I don’t think Munger or Buffett really give that much of a shit about their legacy or would wonder how their decisions play out when they croak to alter their decisions on how to trade baba. I think it’s more of a " I’m calling this jackass’s all-in with queens because he’s a maniac and it’s the right longterm play" that they’ve been auto focused and trained to do for 60 years and don’t even bother to think about anything else.
2 Likes
I mean I guess my point is they’re not just gambling cause they’ll be dead anyway. Their job is to protect their kids’ kids’ kids’ inheritance by making their fortunes unfuckupable, and to maximize the long-term returns of their investors. I think they care about being considered among the best to do it too though, I’m not sure you can be that good at that level for that long otherwise.
Well according to Microaxis’s highly sophisticated method of using revenue and income, they’ve determined baba to get rekt 1/3 of the time in two years.
Alibaba Probability Of Bankruptcy Analysis
Alibaba Group’s Probability Of Bankruptcy is a relative measure of the likelihood of financial distress. For stocks, the Probability Of Bankruptcy is the normalized value of Z-Score. For funds and ETFs, it is derived from a multi-factor model developed by Macroaxis. The score is used to predict the probability of a firm or a fund experiencing financial distress within the next 24 months. Unlike Z-Score, Probability Of Bankruptcy is the value between 0 and 100, indicating the firm’s actual probability it will be financially distressed in the next 2 fiscal years.
| 2019 | 2020 | 2021 | 2022 (projected) | |
|---|---|---|---|---|
| Cost of Revenue | 282.37 B | 421.2 B | 484.39 B | 522.63 B |
| Consolidated Income | 140.35 B | 143.28 B | 164.78 B | 177.79 B |
Cost of RevenueConsolidated Income
Probability Of Bankruptcy = Normalized Z-Score
More About Probability Of Bankruptcy | All Equity Analysis
Current Alibaba Group Probability Of Bankruptcy 34%
Most of Alibaba Group’s fundamental indicators, such as Probability Of Bankruptcy, are part of a valuation analysis module that helps investors searching for stocks that are currently trading at higher or lower prices than their real value. If the real value is higher than the market price, Alibaba Group Holding is considered to be undervalued, and we provide a buy recommendation. Otherwise, we render a sell signal.
You could be right. I just think after so much time of pushing what you feel are edges in trading, it ends up being what both drives you and blocks out other factors like we know it does with poker players. It’s all greed, regardless of how the money actually serves you.
The primary risk for BABA isn’t geopolitical - it’s the Chinese government. There’s really no guarantee that the property rights we take for granted in the U.S. apply over there. First, owning BABA shares in the U.S. involves owning shares in a weird VIE that kind of has an arrangement with Alibaba, but is definitely not itself Alibaba and has no legal ownership of Alibaba. But more importantly, the Chinese government has made it clear that they are willing to just extract billions of dollars from Alibaba and other tech firms. I’m too lazy to look up the details right now, but they imposed a multi-billion fine and destroyed billions and billions of dollars by forcing an Alibaba investee to restructure in an incredibly costly way.
Important to note that this was a Munger investment for DJCO, not a Berkshire investment. Munger has a history of giving the Chinese government a greater benefit of the doubt than others might.
I don’t think this has anything to do with it. If you knew that you, as an investor of BABA fake-ownership shares, actually had the standard rights to the firm’s future cash flows, it would be an insane bargain at these prices.
Here’s how the CFRA research report presents it:
Our target is a product of our ‘24 EPS forecast of CNY61.77 and a 14.3x P/E – 1-year mean, -20% due to Xi Jinping’s innovation-stifling control over software-based businesses and an added 30% discount for “vehicle risk” from delisting or by Chairman Xi repudiating BABA shares (i.e., “Winnie Take All” scenario).
I laughted at Josh’s comment (for real, out loud) because it was funny, but I think Formula72 is right. Munger believes that the Chinese government will behave honorably (in the capitalist sense) and believes that the stock market ultimately recognizes value. So I doubt he’s terribly concerned about whether that turns out to be resolved in 1 or 5 or 10 years, as long as it’s ultimately resolved.
1 Like
Looks like I get to get screwed by this, too! High five!
1 Like
Yeah, there’s so much ego with these big traders that I see it as Munger sitting at a poker table holding QQ’s while Mr Baba goes all in again. Unlike anyone else at the table, he knows he’s full of shit because he’s got PioSolver 7 and his ilk knows how to use it. This fool over here who just went all in thinks he’s the shit because he downloaded a free hand ranking chart from yahoo finance and read the bear and bull case on Robinhood that my people wrote!
“Sure, I’m going to make sure that my family is taken care of but I’d bust my own mother if she took the opposite side of my trade. I could be dead before the river hits but this is what I do.”
Is his track record good in those specific investments?
My comment was based mostly on what Munger has said at Berkshire’s annual meetings over the last several years. He’s consistently made statements along the lines of, “The Chinese government has smart people who understand that a vibrant capital market is good for the country. So they’re not going to do anything to damage that vibrant capital market.”
The only specific Chinese investment that I can think of is BYD, which Berkshire invested in many years ago (prompted by Munger), and has turned out very, very well. (Cost of $232 million, current value $7.7 billion according to the most recent annual report.)
1 Like
mega rekt. im kinda amazed that SPY hasnt drilled as hard when i see these individual charts looking so dead as this
1 Like
What do you think SPY is? To expand, only 1 of those companies is even a part of SPY
1 Like
I just assume when I see that level of destruction that everything is dying. I don’t know what companies are in SPY I just blindly buy it. I know it has a decent amount of tech stocks in it though but guess they aren’t as rekt as these.
Edit; I’m not saying I expected SPY to be down as much as all these companies, it just makes me feel relieved that my index fund stuff isn’t dying at all really. Down like barely 10% from highs or w.e
My index holdings have been pretty “flat” for a few months. I found this list on Schwab that shows all the holdings for SPY All Holdings. Looks like PayPal is $1.3B of the $399B of SPY. After I found out Block Inc is Square, I was surprised it wasn’t on the list. Definitely not surprised Roku and DraftKings aren’t part of it though.
With that said, I was bigly surprised to see how much PayPal and Block have dropped in those graphs. It would probably be worth the time to see why that’s happening because they seem like potentially good opportunities.
Oil opening up almost 10%. We seem destined to break all time highs in oil soon.
Cool maybe we will finally stop depending on the absolute WOATs for energy
Futures down bigly. Love buying the dip and losing even more daily.
Yawn. It seems like half the time when the market opens down 2%, its back in the red by lunch.
But maybe this will be The Big One.
Is “in the red” different in Canada?
2 Likes
No, I meant green.