March Madness, Alibaba (BABA) and How many stocks should I own?

Podcast Transcript

Hey, this is Jeffrey with another edition of Stock Smart, March 17^th, 2021 edition. Hope you’re doing well. And happy Saint Patrick’s Day to all my Irish friends in Chicago. And I’ll tell you a little-known secret growing up in Chicago. I was sort-of adopted by another family not that I needed to be adopted. But I was kind of always at their house eating dinner with them and they invited me they were a bagpipe band, and they invited me to be part of the bagpipe band, and I learn to play the snare drum a little bit. I wasn’t very good. I wasn’t that into it, but I wanted to hang out with them. So I kind of went along with it. But we used to have I’ll tell you Saint Patrick’s Day in Chicago is sort of like bigger than spring break. It was huge, big parties.

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The whole weekend was a party, not necessary if it was a Wednesday, it used to be great if it fell on a Friday. That was a big weekend. And anyway, I just want to say happy Saint Patrick’s Day to all my Irish Catholic friends in Chicago. So hey, let’s get into it. 10-year note continues to push up higher, up in between 4 and 5 basis points today. High of 1.67, sending again the grow stocks down and putting them in tizzy as the NASDAQ lags again, VIX is up in between 3 and 4 % today. On volatility again, on the rising 10-year note. We’re a little bit over bought on the S&P 500 oscillator. So maybe a good time to stay put, hold what you have, maybe not a good time to add positions as it rolls off a bit till we get to better and safer buying levels and keep in mind last week when we get those big swing days.

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So when you get a market that kind of trends down you know, you’re getting a lot of shorts in it. So we’re going to have those gigantic recovery days when we saw a 4% recovery in the NASDAQ and a lot of that again, it’s short covering, so you have to be careful like that a lot of times when you see a day like that, there is probably going to be trading off the next day or two as people dump the positions after they’ve covered, so keep an eye on that

STOCK WATCH

We’re going to do a stock right now, let’s do the marketing language. Blank is a holding company. Through its subsidiaries the company is engaged in online and mobile commerce through offering of products services and technologies that enable merchants brands and other businesses to transform the way they market, sell and operate in the People’s Republic of China and internationally. Well, that could be any number of Chinese online retailers.

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But this one is Alibaba. So once a great growth stock out of China, Alibaba now faces daily deluge of bad news, chart is simply awful. It has been in great descent recently, today it’s bouncing a little bit probably on oversold conditions. It is oversold, it could get more oversold though, down to about 230 right now, stock was around 310, you know only a couple months ago or earlier in the year, but now it’s getting hammered, let’s go at it. Let’s go 52 week high on this is 319. So it’s sold off a great deal, what’s going on is this thing is right at, the Chinese government has Alibaba and Jack Ma’s group in

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the headlights, everything they’re doing they’re targeting Alibaba for sure right now, this is a very dangerous stock to be in, if look at take a look at this, Google News, Alibaba. Let’s go over some of these stories. They’re all terrible. Alibaba to open up deals app and keep session to antitrust campaign. So the antitrust campaign, against them. Alibaba’s browsers have been detected or deleted from Chinese app stores. Not good. Here’s another one, Pinduoduo which is PDD another very interesting eCommerce company, Pinduoduo active users beat Alibaba, sales jump, takes lead in China e-commerce. So Alibaba is not even the leader anymore. It’s Pinduoduo, PDD.

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Stock you want to watch, getting sold off a little bit today, but definitely when this hits some, it was bought pretty heavily, watch for the stock, I think we’ll cover it on a show upcoming soon. So again, Pinduoduo tops Alibaba? This is news, all negative news about Alibaba. Pinduoduo overtakes Alibaba China’s Xi Jinping

warns of tech crackdown Alibaba pulled from app stores, China presses Alibaba to sell media assets. OK every new story is negative, that is not a good and safe place to be right now. So it’s getting way oversold. Do you want to be in this? I don’t know. We’re not going to put clients in this right now. But if you want to take a position in this just to watch it, really small position, less than a percent even and maybe dollar cost average.

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You know these stocks go through, they get punished, pounded, pounded, pounded and then there’s some relief but you need to be really careful, Boeing has gotten to a place where maybe there’s some relief and it can count to start regaining, that again is if it stays out of the news cycle and it’s some of these stories roll off, and people forget and then people get more invested again in these companies, but right now for the last 2, 3 months, Alibaba has just been getting pounded by bad news stories.

So and Pinduoduo has overtaken it so emerging competition pressures from Chinese government. Not a good place for Alibaba. If you want to get in take a small position potentially here and kind of or dollar cost average in.

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THE AVERAGE INVESTOR

So I got a question from Peter. Thanks again for all the questions, and if you guys subscribe, we would love to have more subscribers. On YouTube hit the subscribe button and subscribe to the podcast wherever you’re listening to it, really appreciate the growth of the show. Again, we’re gaining another 2-3% every week. It’s fantastic and I’m really excited about it. We’re really excited about something new we’re going to be doing. We’re going to eventually turn this into a YouTube video podcast, we’ll still have the podcast out. But it’s going to be a video podcast as well, which should be really fun and we’re excited about it. So let’s get over again to the question from Peter, Peter wants to know and this is a common question, especially when we talk to clients, clients always say like how many positions, he wants to know how many stocks should he buy or have in his portfolio? You have to be diversified so you shouldn’t be over or under diversified, meaning you shouldn’t be so thin on

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Every position that you can’t make any money in it. And you shouldn’t be so heavy in any one position that it could take your whole portfolio down.

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So for an average investor or a retail investor who wants to be slightly invested, and wants to be active, you know, maybe 5, 10 positions, you know, some of those could be an index fund, an ETF and the ETF based on what it is, if it’s a massive sector like an SPY, that’s a diversified, you know type of investment anyway, so you don’t have to worry about your holding percentage in that so that you can have 10 or 15 or 20% in but in individual stocks, you probably want to stay 3 to 5% at most. So what you should do is 10 positions for an average investor and some of those are heavier weighted the ones that would be heavier weighted are things like ETFs that are diversified within sectors or ETFs that are diversified within the S&P 500 but

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it becomes really difficult to know the news know the catalysts, follow it every day and most people want to dabble in the stock market, but it may be something that they look on the weekends you know after work and as people get back to their work schedules, they’re not going to be at home as much and able to check, you know, CNBC or to check their portfolios like they used to and you’ll see when people start getting in the office you’re going to see a lot of the network people blocking certain sites probably sites that people got a little bit addicted to while they were at home working during Covid. And so as companies bring people back in to the workplace, you’re going to see network operations people in those companies blocking certain sites, and one of them would probably be stock sites, like Robinhood, maybe CNBC, maybe eTrade, who knows?

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But they will probably do that, because they always do that in a workplace, they want more productive people, so be diversified, but not overly diversified so 3-5% in any one holding, if you’re going to do an ETF, you can maybe raise it up to 10 or 15, but hey, thanks for the questions. You can keep them coming at Jeffrey@JeffreyKamys.com and we’ll see you again next time on Stock Smart