Abstract: Share the reasons for buying the Hong Kong stock Alibaba (9988) and selling the US stock Berkshire Hathaway Inc (BRK.B).
Transaction detail
What I want to share with you today is that I bought and sold a stock, respectively on July 8, 2021.
Buy
- Alibaba Group Holding Ltd (HK stock code: 9988)
- Quantity: 100 shares
- Bought in price: HK$197.1
Source: aastocks.com
Sell
- Berkshire Hathaway Inc (US stock ticker: BRK.B)
- Quantity: 10 shares
- Sold out price: US$275.5
Source: seekingalpha.com
Chinese stocks fell together
Recently, Didi went public in the United States (for detailed information about Didi’s listing, please refer to our previous article). A few days after the mainland China government required the Didi App to be delisted and reviewed due to cybersecurity-related regulations, investors were worried that the government will conduct further investigations into other Chinese-funded listed companies, resulting in the decline of all the related stocks listed in both Hong Kong and US stocks.
Alibaba’s 52-week new low
Given that the Hong Kong stock Alibaba has fallen to a new low in a year, I decided to take advantage of the low price, everyone is now frightened about Chinese stocks. I think it is the time when people are abandoning them. Of course, I do not expect that Alibaba will stop falling, but I think it will rise up again when the market sentiment returns to normal. Anyway, I think Alibaba’s business development will probably be better than today after a certain period of time, say 5 years later, and I am confident that the company’s development growth should be quite rapid. As I find that people around me are shopping on Taobao almost every day, and it has even become a habit of many people. In addition, there are also people around me who are using Alibaba Cloud services, and I feel that they are relatively professional. Overall, I am quite confident in this company so I decided to bet a bit more on Alibaba.
Why not buy U.S. stock BABA?
In fact, buying U.S. stocks BABA instead of HK stock 9988 is advantageous in a sense. Because you can buy at least one share at a time, that means higher flexibility. Moreover, the turnover of U.S. stock BABA is much larger than that of Hong Kong stock 9988. What’s more, the transaction commission fee of BABA is much lower than that of 9988 in Hong Kong. Right now, one share of U.S. stock BABA is equal to eight shares of Hong Kong stock 9988, and I see that BABA stock prices seem to be constantly higher than 9988. But there is only one reason why I still buy Hong Kong stock 9988, that is, I am afraid that Alibaba will be forced to delist from the US one day. Although even if this really happens one can always transfer the US stocks to Hong Kong stocks, I am still afraid of the troublesome, so I just decided to buy 9988 in Hong Kong.
Why do I exchange stocks
On the other hand, the U.S. stock market has been hovering at a high level recently. In order to control the stakes and reduce the risk, I decided to reduce the holding of BRK.B in exchange to increase the holding of Alibaba. I first clarify that it is not that I am not optimistic about BRK.B. I just think that if you look at it for a longer period, the growth of BRK.B stock at current price will be relatively lower than that of Alibaba at the 52-week low now. Let me look back at this article a few years later to see if the decision I made at this time was right or wrong. But in fact I may not take it too seriously as I only bought one lot of Alibaba this time, and it really does not matter if I am right or wrong, but sometimes it is quite interesting to bet on what you believe.
The logic of stock exchange or sale
I currently have a strategy of selling stocks, that is, when should I sell stocks?
My answer is
- When there is an urgent need to use the money, then you will have no choice but sell your stocks for cash. But the most unfortunate thing is that when cashing out is urgently needed while in bad market sentiment, then you will most definitely suffer a loss. In order to avoid this situation, it is best to plan your financial situation as soon as possible. For example, prepare emergency cash. I think the emergency cash should be enough for you or your family for six months to one year. Of course, it depends on the stability of your income. But I think it is very important to remember that you can hardly earn money in a hurry. For example, if you expect to buy a property or get married in two years, it is best not to use the money to buy stocks, even if you buy an index fund ETF, I think it is still not safe enough; otherwise, it is possible to encounter a sudden bear market or any black swan events at any time. Therefore, it is best to invest in stocks with the money that is not expected to be used in 5 years.
- If the reason you bought the stock at the beginning is no longer valid, you should sell it decisively. For example, I bought Tesla because I am optimistic about the company’s leading position in electric vehicles and autonomous driving technology. If this company changes to mainly speculate in Bitcoin, I will liquidate it as soon as possible.
- If you think there are other better investments, I think it is reasonable to sell your stock to replace with another better investment. This is exactly the case for me this time. Of course, everyone has different thoughts, opinions, experiences, and views on different industries, so which stock is better varies from person to person.
Comments and sharing
I am going to finish it here. If you have any questions, please feel free to leave a message or comment below, I will reply you. Or if you find anything incorrect in the article, please let me know and learn from you. If you find it interesting or it may help you in any sense, please share with other people.
