Alibaba: One Year After—Celebrating The Losses

Today is the anniversary of Alibaba’s founders sucking $22 billion out of pockets of US investors. About 40% of that, or $8.8 billion, has already gone to money heaven. The media is full of stories about this firm.

Even after the plunge, 39 Wall Street analysts have a “buy” on the stock, while there is only one with a “sell.” That’s wonderful for experienced contrarians. Shorting such lopsided advice can be very profitable. We predict that eventually there will be “class-action” law suits for lack of disclosure of the IPO.

The Stock And Bond Markets: A Critical Time

A CNBC survey asked 14 global market strategists to give their year-end target for the S&P 500 index. The lowest forecast was for 2,150 (close on May 28 was around 2120.) Most of the other forecasts were just below 2,300, while a number were above that level.

We remember a Barron’s survey of top institutional money managers in early 2008, just before the global crisis. Not one of them forecasted a decline in the stock market for the year, but the year saw the greatest global crisis since 1929.

They were obviously all very, very wrong.

Apple: Icon, Icahn or iGone?

The Christmas holiday season will probably help produce an excellent quarter for Apple. After all, it is a technology icon. But it may be their last great quarter for a long time. Shareholders should note that when enthusiasm is highest, and everyone is in, it’s usually a good time to look for the exits. Rather than looking at what is now, investors should ask, “what’s for an encore?” The markets look ahead.

Remember, market tops are made when everything looks best, not when they are bad.

Should you buy the ALIBABA Hype?

Bert Dohmen’s Thoughts on the ALIBABA IPO

The very large, long anticipated NYSE IPO of Alibaba will come on Sept. 19. This is China’s largest online retail firm, accounting for perhaps 80% of all China online sales. Many US investors are eager to get some of the shares. Should you?

Reportedly an initial price range of $60 to $66 for Alibaba is contemplated. That gives the company a market cap of about $147-$167 billion, quite a bit lower than the $200 billion that was mentioned at one time.

Last Chance to Sell or Buying Opportunity?

The bulls say the market weakness is a buying opportunity. As usual, we have a different view based on advanced technical analysis, which Wall Street doesn’t believe in.

Contrary to what many novices believe, it is not possible to successfully and precisely predict the date of a market top in advance. Trying to do that is merely an educated guess. However, using advanced technical analysis, we have a very good chance to identify a top when it occurs, often within a day or two.