Do we need a PFKA board?
I bet DJCO shareholders are thrilled with Munger’s skillful investment acumen! What a genius.
Losers average losers, to quote Paul Tudor Jones. BABA has proven to be a loser.
I think you’re being a little harsh. Charlie now has a loser internet joker pointing out how dumb he is! What’s your resume again?
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BABA looks to have put in a bottom around $85.
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So, you do entrails reading (It looked like bottom in Apr/May already). Do you bet on it?
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So, you do entrails reading (It looked like bottom in Apr/May already). Do you bet on it?
I don’t think using charts is any different than using something like Mungo’s 99 day bottom detector. For me charts reflect collective investor behavioral data. In the long run (years and decades), charts reflect the general direction of the underlying business fundamentals, but in the shorter run (months and years) they reflect investor behavior more than anything else. In my view, bottoms tend to be put in at levels that reflect a balance of investor sentiment about the price level at which the majority opinion is that the price is unrealistically cheap given business fundamentals. You can see these bottoms emerge overtime as they get tested again and again. For BABA we have seen it bounce off the mid $80s repeatedly since March through multiple earnings reports, COVID lock downs in China, a Taiwan crisis, the de-listing scares, etc. etc. Baring a fundamental change in business operations, the collective behavior of investors is telling us that BABA in the mid-80s is too cheap given existing business fundamentals. While some decided that BABA was cheap at $200 or $180 or $150 or even $120, the chart never showed that through the establishment of a bottom. Only around $85-90 do we see consistent buying putting a floor under price declines. At this price you are buying BABA at 11 times earnings.
You could see the same thing with MSFT between June 2010 and November 2011. The price oscillated between the low and high $20s for 18 months, putting in a clear floor, before taking off. Throughout that time you could see the business fundamentals humming along even as doomsayers pointed to the death of its Office Suite and OS core businesses. Money kept coming in steadily, and for the foreseeable future, that for the collective investor it was just too cheap at 9-10 times earnings even if the business was dying.
We do this with Berkshire all the time. It looks like a floor has been put in around $275, which makes sense from a fundamental business perspective as that is about 1.2 times peak book value.
So do I bet on charts? No, I’m not a betting man, but I do think they provide a quick look at collective investor behavior through a convenient graphic. If I were looking to enter a BABA position, I would be pretty comfortable doing it around $85-90.
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Two reasons 88 is around the bottom in investor’s mind:
- 88 = baba in Chinese
- This is below the price when they listed on NYSE
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I think you’re being a little harsh. Charlie now has a loser internet joker pointing out how dumb he is! What’s your resume again?
Do you dispute the facts?
Charlie made a DISASTROUS bet.
He thought he was super smart.
He condescends to everyone. Which might be OK (not really) if he was infallible, which he is not.
True I am just an Internet joker with no resume. But I don’t need one to point out the truth.
Ad hominem attacks are the refuge of those who can’t face reality.
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Do you dispute the facts?
Charlie made a DISASTROUS bet.
He thought he was super smart. …
I tend to agree that his substantial investment in BABA was unwise, simply because the chances of a disastrous outcome were and are pretty noticeable.
Too large to warrant a big allocation of anyone’s portfolio.
But to be fair, it’s early innings yet. The fat lady has not yet sung. Other bad metaphors.
His investment might look very prescient and profitable five years from now.
He certainly never intended for it to be a one year position.
My own prediction:
Odds are that the investment won’t blow up, he’ll make a lot of money, and naysayers like me will be ridiculed.
But my logic remains: just because a bet works out, or even that it was LIKELY to work out, doesn’t mean it was a smart bet.
The size of the bet, the size of a dire outcome, and the probability of that dire downside are all important things to consider.
If someone offers you (say) 50% of your net worth to play one round of Russian Roulette, and you do, and you’re fine, was it a smart thing to have done?
Yet that’s the most likely outcome.
Jim
Note, I have a BABA position, which of course is losing.
But I bought some call options: lots of upside, very low downside by comparison.
As a portfolio allocation, the downside risk is minimal.
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If someone offers you (say) 50% of your net worth to play
one round of Russian Roulette, and you do, and you’re fine,
was it a smart thing to have done? Yet that’s the most likely
outcome.
Yes, and if the one round of Russian Roulette permanently ends
your life, you won’t have felt any pain. And couldn’t even be
aware of it. So, all around, no regrets.
Yes, and if the one round of Russian Roulette permanently ends
your life, you won’t have felt any pain. And couldn’t even be
aware of it.
Maybe, but having worked as an medic first responder I can tell you that is not how it always works out.
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Yes, and if the one round of Russian Roulette permanently ends your life, you won’t have felt any pain.
And couldn’t even be aware of it. So, all around, no regrets.
True enough!
That’s one of the best arguments for annuities and tontines.
The longer you live, the more money you make, the smarter you feel. And justifiably so.
The only people who might regret the poor financial decision are dead, and are beyond regrets.
Heads you win, tails you don’t remember having played the game.
(ignoring the problem of bad annuity pricing that often means you have to live to age 95-100 merely to break even)
Jim
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BABA looks to have put in a bottom around $85.
If you are interested in fallen knifes that might have bottomed, you should look at Meta (quintuple bottom around $165). Or at Alphabet (multiple bottom at $108). Others too should get your attention for which it’s less clear: MSFT at $260, eBay around $42, even our beloved BRK around $420k.
There is one caveat, having to do with those 2 points of yours:
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bottoms tend to be put in at levels that reflect a balance of investor sentiment about the price level at which the majority opinion is that the price is unrealistically cheap given business fundamentals.
-
Baring a fundamental change in business operations, the collective behavior of investors is telling us that BABA in the mid-80s is too cheap given existing business fundamentals.
Both assume rational investors. If we’ve just seen a bull trap and the market crashes as not only Grantham expects then rationality…
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Or at Alphabet (multiple bottom at $108).
I have to say, GOOGL looks pretty good to me at these levels. $104.45 as I type, 31% off its 52 week high.
Chart or not chart, they make a ton of money, and the rate per share continues to grow.
It’s currently quite a bit cheaper than its historical norm on a number of measures.
And it’s hard to imagine some new competitor, or even regulator, able to kill the golden goose. Geese.
One of my biggest positions now.
Jim
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I purchased some more last week and its now my 4th largest holding (BRK, SPY, MSFT, GOOG : in that order). I will consider adding even more as I have some other changes I want to make.
tecmo
…
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If you are interested in fallen knifes that might have bottomed, you should look at Meta (quintuple bottom around $165). Or at Alphabet (multiple bottom at $108). Others too should get your attention for which it’s less clear: MSFT at $260, eBay around $42, even our beloved BRK around $420k.
I have already nibbled at META and GOOG. I have too much BRKB, but am intrigued by Mungo’s options strategies. Still trying to learn there. I have not looked at EBAY but may do so now. I have secondary targets for GOOG and META that I am waiting on before adding.
PP
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BABA looks to have put in a bottom around $85.
…
…
Only around $85-90 do we see consistent buying putting a floor under price declines.
We were/are there again ($85.80). So we’ll see. May we live in interesting times 
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Tom Russo actually talked about baba in his March 2022 letter. He has higher cost than me , lol
http://moiglobal.com/wp-content/uploads/Letter-to-Investor-L…
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From March, BABA is consolidating. Clearly, this is going to take sometime. In the meantime, if BABA can use some of its cash to buyback, it will enhance value over long term.
BABA down 14% today.
Munger keeps getting smarter and smarter! So many opportunities to harvest capital losses!
BABA : Munger :: 2007 financial stocks : Bill Miller.