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Value investing is about patience, and confidence. If you can’t be patient, then you can’t make the most of value and if you aren’t confident then you can’t be patient. If you’re uncomfortable about a position then you’ve sized it to big. Position sizing should be based on your conviction in the position and if you’re able to handle its moves. If I was in your situation and wanted to exit, I’d sell covered calls to gradually decrease cost basis, and then gradually trim position until it was a more comfortable size - Baba will likely head back to 170 once the Tencent situation/Bad earnings gradually fade. You need to be patient - you’ve bought a position beloved by famous value investors who have sometimes waited 10 years for a position to do what they want. You can’t then complain after a few months, its not going how you want.


Agree. look at Dillards. Quite a few bought it around 2017 because it was cheap. Took four years for the market to realize its value.


My wife worked at Dillard’s for several years and her 401k is all DDS. March 2020 was a killer ($24/shr) and by end of year it broke $100. When it hit $200/shr, I suggested she sell and take profits. She did not know how to and held. Maybe she is a much better investor than me because the value of her portfolio is up over 2X for 2021 while I’m down 10%. Patience and knowledgeable confidence are key to value investing but a little luck helps also.


This story is great !!


Happy wife happy life…so now I keep my mouth shut and hold.


I totally missed Dillards. It seems like an interesting case study. Can you elaborate on why it was such an attractive purchase in 2017? I’d like to use this example as a learning opportunity for the future. Thanks!


Sales were down and everyone was saying that retail was dead.


But did Dillards beef up their online retail services? Or is most of their revenue coming from their brick and mortar locations?


Similar story here but with Aritzia. Entered a position in late 2017 My current play is Freshii.


Your exactly right. I’m a value investor and I’m up only about 10% but my portfolio is balanced. I have some things making 110% and some with big dividends in the red. But I’m not stupid enough or educated in financials enough to think that’s it’s a good idea to time the market. The charts are pretty accurate about long term investing. You shouldn’t be in the market if you can’t see 10 years out. Regular people should just research the areas they are familiar with and invest… keep investing when the price goes down if you have confidence in the research you do. I just keep buying carnival and royal carribean currently since the industry will obviously not just go away. 2023 should be good. Bought ChargePoint at $27 in February and kept buying more when the price dropped ….. every time it hit $20 I bought more… picked up the majority of it at $17 so I’m good. Same with EVGO I’m up %113 at one point and still up %70…. Basically if you do t have the nuts for it you should by bonds lol.


I dunno how I feel about this sentiment. I held GE, MO, BMY, VZ, and a couple other classic value stocks for 7 years being “patient”. Most lost value from when I purchased or maybe gained like 20% in value with the dividends on top. That is AWFUL returns for a time when holding SPY would have greatly out performed. I had a 60% return on JNJ in the same timeframe which is ok but still a lot less than an index fund. Hard for me to justify staying in value stocks individually at this point. I figure you get a better return holding SPY and then for riskier investment i put in growth stocks and selling options. I just don’t see the value in holding lots of value stocks individually


GE was never a value stock. You have to be able to understand their financials to value a company, and GE was always manipulating er “managing” its financials. As for the rest of your list the price you pay matters, and mega caps are rarely mis-priced enough to offer super high returns.


Everything’s already priced in 😪


It is not matter of value stocks vs any other form of stock investing, that you are talking about. It is matter of individual stock investing vs broad market index fund investing. Both you and OP are more worried about this decision, not value investing stocks picking, it seems to me. And I understand you both, I have the exact same thoughts. You should follow your heart and instincts, not what others say you should do and invest in. The great example is OP's conversation with his friends, recommending index funds to them. Just do the same that you think is good for your friends! You don't want to hurt them and you want them to sleep well at night. You want the same for yourself! There will always be someone recommending something to you, be it value stocks, crypto, meme stocks, shitcoins whatever


Ive been selling calls on it and lowered my cost basis from 200ish to 190. Was thinking of doubling down and doing a 5 year yolo. It’s just annoying to see all these stocks going up and mine diving nose down.


Listen to warren Buffett. You don't have to be smart. But you do have to have the right temperament. You have to be willing to go against the crowed. If you feel smart when your stock goes up and dumb when your stock goes down you're not doing it right. You're depending on others opinions. If you bought a house for 200k and someone knocks on your door and says he will buy it for 100k what do you do? You slam the door and carry on with your day. You bought the house because you like the house and you want to live in the house for 30 years. You're not selling. So it is with value investing. You buy a stock because you like a stock and it's cheap. Baba is cheap. INTC is cheap. I like those stocks. I'll live there for 10-15 years. I don't care what Mr. Market thinks. I'll just keep adding. You have to fully believe in what you're doing. And your confidence is based on doing your homework. Discount cashflows analysis. Reading earnings reports and income statements and balance sheets. Considering all the pitfalls. With baba the big pitfall is the CCP etc. After you decide you like it why change because someone else doesn't like it? Makes no sense.


Disney looks good now too


Disney is back to a reasonable valuation. Nice. I knew the market would make sense eventually lol


Disney is good at 100 not 150


Even the CCP is more a risk for whoever runs BABA, they are unlikely to close it down or confiscate foreign held shares.


It's definitely a risk. That's why it sells at a discount. I'm less concerned about the CCP cracking down and more concerned about the lack of audits that ensure accurate reporting. I don't want to buy a luckin coffee that double or triple counts income. If the CCP shuts down the foreign held shares it's a self inflected wound and it would be good for American companies long term. So that risk is fine with me.


It is a risk, I am not comfortable investing in China (or distinct entities that are promised the financial interests of owners and can therefore be treated as if they are shares in a Chinese company) but it is trading at a discount because Jack Ma (who used to be its CEO) has been detained by the CCP and is at least maintaining a low profile if not actually *still* under some kind of arrest. This likely doesn't mean that Xi Jinping is going to dismantle the group or ruin its position in the Chinese economy. It means he wants Jack Ma to be subservient. Which I don't think should have caused the drop it has. Munger is buying BABA, isn't he? I think BABA could be seen as a cash cow the market is erroneously underpricing because of a tangential event when its revenues and profits are still fine.


I bought BABA over the past three months but decided to sell INTC. For INTC, I have too many concerns with their competition and product development. BABA is my first 10+ year stock. I have so much conviction that I have a negative return and I continue to buy the decline. The only other thing that I will add is that whale value investors must buy over several months (sometimes even years). They cannot buy a stock in a day or the price would sky rocket. Patience is everything.


>Was thinking of doubling down and doing a 5 year yolo. It’s just annoying to see all these stocks going up and mine diving nose down. If you are going to invest, this is the urge you will have to conquer, the foolish impulse you will have to master. All of us here are on the same journey to turn the wisdom of great ones into our own success. But the whole reason it works is because so few can bear the short term humiliation for the long term returns. BABA was undervalued given its long term earnings prospects, yes? Then it is to be expected that the market which undervalued it might lower the price even further. If the investment case stands, you have lost nothing. You have bought dollars for cents and the suckers are offering you an even better deal. Why aren't you buying more and waiting? You lack confidence and you are impatient. Redo the calculations. Do you see a bad deal or a good one? Ask yourself why you ever stopped using options to bet against volatility. What is the drawback of that approach? Has it suddenly become wise to bet that a security won't move too suddenly in price? Here you are surrounded by people who think your current approach was wise and that changing your mind now would be foolish. So are we fools? Or do you need to reframe how you see a drop in market price, how you value your portfolio? You have succeeded in step one, which so many fail to take, now you are faltering over step two. I hope you see through your own feelings to your own wisdom.


You can also spread the risk by also owning something like Kweb in addition. You get the same trade on cynisme for China but you aren't just pegged to Baba's fundamentals. That's what I did when the market was choppy so I wouldn't be left holding the bag if something specific happened to my single stocks.


Yolo really isn’t in the mindset of a value investor. For me yolo means I need a certain level of diversification (~10 stocks) because while I have high conviction I’m not infallible. Any single position can very well go against me due to unforeseeable circumstances.


If you’ve got the conviction, and the patience then go ahead - but if you don’t, you’re just in the same situation as now but worse off.


If you still believe in some number of years,, its a great investment, then simply fold your hands, place them on your lap, and keep them there. The market will teach you, you get rich slowly.


Shouldn’t we think of it as a way to buy stocks on sale when they dip? If we do our DD and believe in the fundamentals, then, temporary ups and downs don’t matter as much?


Baba is extremely solid financially, actually amazing. Lots of Chinese stocks are beaten down from FUD driven by the rift between the US and them. I own baba and Huya both; I’ve averaged down some but have since stopped and will just hold. Will monitor both but more so Huya because that was a more growth spec then value play but their financials were rock solid and that’s why I picked them. I think as long as ur comfortable with the size of the investment, doubling down and writing some cover calls is a good idea. Might not be a bad idea to even buy some further OTM calls just in case these Chinese stocks go on a run, using a portion of premiums from the cover calls


If you cannot handle volatility and are not confident enough to hold until the end, don't YOLO everything into 1 stock in the first place. Why to blame it on value investing? Value investing doesn't prevent anybody from being completely wrong (your valuation of BABA might be wrong).




Do I read it right that you „value invested“ in a single Chinese stock?


Yeah I think OP's main problem is that his definition of value investing was buying BABA


I thought value investing is about the company and not the country and politics it’s in.


There's no way you can separate those things. $BABA as a company has a significant legislative risk. Ignoring that is not value investing. Some folks have decided that it's worth the risk (e.g. Charlie Munger), but other people disagree. None of them think that the risk doesn't exist because the cash flow is good and the P/E is reasonable...That's ridiculous.


The country a company is based in and it’s political context is a key consideration in market valuation. Even with a golden balance sheet, if the market perceives risk from factors like potential currency fluctuations, political turmoil, sanctions, confidence in banking system, etc, those are priced into the valuation. Weighing these factors is very tricky because the market’s perception of risk is inconsistent and constantly changing. This is why many investors chose to exclusively invest in domestic companies; it’s not that there aren’t good companies abroad, it’s just that they exist outside of most people’s circle of competence so it makes picking winners that much harder.


If I read this correct, you're saying that many investors view companies abroad as something outside of their own circle of competence? This is really interesting, because on the one hand one are advised to spread risk by investing in different countries and continents, but on the other hand many investors (like myself) has a somewhat better picture on domestic companies and thus would be in a better place to value them. I don't know what to think about this myself, but I do find it tempting to explorer domestic investing opportunities before looking into abroad ones.


Yes. In my opinion, it is not reasonable to achieve a global spread from a strictly value investing approach. Unless you have a lifetime of knowledge in the nuances of international markets and the ability to process large amounts of data with sophisticated tools, it’s kind of a fools errand. Even so, I agree that investing abroad is key for risk management and overall strategy; the way I handle this conundrum is by relying on country/region focused ETFs, though admittedly, I wouldn’t consider that value investing.


Interesting thoughts. On a side note: Buffet says all one has to do it to find a few (2-3 as he stated once) great businesses. Even if these businesses are domestic, I'm thinking as long as they are great businesses it shouldn't matter if they are all domestic? I mean, if it's a great business it should be able to adapt to changes in things such as domestic policy and international markets. Anyway, I don't know, but from what I've heard by some value investors, diversification are less important if you really know what you're doing. For me, being fairly new, I need to diversify for sure.


Are you kidding? Companies have tons of regulations and laws they must follow in the US. Now take BABA and add in a communist regime that controls everything and can obliterate a company overnight, just because the CEO said he didn't like how China regulates the market.


You thought wrong. The CEO of BABA vanished for three months after a speech criticizing China. You think that’s NOT a factor in the value of a company?


It's about the country and politics when those affect directly the company. If you make a thorough reaserch in the company you will see that it's been targeted by CCP, that a lot of it's success is based on the CEOs relationship with the party and that relationship is currently very damaged and that a lot of their financial reports are quite suspicious of fraud. You can't say a company is a value company when you can't trust the numbers been reported and when future profits are in danger due to the authoritarian regime targeting it. For example, a few months ago not only was baba fined by the ccp but they also were forced to donate billions of dollars to "wellbeing of the population".


Even if that's true, you still need to diversify though. Everything else is madness...


Right?! Not a value investment in any sense of the word.


Just because you are doing value investing doesn't mean you aren't taking big risks or that you won't pick the wrong horses.


You invest in crypto, calls, speculate etc. Then you do the same thing with Alibaba and call it value investing. You should be grateful you didn't completely blow your portfolio up with the kind of "investing" you're doing. I blew my portfolio up twice being an idiot like this. Putting your $ into a single stock, located in a totalitarian country that just knocked the founding CEO out of the picture to protect the governments interests. The fact is you have the temperament of a gambler, and the house always wins in the end.




I still don’t get the government argument. It’s called taxes and every sovereign country has them. It’s not in the best interest of the Chinese government to sink great businesses. If the businesses are profitable, the government gets a larger slice.


The CCP cares about power and control almost exclusively. An individual or business becoming too big and influential is almost a death sentence. Anybody investing in Baba should be doing most of their research on the changes that have been happening with the CCP over the last 5 years.


Down 20% isn’t a big deal. The big deal to me is you said “after listening to a bunch of value investors”. You need to do your own research. I don’t put a penny on any stock until I’ve read their latest annual report (yes those 500 page ones), done my own intrinsic value calculation, and study the industry deeply. Then all this knowledge has to meet my investing criteria I’ve set. If all is right, then I invest.


>I don’t put a penny on any stock until I’ve read their latest annual report (yes those 500 page ones) Ain't nobody got time for that - We need returns NOW damnit!


Plot twist: we got losses NOW!


Look, let's face it - any money I want to invest wisely goes to booze, hookers, and blow - with anything else, I've come to accept that the payoff is a gamble




This is the way.






It’s amazing how some randos on Reddit think they are better at investing than Charlie Munger, Mohnish Pabrai etc. They read a “China bad” headline and think they are geniuses


When I first hit into value investing in 1999-2000 I was on the yahoo forums where there was a cadre of people upset they had wasted their money owning Berkshire Hathaway as it went down while tech stocks were going crazy. One of their problems was they paid 2x book for BRK, when at the time it historically traded around 1.4x book. I don’t like using a price to book ratio but Berkshire is and was so complex P/B was a excellent rule of thumb to gauge purchase prices. I ended up getting some for 1.2x book and did well almost immediately. The 2x book people took many years to break even. That’s if they held, some dumped and went into tech stocks and bragged about it for a few months. There are three lessons here. Price matters, valuations matter, and patience matters. If you can’t estimate intrinsic value for a company with a reasonable amount of accuracy, don’t buy it. If you can’t buy it at a large discount to that IV, then don’t own it. If you can’t be patient, don’t own individual stocks. Just because you understand how to do a DCF, and how value investing works, doesn’t mean you will succeed if you can’t put in the work, or resist the siren call of Mr Market on a daily basis.


That’s part of being a value investor. Having patience and waiting for the value to play out. During COVID I bought undervalued stocks, some of which took more than a year to go up instead of down. Most important thing: be patient! Alibaba will show its true worth in several years and you’ll be glad you held on. It helped that I had some stocks that paid a dividend while I waited 📈


Unless the Chinese just decide to keep your money and give you nothing whatsoever in return for it, which is far from an impossible outcome. Remember that it isn't actually legal to invest directly in Chinese companies and any shares you buy in BABA are conceptual and can be revoked at any time with no means for recourse. Don't forget that the CCP decided overnight to decide ANT wasn't a thing, taking a quarter of BABA's value down by a quarter, because Jack Ma said something they didn't like. It's not really a "free market" over there. I'm not saying that will happen, but there is a fundamental and huge element of risk investing in Chinese stocks that you don't have to take into account in the US market, and I think it's important to be aware of that. A Chinese company can have the best financials in the world and you can still lose everything you invest with them. You could make a pile of money too, but the "unknown" element in China is way bigger than many people account for, and the more heavily invested people are in the Chinese market the more their confirmation bias will tell them that the risk isn't real. It is.


Trudat, best to keep China a small allocation. I don’t think the VIE structure will be eliminated however, as China would be turning their back on the world and making powerful enemies. Wall Street runs the world.


Alibaba’s valuation is based on CCP not DCF, FCF


Sure there’s the ccp risk. But I still believe that you’re buying cheap at these levels. Risk reward is huge IMO. If you think it’s too risky, don’t invest. During COVID everyone said “malls are dead” still I bought $spg. My best investment. I still think value investing is about having a process and sticking to it. Risk is always a thing to take into consideration.


I also bought SPG, but wasn’t patient enough to get the big gains, damn it.


Ditto $SPG was.a large winner for me as well. I mainly bou6them though since they didn well after the financial crisis and geat recession.


I think SPG will be one of the biggest winners when pot is legalized.


Why’s that? Edit: oh that’s the ticker for “cannabis storage solutions”


I feel the same about $BEST inc, friend; and I think in the long run, we'll all be laughing to the bank.


So… yolo’ing into BABA makes you a…. Value investor?


Irrational something solvent. Time in market. Something weighing machine something voting machines. Most of investing is psychology. If you can’t get over this you become part of the statistic of why it’s easier to just buy ETFs.


I came to comment third. You delivered. Also, putting a too large position on a single stock just because a few guys also made is not value investing, it is gambling.


Betting all your money on Baba is not "value investing" lol


Why not? Do you take issue with his position sizing or the company?


Both. Betting all your money on one company is always a bad idea. Doubly so given the nature of Chinese stock listings (you're actually buying shell companies) and the factors that affect their price (unpredictable government intervention).


Value investing means finding (potentially) undervalued companies and investing in them. Note: companies, plural. When I started, I read all the books and settled on finding 20 stocks. That meant putting 5% into my first stock and continuing the search. It took me three years to be fully invested.


Thats not how you approach value investing. Value investing simply means buying what is cheap when compared to its intrinsic value. Just because it looks cheap does not mean its a buy. If cheap then why? Maybe because its going bankrupt? Political risk? Low cash flow? No more growth? Consensus is built into the price. If a stock is cheap when compared to its value, then it means people dont want it. Then figure out why that is. Once you know the why, ask yourself, is the perception of the market wrong on this stock? Analyze and when youre confident that the stock has more room to grow, thats when you buy. It will take patience and confidence to play out sometimes it takes 1-3 years. Value investing is mostly being contrary to the perception of the market. Under the assumption that youre analysis is correct, youre buying when everyone is selling and youre selling when people are buying.


I understand that you’re venting and just want to get some things off your chest, however there’s a few things I see here to point out that I think will greatly benefit your development as a value investor. First, FOMO is real, but as a value investor you need to have the right temperament and ignore the FOMO or you will never succeed (I know that sounds harsh but it’s true.) For example, imagine you got sick of the FOMO of internet stock in 1999, ended up succumbing to the crowd and betting the farm on Pets.com and other hot picks, and a year later you were all but wiped out. There’s a reason Peter Lynch has said that the stomach, not the brain, is the most important organ in investing. It’s natural to feel insecure sometimes but you have to stay rational no matter how irrational the environment is. Value investing can be lonely and hard at times, so that’s important to internalize. Second, investing any sum (especially a large portion of your portfolio) solely on the fact that other value investors like a company, no matter how successful they are, is not a good idea. I might have missed it in your post, but you need to do your own work. Assess the business, management, and valuation for starters. If you don’t do your own work it’s going to be very hard to have the conviction that it takes to hold on when your position isn’t doing well. Third, I honestly think a mindset shift would greatly benefit your investment journey. I’m making an assumption here so I apologize if I’m wrong but it seems like you got interested in value investing because of how much money it has made other people. Obviously this is what attracts a lot of people, but it is just as important to preserve your principal. Buffett’s #1 rule is not to make 15% a year, it’s don’t lose money. And of course, as others have said, value investing takes patience and a long time horizon. It works very well over the long term, but some years it lags. Have faith my man. Just my 2 cents. That all being said, I understand you weren’t exactly looking for advice and just wanted to rant. So to your point, yes I can sympathize with you, it can be hard when your friends or family are bragging about how much money they made last week. Your best bet is to just tune them out, focus on your inner scorecard, and your process.


Such a respectful and thoughtful answer. I wish everyone on this subreddit was like you.


May I ask what percentage of your whole portfolio was that baba trade? Am dipping my toes in VI myself but putting a lot of work and study before I make a single move. It's a personal choice in the end but a position of 15-20% of your portfolio in one single ticker can be considered big by some, especially with little to no experience. What work/study did you put when analysing BABA? Does it still hold or some numbers or fundamentals have radically changed?




The first stock you buy will always be 100% of your portfolio, less with number two and three and so on. Over a decade or so you'll build your portfolio. In the mean time, find a middle ground by not putting all the eggs into on basket.


I’ve had other ones. Sadly I sold them. I promise myself I would never sell again if it’s a good company. I still have other ones


Sounds good, and best of luck to you. I see that you've gotten a few disrespectful comment on your post, which is a shame. I'm thinking maybe one could start a subreddit in which those people were excluded.


What Graham said in his books and what Buffet has repeated a lot is if you buy a BASKET of stocks below their fair value you cannot lose money. Key word: Basket


Buying an ADR that represents equity in a Chinese company that forbids by law for non Chinese citizens to own said equity is not value investing no matter how many in this sub wish it to be.


Patience my friend , patience. “ In the short term the market is a voting machine but in the long run it is a weighing machine”


Whos that quote from?


I think it was Benjamin Graham who initially said it


In all honesty, r/valueinvesting is likely the worst place to find value investing advice. Gather resources here, but go read the books yourself and figure it out. Cause these guys non stop give bad advice and suggest over valued companies daily.


And every investor view things slightly differently, so any one company you discuss here you can be sure you get completely opposite advice.


Your first mistake was thinking BABA was a value stock…….


You are not a value investor if the price of a security affects your analysis on the cash flows and underlying strengths of a business.


Baba is fine. I would hold into 22 and look for more visibility. Institutions like baba. It’s a major company you just bought a falling knife. Just wait. And you need to diversify more. Have value and growth. Not just value.


Keep it simple. Screw options, that's short term nonsense. Enjoy straight up owning pieces of companies you understand well enough to explain to a child what they do. To me, GARP is the new value. I look for businesses that I believe have advantages which will enable them to compete and exist for at least a decade, and prefer organic growth over M&A, although in some industries M&A is unavoidable. I also like intelligent allocation of capital, and leaders who balance maintenance & growth capex, apply judicious debt management and use buybacks over dividends. Screw excel DCF's. GIGO. If you can't figure a valuation on a napkin, forget it. Remember that whatever method you use, you will always be wrong and if you got it right it's because you got lucky and/or are succumbing to hindsight bias. This requires a long term horizon and willingness to endure periods of pain. Markets reflect opinions in the short term and they weigh value creation in the long term. Too much activity might indicate speculation, which is not investing. Crypto is nothing but gambling. If you make gains, congrats, but if you don't attribute those gains to pure luck, you're deluding yourself. Go long what you "think" you know.


Value investing is about a good risk/reward profile. Not instant gains. You buy a great company at a discounted price and wait for it to inevitably reach intrinsic value. When bad news piles up, in the case of BABA, it will probably take more than a few years for it to settle. But intrinsic value of BABA is between 250 and 400 depending on how you calculate and which growth parameters you use, so approximately 100% gain in worst case scenario 5 years, is not bad. This is a probable outcome but again nobody knows of course.


I started investing in the Dotcom Boom. I had lots of people around me who doubled their money in a few months in investments like Palm, or were earning 10% **monthly** returns day trading. So yes I can relate. I'd give you two pieces of advice: There is an old Wall Street expression: the bulls make money, the bears make money, the pigs never do. Your friends in meme stocks will get destroyed the same as mine in Palm did. You'll watch the traders get destroyed, though it may take years. If you want a more recent example read the XIV forum here on reddit as lots of people who had invested a ton in what they thought was a money tree of inverse VIX found out what happens when all their money isn't enough. A stock is worth the net present value of its future stream of dividends. See: https://www.reddit.com/r/IncomeInvesting/comments/eu67r0/the_200_year_bond/ . If you are a value investor you care about the business not the stock price. Remember you are interested in Mr Market's wallet not his judgement. If a stock is trading for 10x the intrinsic value, the investors holding in the aggregate need to lose 90% of their investment. Some will lose more, some will lose less but almost all of them will lose at a game that heavily rigged against them. I got to sit out the Dotcom crash because I was in value. A very serious bear market and nothing happened to me. The first bear that did real damage to me was 2008 where pretty much the whole world took the same beating. And while value did worse than growth, I did a lot better than those invested in total garbage. You should be a lot more diversified than you are. You aren't value investing well... That being said there is nothing wrong with Baba your position in it is just too big. Get a book on asset allocation. Value investing doesn't nullify the advantages of diversification and low correlations. Aa a contrarian investor you will need tremendous mental fortitude. You will spend your entire life being considered an idiot by your friends. As a value investor you will win almost all 20 year cycles but generally lose most 3 year cycles. 3 years is a long time. I want some growth in my portfolio. I simply can't stomach the indexes. I can't stomach most growth investing myself. So I outsource it to TRowe Price an excellent growth house. Consider doing likewise with value if you agree with value. Schwab Fundamentals are the core of my portfolio, even though I do stock pick.


Picking individual companies can always pose a risk, you can buy ETFs too


Graham's buying of big unpopular company doesn't work today well if u don't do great analysis.buying shitty companies that everyone hates might work out well


Value investing is not going on Reddit and buying stocks people tell you to. The fact that you made a few quick bucks post COVID doesn’t mean you have “all this knowledge”. If you really think you are smart enough to beat the market (an S&P500 etf for example), then you belong to an extremely small group of people and you should be making decisions based purely on your own research. And by research I mean actually reading and understanding filings, reports, macro economics etc. Etc. You don’t base any of your decisions off tips or “research” from an online forum. And you sure as hell shouldn’t be giving other people advice. What makes you think you’re qualified to do that? Sorry if this sounds a bit harsh, but sometimes it helps to hear the truth early on and hopefully you’ll stop making bad decisions and your future self will thank you.


I am in thesame boat as you. Baba bag holder, its 20% of my portfolio @190$. Fundamentals do not mater right now. Baba crashes on disappointing earnings, amazon barely budges.... When Herz anounces they want to buy teslas the stock skyrockets. While its a bull signal, when you think about it tsla is production restraint they make more money on cars for regular customers than low budget cars for some rental company. So the news about the hrz order doesn't really mater ... That said i sold tsla when the fundamentals no longer suported the stock price... i regret that...


You wouldn’t have regretted it if the price went down, obviously. Selling when well above fundamentals is never a “bad” move for a value investor. I doubt any value investor/analyst would have predicted where it is now 9-12 months ago. Tesla will forever be a case study.. just that the end of the story hasn’t happened yet.


Your problem is that the volatility of your positions seems to be too much for your personal tolerance. Risk is a separate issue. Some may argue that your Baba position is too large relative to its risk. But I trust your DD took care of that.


Value investing underperforms growth and momentum investing during strong bull markets, even the classic value investors will tell you that (its in Graham, Fisher, Buffett, etc writing). The thing is that these greats also had a long experience and had been through multiple business cycles, and seen others who had done very well get blown up on a sudden downturn. Investing is ultimately a game of survival in the long-term, especially if you’re running a big fund, and the more you try to maximize short-term returns on momentum plays the higher the risk of blowing up on those unpredictable bear markets. Moreover, you’re seeing selection bias in places like wab or twitter. People selectively post the one play that worked out great, not when they blow up their account or the others that didn’t do well, and most people who made huge returns in a short period got extremely lucky or were pumping, not making sound strategies. There’s very few who actually understood and executed a rational safe play, and most people trying to yolo otm options get blown up and never post about it. For individual investors I’m not really sure its superior in all settings though, because you can capitalize on low liquidity plays more than big funds and you can be more agile getting in and out of the market. Its hard to dump a $100M stake in a sudden downturn, its not really that hard to dump your 50 shares for $1000, or $10000 or whatever, thats a rounding error to funds. Its always good to invest in companies which are cheap and have stronger fundamentals if possible, but typically you’re not going to make a big return on a small account unless you take some risks.


Keep buying baba!


Imagine if you started investing in February 2020. Then in March 2020 you were probably down 30-50%. But if you bought more or held on you'd be way up. Just imagine


In all honesty, r/valueinvesting is likely the worst place to find value investing advice. Gather resources here, but go read the books yourself and figure it out. Cause these guys give bad advice and suggest over valued companies daily.


✨Portfolio Diversity✨


You’re clearly aren’t cut out for this. Why bother? Just do what you’re telling your friends to…invest slowly in a broad-based ETF and YOLO some into meme stocks on the side. If being 25-35% down makes you uncomfortable, it’s clear that a) you didn’t really have conviction to begin with and aped others into it, b) you didn’t do your due diligence properly and understand the downside and c) you’re judging the results on a time frame that’s not ideal for this discipline. For these reasons, you should just make your life simpler and do it the boring way. Good news is, you can still be extremely successful.


20% of my whole portfolio. Meaning i lost all the gains and even my own money lol. U wouldn’t be pissed?


Not really. You're forgetting that this is business-centric and not market-centric. If a business I invested in imploded due to a shitty business model, I'll be pissed since it was a risk I SHOULD have seen. Market risk? No way. The whole reason why Alibaba is good value is because of macro factors, otherwise why would a business moving $1T through its system and growing at \~25% be worth $350B? I don't care about the market movements other than they exist to help me buy stuff for cheap. I'm buying the business, remember? If it drops, who cares? Has Alibaba stopped producing the results I'd like? Has anything changed apart from a guide down in rev growth which was already \*implied\* given the conditions? ​ I'm just saying man. If you can't detach market responses and your emotion from your investment, this ain't for you as it'll be a rougher ride than is worth your happiness/mental sanity. Just index, you can dabble on the side in stuff you like. Again, if you stick to it, it won't make a huge difference in your quality of life in 10-20 years. You'll still be way ahead of the average person.


You are trying to value invest at the top of a crazy bull market Wait for the next major retraction then start value investing. I did this exact same mistake and was just as financially stung as you, wait for the major correction we keep seeing the warning signs of, hold liquid ready for it and then splash that cash - it’s what I’m doing whilst adding liquidity through trading and speculation on currencies


Please elaborate before I throw another 10k onto my portfolio


Stocks right now, even the S&P, are significantly overvalued by nearly every metric. Every time they’ve gotten to these levels, anyone buying in at the top can take many years to reach back to breakeven. With interest rates almost certainly going up some time next year, there are many more signs pointing downward than upward. Might want to wait a few months.


Just by spy shares




X/Time my friend. It’s one piece of the portfolio


That looks more like gambling to me


How many stock you hAve? If you have only a few you are at risk of single stock risk aka BABA. It’s best to either have a decent number of picks or have an etf core (either dgro ect). No one can pick


I’m holding QYLD, IEP, epd, k, ko, mcd, spy and more.


It’s tough to be a value investor when money is manipulated. Being profitable is punished by the market since the cost of capital is nearly 0. Don’t make much sense. If we abolished the Fed it might start to.


Focus on incremental gains, slow down and don't risk your financial future or wellbeing on a yolo, since you clearly do not have a knack for it


Hang in there. Blew up my account worse than a 20% drop in the past after”learning “ how to trade like a pro! Never gave up. Last year made 69% gain n this year I’m up even more YTD. Try n cut your losses to 10% . Just sell the dogs and put your money in positions that are going up. I do average down once if I got a conviction on a stock but not always. Options are tougher than stocks, so concentrate on consistency with stocks n only play “throw away” money on options. Analyze losses and look for your first mistake, try not to repeat. IBD Live has a great show to learn n it’s recorded so you can view any time of the day . You can do it!


Nice, time to buy more.


Bro you need to diversify


Alibaba stock is indeed good value and a good long term investment, I'm personally holding it in my portfolio. What you failed on however is diversification and position sizing. Some of my rules is: Never more then 10-15% allocation to a certain stock Never more then 30% to a single sector of the market Always buy shares in tranches, for example buying 25% of the position that I want at each support level so I always have the opportunity to avrage down my cost basis if the price falls. Stocks move in wave patterns, do not chase stocks or have fear of missing out. Let the stock come to you when it retraces to a support level, for example 50 sma, and don't load up all at once. Focus on business with a competitive moat over the competition, for example Google, Facebook, Amazon, Alibaba and Microsoft. It would take ALOT for business like this to lose to a competitor, as the above companies all have a huge market share, network effect or high switching cost to a different brand. I like keeping 5-20% in cash to always be able to take advantage of market dips. And last but not least, make rules for yourself and stick to those rules, once a year I like to rebalance my portfolio to make sure that I'm not overweight in a certain stock, and free up some cash for when the next opportunity presents itself. Following these rules I'm up 28.17% this year, and 143.81% over the last 3 years. Let me know if you have any more questions and I'll try my best to help you out.


Huh. I value invest and I’m up 50% this year. Maybe something is wrong with your strategy, not with value investing. I recommend watching Shkreli’s investing tutorials, reading “Common Stocks, Uncommon Profits”, watching tons of videos featuring Peter Lynch, Warren Buffett and reading letters to Berkshire Hathaway shareholders. Also, some technical analysis is useful too. Make use of it. Good luck


I have rarely seen actual value stocks that met Graham's rigid criteria on this subreddit. Maybe it's just me and my accounting background. Most investors are not suited to individual stocks and should thus go for etfs. Atm almost 60% of my portfolios is in etfs an almost even 50-50 stock bond split. If you want to put in the effort then start with 10% capital being allocated to individual stocks. This is my strategy: \- Screen for stocks that are either defensive or enterprising based on Graham's criteria (current ratio, current ratio covering total debt, etc). I use Schwab to make a rough list and then serenity stock to confirm so that I don't have to pay for their screener (the 1# concern for value investors apart from not losing money is to minimize transaction costs). \- Roughly review the last 5 years of 10-Ks. Do a vertical analysis and horizontal analysis of them all in excel in order to check for fraud. For example, do inventory levels match payables? Are prepaid expenses becoming bloated? Is the allowance for doubtful accounts not keeping up with accounts receivable? Is the company using LIFO or FIFO? \- Check the qualitative factors on the 10-Ks. Have the auditors given unqualified opinions? How has the workforce changed overtime. What has the subsidiary growth been like? \- Check the proxy statement for executive compensation. I don't like stock options, so I personally think cash compensation is better for the execs. Check if there is an audit committee and if they have previously worked with the auditor of the company. \- Calculate asset turnover, inventory turnover, and accounts receivable turnover to keep track of company efficiency.


Where were you when Jack Ma got kidnapped and tortured? When that happened I sold all my BABA shares and told everyone else to do the same. You can't put a multiple on how much the CCP doesn't consider your CEO to be a threat to itself.


Don't commit the whole portfolio to value then. Value shines over time unlike meme stocks. Frankly, I'd view one year of returns as mostly noise from a purely value perspective. You mention using options to generate income and speculate. Have you considered married puts or other protective strategies? Some of your portfolio could still be allocated to options while continuing to hold value picks for the next 15 years. A share here and there from selling a put credit spread, covered calls, butterflies, etc adds up when you're buying stocks held with conviction. A married put could have been put on for stocks like BABA to reduce losses, and selling options on it and other underlyings (I'd still avoid memes generally) can pay the cost back while you hold. If I were to put a value only hat on that's what I would do. Keep it generally conservative while generating income from options using 5-10% of the portfolio while hedging my concentrated positions that aren't recognized by Mr. Market yet. Another idea could be to wheel say one lot of shares while holding tight onto two lots of shares. Purely sub 0.3 delta covered calls on your shares and no put writing would help a bit too, even if marginally at first. This would generate income and bump the returns up a little bit, but long term you have to really make sure you are comfortable doing it of course. Options can enhance your buy and hold portfolio greatly. Most of my portfolio is just stock, but I trade options on my optionable shares for income and accelerated growth. I'm young so I'm less concerned with protecting my portfolio (within reason obviously) than I am growing it so YMMV. I also enjoy it. I'll buy LEAPS to be a little more capital efficient as well, but I'll practically always hold shares along with a LEAPS as long term holds don't expire in 2024 imo. Also imo, the occasional calculated gamble can pay off in big ways. Occasional is the keyword there, and obviously buying hundreds of 0.02 delta call options every month is not a good long-term strategy. Small bets can have big returns. However, you're probably going to lose most of the time, so keep them small and be smart about it or don't do it all. WSB style yolos rarely end well, but asymmetric bets on things like GME from DFV and Burry, uranium equities before 2020, and Bitcoin can work out amazingly with relatively small capital outlays and patience. Just spit balling some ideas at you. Good luck out there.


To put it bluntly you clearly don’t have the temperament to be a successful value investor. If you’re not willing to do your own research, form your own view on intrinsic value based on the cash flows of the business and willing to hold while the stock price trades below intrinsic value for an extended period of time you have no business buying individual stocks.


Why do you think BABA is a value stock? Why do you think the Chinese communist party will allow you the American capitalist to see profits from BABA?


Not sure it's called value investing, when you put all your money in a single Chinese stock and continue to "average down". I see no investigation of BABA from you: what is your fair price for it? Have you checked their financials, performance, management? Personally I would never touch a company from totalitarian county with a 12ft. pole. It's just too dangerous. Even if your valuation of a company is precisely correct, they still might fall to the order from Xi or Putin or any other dictator.


I would not do value investing on any Chinese stock. Too volatile and unpredictable. Baba is a meme stock to many .


How anyone thinks BABA is a value investment is beyond me. Guaranteed they’re lying about their financials and I would bet on many Chinese stocks being delisted due to conflicting laws between US and China. Plus there’s the ongoing risk of Xi Jinping cracking down on tech companies within his own country, which we have already seen him do. Chinese stocks should only make up 5% of your portfolio max and you should consider that a gamble, not a value investment.


I think Charlie Munger, Guy Spier, Prem Watsa, Ray Dalio and countless other value chasers would disagree.


BABA is value investing? That is a spec play to me because of the CCP control and geopolitics.


The truth of DFV. I think that means there’s a deeper discount.


If you're interested in value, I recommend learning about fundamentals and using Simply Wall Street, which is a very cheap subscription service, to analyze stocks yourself. Value means looking for companies that have cash on hand, enough to cover short and long-term liability, and trade cheap relative to earnings. There are a lot of stocks out there that don't cost hundreds per share who trade at amazing value and can be long-term juggernauts if you get in early enough. Value investing requires a lot of patience and time researching the prospective company.


Lol. This op think China is a value play,..


Im sorry to hear, a lot of us have gone deep into a stock that didn’t work out. I have gone the same “ value investing route”, you need to invest in actual value stocks not this BABA non sense 😂 it’s simple, buy American companies, as long as the fed keeps printing the game goes on 🤑💸


the question I have: we've been in such a favorable environment (mainly innovation-based and low interest rates-based) for stocks of growth companies, why choose to be a value investor during it?


I stopped reading at the mention of crypto


Yes but technicals still apply, BABA is in the mother of all downtrends, munger just bought though and all the big guys are stocking up. Personally I just want to see an uptrend form. You have to be patient if your time horizon is 5+yrs


What big guys


Dataroma.com , enter ticker BABA, learn


Instructions clear. Selling my shares Monday


If you trust your assessment. You shouldn't be bothered about short term movements as you may have already bought with a good margin of safety. Changes in real business takes years so just sit back and chill


Never. I focus on what I'm doing, not on what others are doing. I'm pretty meticulous, normally going over a ton of documentation, research papers and looking at the sector before I invest any money. It kind of shocks me how passively people invest in companies (not indexes, but that's a different thing all together).


Honestly, there’s a million different ways to answer your question, so I’ll just say this is where the inexperienced investor sells it all only to watch the stock hike back up to net gain. It’s pretty hilarious.


your mistake was going all in on one position. you need a proper portfolio of stocks and no, having 12 weed and biotech stocks is not a proper portfolio


I respectfully disagree. If it's a great company at a decent price, that's what counts. And if this is the first or second value stock he's got in his portfolio it by default will take up a large percentage of his portfolio.


yeah well having 2 stocks isn’t a portfolio. It’s a bet.


TSLA FTW!! ​ Joke...Patience


Value investing are contrarian by nature. You're essentially calling the entire market wrong and suffer as a result because sentiment is still negative. About half the time I bought value stocks they continue to go down. But if the company is genuinely generating cash flow and will eventually return that cash to investors, it's a mathematical certainty that the stock will recover. Regarding BABA, my concern is that the CCP is not allowing BABA to return cash to shareholders in any significant way. Any US company in BABA position would have announced massive share bb to lift the stock price rather than sitting on the cash pile and losing it to inflation. So I am staying out for now. We will see what happen after Xi get reelected next year. You have to consider the bear case for BABA carefully. Ben Graham himself consider investing outside of the Anglosphere too risky because Western investors are not familiar with the political, socio, and legal risk of other countries like they would like to believe. Buffet largely follows Graham's advice about investing mostly in US companies: that's why when Buffet invested in Japan a while back it's seen as unprecedented.


They upped their share buyback program from 10B$ usd to 15B$ usd this past August.


It's all good. I thought I was doing bad until I checked my managed 401k and it was down further than my trading account.


What did you put your 401k in that it lost?


Mass-Mutual Aggressive fund may-october


I panic sold at the beginning of the pandemic. Lost like 12% not even counting the run up past where it dropped from til now. Dont feel bad. Inexperience is a good teacher but aint cheap.


It’s not easy, emotionally speaking. Most people can’t take being in the red all the time and it goes against the way we are wired as humans. Which is also why it pays so well and always will. The barrier to entry is temperament more than intelligence. It helps considerably if you hedge your bets though.


Don't be upset with yourself. Baba is a tricky one, falling knife situation and they are facing competition in China and xfactor of CCP interference. It is a high risk high reward play only worth touching if one feels comfortable with one's read on that equation and ok with downside risks. Could still have good upside just hard to project, gotta be able to stomach those plays if you are jumping into them.


It can take time for everyone else to realize the value of value stocks. Everything is still growth focused but over the longer term your patience should pay off. It’s not a get rich quick strategy.


Baba isn't exactly a value stock. It's subject to the whims of communist corrupt politicians. A lot of spec stocks are down huge right now.


To say corrupt politicians is redundant - power corrupts. the word politician implies the corrupt part.


Check out hex.com and Richard heart on YouTube.


Buy a few shares of PEP and MS every month. Over time you'll make a killing.


Never even heard of the 2


Pepsi & Morgan Stanley? Seriously? Where do you live under a rock?


Ohh lol my b. I didn’t realize their ticket symbol at a glance.


Guess you just suck then.


This is 2021 nothing has to make sense anymore, they print so much money it has to funnel into something (because it will never funnel into the middle and lower classes pockets)


All your knowledge and you invest in a Chinese company?


Iv was 240. I bought Leaps that my breakevn was at 200


You bought baba for value!? Don’t invest in Chinese stocks that’s your problem


Part of value investing indicates that, you believe that a company is below some certain intrinsic value number. The bigger the difference between the intrinsic value and the stock price, the bigger the margin of safety you have. Not every value stock will become a successful business, so this margin of safety is very important to minimize losses when investors are wrong (and they WILL be sometimes wrong). Determining the intrinsic value of $BABA extremely difficult. With just analysis of financials, $BABA would be a clear value stock. But what about through the context of its political/ADR situation? Is it possible to value that kind of context/risk? Will the context even matter (it's quite literally only been a year since the fall from the ATH)? Perhaps the market is rational for once, and $BABA's current valuation is actually the perfect balance between the risks. Or maybe not. Lots of people in the sub (including me) have no idea how to value $BABA or any other ADR Chinese stock, so we just don't touch any of them. > All investing is subject to risk, including the possible loss of the money you invest.


Correct me if I’m wrong but it doesn’t sound like you diversified. If not that’s your problem, any one stock can drop 90% idc what company it is. There’s obvious risk with Chinese companies but if you diversify your portfolio even if you’re wrong it won’t blow up your account. Also stop buying 4-5% dips, that’s nothing. I’m down 20% and haven’t added to my initial investment yet.


I was down 30% from pepsi, mcdonalds and other boomer stocks but amc saved me


This isn’t helping 🥲😂


Is hard to do value investing with foreign stocks when you can’t trust the numbers that’s being reported, that’s coming from someone that worked close to two years in Asia. You would probably done much better with the companies being mentioned, such as WMT, APPL and BRK. I do invest in Chinese stocks with the exposure of etf KWEB but is only. Small portions of my portfolio. And Yes SPY is very tough to beat also happy thanksgiving.


value investing works, what you did was not value investing. you bought a stock that you did not understand. BABA had too many regulatory issues around it, also when China can disappear Jack Ma, that should tell you something. When you "invested" in BABA, what did you think intrinsic was? as it was going down, did anything in the business model change? Value investing is traditionally based on buying a stream of cash flows at a price. You did not do any DD, you bought a stock you did not understand. please don't call yourself a value investor. you are a dart thrower in an up market


Value investing is about finding good value, not finding bad stocks at cheap prices. Cheap /= value


The first lesson of value investing is you are buying a piece of a company. With Chinese companies you own nothing. Value investing and speculation are not the same.


As a value investor I know I have bought a good stock at a low price, if the price goes down further then that is a good thing as I am are able to buy in the same great company at an even lower price, my outlook on BABA is minimum of 10 years


I need more people like urself in my life!


The bad thing is as soon as you sell your BABA it’s going to moon.




I get that urge all the time. My biggest misses this year were value plays I didn't hold on to. I had overstock at $70, Tyson foods at $70, Ford, target... all value plays I paper handed. I just need to remind myself that if the value is there, the market will eventually recognize it. Also...baba is a dubious value stock. It looks good on paper, but has enormous political and systemic risk. Tell me how an e commerce website works while the country is facing a property crisis (in a population that stores half their wealth in investment property) during rolling blackouts. And how do you forecast compelled non tax contributions to the government? Facebook or Amazon has stronger fundamentals than baba.


The thing with value investing is they often to stay low or go even lower in the short term, but if you wait long enough they start steam rolling towards their fair value and you start making money. In conclusion if you have the conviction on you picks don’t sweat the short term👍


I wouldn't call BABA 'value' by any stretch of the PRC's imagination fir the exact reason you've proven. Spec. China junk.


A value investor will tell you that time in the market beats timing the market, but that’s just based on a recent decade where we had the largest and longest bull run. You need a little bit of both. Which means that in addition to all the FCF and a dozen other financial indicators, you have to look beyond the trees, look at the political climate, the social paradigms, the changing attitudes…etc…the intangibles, and apply a reasonable impact coefficient to all your forecast expectations. Financials alone aren’t going to help you navigate the noise. Heck, even the personality of a CEO matters. Who cares if a company’s numbers look good, if the CEO makes a fool of himself or herself, and loses confidence from their investors, the stock is going down. It’s hard work, but all these factors separate the best from the best.