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Lower loss on Alibaba or purchase extra for a Merry Christmas?

I didn’t plan on running a blog once more till the brand new 12 months once I would share my 4Q 2021 outcomes.

I might additionally in all probability have blogs in regards to the CPF someday in January.

Nevertheless, the reader who wrote to me about his buy of Alibaba shares at $220 a share after studying blogs by an area blogger left me one other remark.

Anyway, after studying the reader’s newest remark, the running a blog bug bit me and the result’s this weblog.

Alibaba’s share worth continues its slide and the downtrend is just about intact.

It ought to be apparent even to those that aren’t technically inclined that the downtrend is fairly persistent.

Many have been lower very badly by falling knives and a few have had their fingers or palms lower off.

There are numerous who’re nonetheless holding on within the hope of a reversal in order that they might make some huge cash ultimately.

Nevertheless, they need to keep in mind that there are numerous stale bulls who’re ready for a raise in costs in order that they might promote to interrupt even or to scale back their losses.

It’s only cheap to count on some robust resistance or these holding on might be setting themselves up for extra disappointment.

So, investing in Alibaba Group now could be to spend money on a downtrend and to hope for a reversal that’s prone to be stuffed with obstacles.

It’s undoubtedly not for the faint hearted and those that wouldn’t have deep pockets.

That is particularly the case when Alibaba doesn’t pay dividends.

So, to say nothing of the capital loss, the chance price for investing in Alibaba is fairly excessive.

Alibaba’s buyers aren’t being paid to attend for issues to get higher.

What to do?

If the ever widening paper loss is making us lose sleep, it’s in all probability a good suggestion to scale back publicity.

Utilizing cash we can not afford to lose or borrowing cash to spend money on such a state of affairs might be a positive technique to get insomnia.

These with anger administration points might even see familial and social ties affected.

What about those that have used cash they will afford to lose?

Effectively, they’re extra lucky as a result of they solely should ask if they’re prepared to lose the cash invested within the worst case state of affairs? 

Now, to reply the reader’s query in his newest remark, whether or not to chop loss now or to carry on, is there one other query he ought to ask?

Sure, there may be yet one more.

If he didn’t spend money on Alibaba Group at $220 a share so many months in the past, would he spend money on Alibaba Group at $117 a share in the present day?

Why ought to he lower loss now if the reply is “sure?”

After all, in such a case, it could imply that the time to chop loss has come and gone for him.

If he would not spend money on Alibaba Group even at $117 in the present day, it in all probability signifies that his opinion of the funding has shifted a lot {that a} a lot cheaper price is required to entice him.

In such a case, chopping loss and shopping for once more when a reversal is in place is perhaps a greater thought than merely holding on and probably shedding his thoughts.

We must always keep in mind that share costs circulate down a river of hope in a downtrend.

Low might go decrease.

The time to purchase might be when share costs transfer decrease in an uptrend (i.e. shopping for the dips) and even when share costs take a look at helps in a rangebound state of affairs.

Investing in Alibaba Group now could be to purchase the downtrend however if you’re a billionaire like Charlie Munger or if you’re investing with solely a small fraction of the cash you’ll be able to afford to lose, you in all probability do not have a lot to fret about.

Having mentioned this, we are able to by no means make all the cash on this planet and there are extra essential issues in life than cash.

Peace of thoughts is priceless.

I’ll finish this weblog with a screenshot of my home in Black Desert On-line which has been properly adorned for Christmas.

Merry Christmas!

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