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#197 Investing in Alibaba

On 11/21/2020 there is a question whether invest in the Alibaba corporation, now traded on Vanguard, to finance future retirement needs. The objective is to diversify depreciating dollar funds into a small share of rising  China equities.

Though Amazon has 4.5x more revenue and started in 1994, Alibaba is more profitable but started in 1999. The big difference is in employees: Amazon has 798,000, Alibaba only 103,690. Alibaba has >755 million customers in >2.5 billion market place as compared with Amazon's >2 million an >0.4 billion. One characterize Alibaba as a tortoise and Amazon as a hare. Fundamental long term investment choice for a conservative investor: Alibaba.

For a the long run Alibaba investment strategy is fairly valued. Current financial indicators are positive except that the gross margin has been declining.


At current $270/share Alibaba is fairly priced for long term based on continuation of trend in the future and the absence of US regulators cutting off Alibaba from the NY stock market. Do not buy at a price below trend line (under $277) adopting a conservative approach to rely only on an actual long term appreciation to deliver profits. 

Another view of the short term difference in the spread in Alibaba stock prices is shown below:

As an added precaution we also examined the trends in revenues and in Alibaba profits:

Short term trend line confirm that both revenue and profits are consistently positive and that past trends are likely to continue.  The only risk arises from government intervention to cut off trading on the NY stock exchange.

SUMMARY: Continue weekly >10 shares purchases of Alibaba if price >$290/share.


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