Make Money Not Regrets

July 9, 2024 3 min read

Alibaba Group, listed on the New York Stock Exchange (NYSE), has shown an interesting performance over the past five years. Initially, the stock price nearly doubled, reaching highs of around 300-320. However, it then collapsed, dropping by about 75-80% from its peak. Even when compared to its starting point five years ago, the stock is down by about 50%. Over the last two years, it has virtually made no gains. Despite other asset classes like real estate, gold, and bitcoin going up, Alibaba’s stock has been relatively stagnant.

Buying the Dips: A Risky Strategy

Many investors, including notable figures like Charlie Munger, have bought Alibaba shares during its dips. However, this strategy has not always paid off. The continuous buying during the stock’s decline has often led to significant losses. It’s important to remember that investing in the stock market is about making money, and the journey towards that goal should ideally be positive and stress-free.

The Journey Matters

Investing should not cause undue stress or health issues. The journey of an investment is crucial. Even if an investment promises good returns in the long term, enduring prolonged periods of uncertainty and financial stress can have detrimental effects. Many investors experience significant stress and health issues when their investments underperform or cause financial losses.

Avoiding Emotional Attachment to Stocks

One key takeaway is to avoid becoming emotionally attached to stocks. It’s easy to fall into the trap of holding onto a stock in the hope that it will eventually recover. However, if a stock is not performing well and is causing stress, it might be better to consider other options. The idea is to think of stocks as vehicles for making money. If a particular vehicle is broken down, it makes sense to switch to another that is more reliable.

Instead of holding onto a stock based on emotional attachment, consider technical indicators. For example, waiting for a stock to cross certain technical barriers, like the 52-week moving average or previous tops, can provide a better entry point. If Alibaba has to go up to 500, whether you buy at 80 or 120 might not make a significant difference in the long run.

The Importance of Flexibility in Investing

Investors often stay in a state of disbelief, holding onto the hope that their chosen stock will recover. This can lead to wasted time and missed opportunities. Life is short, and it’s important to use time wisely. If a stock is not performing, it might be better to let it go and look for other opportunities.

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    Make Money Not Regrets