi removing officials focused on ‘reform and opening’, says Kyle Bass (cnbc.com)

5 Likes

China’s Xi removing officials focused on ‘reform and opening’, says Kyle Bass (cnbc.com)

3 Likes

Thanks, i guess my skills are higher level than I knew !!

1 Like

Watched the clip. If it is a war cabinet as he says and they go for Taiwan all markets will be hit globally anyway no doubt as the USA and allies will be dragged into the conflict as well as all the other stuff going on right now.

4 Likes

Ive actually got used to the interface here now. It’s not so bad.

4 Likes

With Baba and other Chinese companies
You don’t own anything
You can’t trust the numbers. They mean nothing.

You were smitten by PE ratios and earnings arguments.

7 Likes