Amid the Chinese stocks regulatory crackdown and selloff, the only individual Chinese stocks I still owned by July 27th was BABA. I bought $15K of the stock at the price of $170 in 2018. While the stock price had previously increased to nearly $300 once, as of this writing, it is down to $185.
Although I had missed the opportunity for profit over 50%, in the 3 years that I owned, I hardly was able to double my investment compare to other tech and growth stocks including Amazon, Google and Tesla. That is why I decided to sell all of the Alibaba stocks I had.
One simple question I asked myself helped me to easily make the decision. Would I invest more if the price were to go down below $170? My answer was no, it was simply not worth the risk while there are opportunities elsewhere whether looking at it both short and long term. The continued and prolonged regulatory crackdown seemed unnecessarily long. All goes to show how vulnerable Chinese stocks and companies are, not by business impact but rather government climate. As an investor, weathering this type of storm far outweighs any potential return.
Not even 5 years, keeping the stocks for long term prospect couldn’t stretch that far. When Jack Ma stepped down as Chairman of Alibaba, now looking back, it would have been the better time to have cashed out. Given that the company is now running without its founder, I don’t see any more reason to invest in it.
The reason for writing this post was to remember at the time of selling this stock, I don’t view it as a good investment. I believe in 5 or 10 years, I will have similar sentiment. I have 2 takeaways, 1) I no longer am interested in Chinese stocks; 2) The need to cash out on profit.
I didn’t mention earlier, but I also let go of JD stocks when the news broke about the CEO’s arrest on allegations of rape. In both sell events, I did not make negative losses but i realized they weren’t good investments considering opportunity costs. I am now done with individual Chinese stocks, even as enticing as emerging markets seem, I will be looking at different parts of the world.