1/ A lot of my fav investors on Twitter talking about $BABA last night & today. I wanted to add some personal insights to the story. (I’m Chinese, have family doing business in China, know the political environment)

@jablamsky @JonahLupton @cperruna @GetBenchmarkCo @saxena_puru

2/ China is at a stage right now where they’re looking to take the lead globally on many fronts. Fundamentals/TA aside, $BABA is essential to the Chinese economy. The CCP will NOT kill/harm Alibaba in the long term. The CCP NEEDS $BABA for their E-Commerce and FinTech growth.

3/ This antitrust probe is meant as a show of power. It’s not so much saying “let’s see how Alibaba is breaking the law,” but rather “Alibaba has to play by the CCP’s rules and if they do, we’ll go back to business as usual.” If you read the Chinese press coverage of this probe,

4/ The tone isn’t one of threat of shutdown/breakup. It’s more of a reminder to Jack Ma who’s in charge. Of course, I don’t know how Jack Ma and $BABA will react. But I’d assume Jack Ma doesn’t want to spend the next 10-20 years in prison (e.g. Wu Xiaohui), real charges or not.

5/ There’s def a diff set of rules when operating in China, so the “China discount” to some stocks are somewhat valid. But when it’s one of the biggest corps in China, essential to its global growth, the CCP doesn’t want to harm its own child. This is a spanking, not a drowning.

6/ I’ve been watching $BABA for a while now and just started a position today. Like @JonahLupton, if this drops below $200, I’m loading up.

Hope some of these anecdotal insights were helpful to anyone reading!

7/ Update: I didn’t expect this thread to blowup! I’ve received a lot of DMs & questions and I’ll get back to you all by tomorrow. Spoke with my dad earlier and have more thoughts.

(My girlfriend is meeting my family for the first time today so I’m hella nervous about that! )

8/ Thanks to everyone that read this thread! I originally planned to talk more $BABA specifics. E.g. My dad put forth the idea that this is as much about wealth inequality and public perception as it is about antitrust. But I don’t want to go there as that’s a LONG topic..

9/ And at this point it’s all conjecture; none of us really know what’s going to happen. Any further details will prob just lead to more politics/debates when that time could be spent analyzing other stocks.( $SKLZ, $FUTU, $MGNI anyone?)

But I would like to discuss something:

10/ Why I avoid making generalizations about almost anything. (e.g. “All China stocks are bad because of the CCP”)

I don’t believe any country is innately superior. A statement denouncing an entire country & the productivity of its ppl is at best ignorant, & at worst, racist.

11/ To judge and dismiss an entire country’s businesses based off of isolated examples, without considering lessons from history and possible future changes, is like looking at one Balance Sheet and basing your entire investment decision on just that one piece of info.

12/ Things change (& rather quickly these days). A blanket statement of dismissal blinds us to those changes because we automatically assume we’re right. I learned this lesson the hard way.

I went to biz school and learned the traditional methods of valuation.(DCF, P/E, etc.)

13/ So for the longest time I kept thinking that $GOOG, $AAPL, $TSLA, $NFLX, $AMZN, and other tech stocks were too expensive because of their valuation. I missed out on YEARS of gains because of that blind belief. It reached a point where I realized: I’m missing something.

14/ If you’re curious how my thought process changed, I recently wrote a post on my site about missing out on investing opportunities staring me in the face and how I changed my limiting beliefs: https://musicmoneylife.com/what-if-i-invested-in-the-companys-stock-when-i-purchased-its-product-or-service/

15/ Dissecting that experience made me more willing to admit I could be wrong about many things. There’s too many moving variables in the world for us to always be right.

That’s something I’ve noticed in many of the people I admire: They talk in probabilities, not absolutes.

16/ But the moment you make a blanket statement about something, your mind is already thinking in absolutes.

My pops said this to me many years back:

“As you get older, you’ll see that most of the world exists in a grey area. There’s hardly ever a clear black and white.”

17/ So for $BABA, I’ve started a position because:

A) I already explained my thoughts in tweets #1-7.

B) When I start looking at a tech stock using P/E & DCF and it looks undervalued (as opposed to when I normally use EV/S and other metrics), I believe there’s an opportunity.

18/ But I could be completely wrong and the CCP does break $BABA apart. To me, the probability of that happening is low, so I’ll take a chance. If you believe something else, there’s plenty of other stocks!

With that said, I don’t get attached to my stocks (or I try not to).

19/ If the story changes in a material way, I trim my position or I get out. (e.g. $FSLY, $ZM, $TSLA)

But this latest $BABA saga is just beginning. It’s way too early to jump to conclusions. So let’s wait and see how this plays out in the next few months!

20/ To end on a lighter note, thanks to those who sent well wishes for my gf meeting my parents! Yall ready for a funny moment?

We were driving to see my fam. I called my mom & told her we were on our way. I thought the call ended. My gf was in the car putting on lip gloss.

21/ GF: “My lips are dry AF!”
Me: “Want me to moisten them for you?”
GF: “Okaaay ”
My Mom: “You’re still on the call.”
Me & GF: “Oh.. ”

My gf was so embarassed But my mom didn’t bring it up & dinner was great! We ended up going to see Xmas lights after too!