Alibaba - Layering a long position
2021/11/23
Alibaba is a Chinese technology and e-commerce play. Alibaba trades under the NYSE stock exchange.
The NYSE is near all time highs, having no direction at this time. Alibaba has seriously underperformed the market as a result of Chinese crack downs.
Where-as fundamentals have not changed, and long term value investors see this investment as trading at a discount, I am entering this as a long term trade.
It appears that the stock is trading at a nice discount. So there are no concerns in terms of pricing. It has been bearish for a long time, and hopefully we are getting closer and closer to it turning around.
There are risks for more downturn. Although, it is possible that the worst is behind. This trade idea was inspired by Charlie Mungers position and comments on this stock. As well as some independent research.
This is a position that I will build over time.
I entered 1/6th the position at the current price of $130. This means, I am looking to buy this (probably 2 more times) but possibly up to 5 more times in the future.
Layer your position in so that you are getting a good price average and think of future potential. In the next year, this may continue to go down, but I think over 5-6 years, you will get rewarded for holding.
On the charts, I see the current price as a major location of support (130) which is followed by 115.
The lower it goes, the more exciting it should be to lower your average and add to your position. This is not a position which would be sold unless the fundamentals behind Alibaba change or are reduced. Basically, don’t worry about the charts, as long as Alibaba is still considered a good holding.
I recognise the short-term risk of further crackdowns, but I am thinking of the long term rewards as well.
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Analyst price ratings are at an average of $220. This has once reached over $300. The price rating reflects current fair value, which may increase over the years should Alibaba continue to be successful.
For this trade, I am hoping to hold for 5-7 years. I do hope to see it reach $300 once more, and as such, I am not willing to buy this at more than $150 for now.
This means I will likely buy more at key support levels (if it keeps going down)
Buy more at the confirmed reversal
Buy more as it reaches $150 on a confirmed reversal and bullish channel.
I will then hold and let the trade play itself out.
If it were to reach $300 in 5 years, I would have 100% ROI over 5 years, or 20% return per year on this trade.
Alibaba is a Chinese technology and e-commerce play. Alibaba trades under the NYSE stock exchange.
The NYSE is near all time highs, having no direction at this time. Alibaba has seriously underperformed the market as a result of Chinese crack downs.
Where-as fundamentals have not changed, and long term value investors see this investment as trading at a discount, I am entering this as a long term trade.
It appears that the stock is trading at a nice discount. So there are no concerns in terms of pricing. It has been bearish for a long time, and hopefully we are getting closer and closer to it turning around.
There are risks for more downturn. Although, it is possible that the worst is behind. This trade idea was inspired by Charlie Mungers position and comments on this stock. As well as some independent research.
This is a position that I will build over time.
I entered 1/6th the position at the current price of $130. This means, I am looking to buy this (probably 2 more times) but possibly up to 5 more times in the future.
Layer your position in so that you are getting a good price average and think of future potential. In the next year, this may continue to go down, but I think over 5-6 years, you will get rewarded for holding.
On the charts, I see the current price as a major location of support (130) which is followed by 115.
The lower it goes, the more exciting it should be to lower your average and add to your position. This is not a position which would be sold unless the fundamentals behind Alibaba change or are reduced. Basically, don’t worry about the charts, as long as Alibaba is still considered a good holding.
I recognise the short-term risk of further crackdowns, but I am thinking of the long term rewards as well.
---------------------------------------------------------------------------------------------------
Analyst price ratings are at an average of $220. This has once reached over $300. The price rating reflects current fair value, which may increase over the years should Alibaba continue to be successful.
For this trade, I am hoping to hold for 5-7 years. I do hope to see it reach $300 once more, and as such, I am not willing to buy this at more than $150 for now.
This means I will likely buy more at key support levels (if it keeps going down)
Buy more at the confirmed reversal
Buy more as it reaches $150 on a confirmed reversal and bullish channel.
I will then hold and let the trade play itself out.
If it were to reach $300 in 5 years, I would have 100% ROI over 5 years, or 20% return per year on this trade.
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