SG Talk

1. Many value investors including myself purchased at the mid point where the stocks fell 54%.

2. The reason was even at its peak of 11 China tech stocks were not particularly expensive. So after it fell 54%, they had enough appeal and value for long term investors. The stocks also looked like they have stabilised. I stopped purchasing after some accumulation for 2 reasons ..there seem more regulations coming out and China is seeing an economic slowdown. .My last purchase of Alibaba was $110. I purchased other stocks but leslts use this last purchase of Alibaba as ref.

3.  Unfortunately,  war and many regulatory actions were announced in concentrated period causing a panic and stocks to breakdown and simply selloff in a collapse to 3.38 (bottom)

4. Seeing the panic I step in to but almost at the exact bottom buy only a small nibble of the HSTech ...individual stocks were hypervolatile so I did not consider. Unfortunately I only bought small amount.

5. The Chinese official came out to calm the market on regulation and economy. The HS Tech Index jumped 30% I'm 2 days something unprecedented.

6. Based on  US Alibaba stock price it will open at 106 on Monday. Just 4% off my last purchase.

7. No Alibaba bull on YouTube who promoted Alibaba as it fell from 200 to 100 ...bought when it hit 70. Even these guys begin to doubt themselves...

The HS Tech Index is 26% down from levels in the "middle" part where many long term accumulated.

Lesson here is

1. Cheap stocks can get cheaper. But not ever market has a breakdown like the HSTech many just recover from low levels.
Panic cannot be predicted.

2. Stock movement drive emotions even in most rational of investors. When stock goes down many were heavily invested and feel pain. They were not prepared. This can cause them to sell at bottoms when they panic or cause sleepless nights. Investors who where  bullish previously

3. Most including myself miss the chance to buy more at the bottom.i saw the bottom bought and hesitated....

Right now the HStech index us still at depressed levels  roughly 26%  below where the best value investors saw the market as cheap. So the opportunity is still there even as you missed the bottom. However if you are highly exposed you should be cautious.

One possibility is the unwinding of the 4 fears....
1. Clarity of regulation and for these to trickle down.
2. War to end.
3. China stimulate its economy out of slowdown.
4. China find a way out of covid.

Bull markets are born out of the greatest fears ...deepest darkness and greatest pessimism.

Didi stock collapsed the recovered 250%

That optimistic guy who bought at the darkest moment will walk off with 2 bagger.

The collapse and recovery of Alibaba.

Even the most confident bullish investor got scared but it turned out to be a false move.A trick to off load the emotionally fearful.

Where do we go from here. Actually  I believe it will just settle at $120. Cool heads know there is regulatory uncertainty at the same time the stock is cheap

Simple maths on Alibaba now capitalisation US$294B
Profits is $20B a year with growth in cloud and financial services. Growth will be from outside China as China economy slows.

Here us chart of S&P during sub prime crisis.
The similarity with HS Tech.

1. Both plunged around 70%.
2. HSTech plunge in 3 steps ....S&P 2 steps. Initial first drop for both was around 30%.
3  The rebound of S&P took it back to bottom of initial drop.


The current bounce up of HStech and HSI is breathtaking and rapidly. Taking reference from Alibaba stock reaching $120 where abrupt technical breakdown took place, long term investors will be willing to buy until HS Tech Index reach 6.
This was where many started their accumulation.

(20-03-2022, 11:14 AM)sgbuffett Wrote: [ -> ]Here us chart of S&P during sub prime crisis.
The similarity with HS Tech.

1. Both plunged around 70%.
2. HSTech plunge in 3 steps ....S&P 2 steps. Initial first drop for both was around 30%.
3  The rebound of S&P took it back to bottom of initial drop.

So sell your Chinese stock before the second plunge??

The Nasdaq bubble crash looks like this
The crash took 3 yrs to bottom. Drop was 77%.
At the peak PE ratio was 77. The HSTech was around PE 30(?)

The bottom took 3 yrs because of the recession that followe and many companies have no earnings..

ARKK Cathie Woods hot ETF with many bubble stocks

Down 70% at bottom before rebound....took just 1 Yr to drop 70%.

This is Asian financial crisis stock market drop.
Many speculators and punters died because the entire drop of 70-90% depending on which country took only 3 months. Fortunes would be made if one bought near bottom.

Throughout all these crashes....what does one learn

1. Prior to the crash...each market/fund were promoted as best place to invest. Like ARKK was hottest ETF ...Asian Tigers were the hottest market in mid 1990s. China Tech stocks was so attractive in Feb 2021

2. After the crash nobody wants to buy...but its the best time. 3 years later the returns were 60-100%. Optimism turns to complete pessimism.

3. The recover period is roughly 2x the collapse period.

Market collapse is nothing new and occurs every few yrs on the stock market.

How to survive and handle it

1. Avoid buying when markets are expensive.just wait until correct or drop.

2. When markets are high investors get overly optimistic . This is when they buy the most. Regular investing helps to prevent this

3. Some of the stocks that crash during a bubble will never come back ever. So avoid concentrated positions.

4. After the crash is usual not a bad time to buy. Exceptions is Nasdaq which had an extended bottom ...but even if you dont catch the exact bottom...it does not matter in the long run.

(20-03-2022, 11:16 AM)ROFLMAO Wrote: [ -> ]So sell your Chinese stock before the second plunge??

I have not done a tally. But I bought after they already fell unfortunately they fell further. Losses should be 20-30% region. I have not tallied  .reason is I purchase fro long term so do not see day to day fluctuations as important. It does not matter because I do not plan to sell. Even if up 30% it is of no consequence as I do not plan to sell.

When I bought i knew the downside risk can be 50%.so I right size the amount I bought so I will as a whole my investments will not be too badly affected.

Will the market plunge again? If I knew for sure I can short and make millions....so I don't know.

I am more keen to resume buying. I stopped when the flood gate of bad news opened