Stock market and alibaba.com

[Pilotasso]

Hey guys.

 

I have never played in the stock market but willing to set aside a small amount of money to make investing experiments (so that I can absorb potential losses without blowing a hole in my pocket).

 

 

Latest buzz is alibaba.com from china, a company that started in a small apartment and is now set to gulp up the American market and stocks with billions of reported profit last year.

 

The tech market really plunged these past years, so is it a good bet?

 

Tell us your experiences! :)

Edited May 11, 2014 by Pilotasso

[cichlidfan]

Aside from the fact that it is difficult to buy into an IPO like this with a 'small' amount of money, and assuming that you are comfortable with the possibility of losing 100% of your investment (needs to always be true no matter what you are buying), then go for it.

 

Personally, I am not typically a hype investor, with the Facebook IPO being a good example of why.

Edited May 11, 2014 by cichlidfan

[Pilotasso]

facebook shares prices went to the moon before the sales and it was all internet bytes. The bar was set too high and they had very little to do with tangible business.

 

The distributers and associated businesses always moved goods and money. This is why the timing for alibaba sale is good as they will be preparing themselves during the summer. I thought it was a good idea to invest months ahead of the holiday season? and then sell everything early 2015.

[cichlidfan]

I thought it was a good idea to invest months ahead of the holiday season? and then sell everything early 2015.

 

Keeping the stock for less than a year, in the US, can be very expensive tax-wise. I don't know how that would apply to you.

[Griffin]

If you want to take a random walk down the wall street, gamble and play by a hunch, then sure go ahead.

 

However one of the main rules of investing is to know what you invest into. The latest buzz is usually one of the worst kind of investments. Well not the worst but usually it wont yield a huge amount (not that it's the goal of investing anyway). The reason is that the latest buzz, like the biggest and most famous companies, always has thousands of analysts and individual investors watching the company and valuating it very efficiently.

Stock markets always look ahead by at least a few months so basically you don't know anything right now about Alibaba that will benefit you in the early next year. The holiday sales profits are already in the share price.

In the long run, it might be a great investment, becoming a value company and giving you high and ever growing dividends for the rest of your life. In that case gambling with it until next year will be unwise.

But if gambling is what you want, I believe other forms of it could yield you a much better profit.

 

I leave speculation to gamblers and I'm also not so interested or have enough time to know exactly what I invest into. Thus I either let others do the analyzing of individual shares for me (mutual funds) or don't take a position at all (index funds/ETF's).

In my case though, I don't think it as investing per se, I consider it as saving into the stock market for years to come, either until retirement or to fund bigger acquisitions later in life. For this purpose, stock markets are really good. However knowing about market psychology is very important. It's been proven time and time again that those who try to time the market get the worst returns and it's statistically the worst mistake.

You could always get lucky though... or not.

 

Now, I'm not an expert of stock markets in any way and only started saving money into stocks early last year but I've read enough of literature that made it clear to me the difference between gambling and investing.

 

I don't mean to sound negative about buying shares and am actually happy to see people talk about them on this forum but that was just my two cents on the subject. :)

It's great to see people sharing thoughts about investing!

[docfu]

Ditto Griffin's negativity:

 

1. If it's in the news, the cat is already out of the bag.

2. Do you actually know anyone in the company who is giving you a special deal? Nope.

3. Very few people live long enough to actually cash out on their investments. If you'd bought Apple stock, would you actually sell it now? Or wait for it to split a few more times...

 

If you want to make money, incorporate, get other people to invest in you, have a nice party, then declare bankruptcy. That's the way to do it these days.

[cichlidfan]

3. Very few people live long enough to actually cash out on their investments. If you'd bought Apple stock, would you actually sell it now? Or wait for it to split a few more times...

 

I beg to differ.

 

Good, and significant, long term investments can and do produce useable cash down the road.

 

As for Apple, I have bought, and sold, within the last five years, for quite a tidy profit.