Weekly Market Assessment
Surrounded by historical records! On Friday The DOW and S&P 500 hit new all-time highs on the heels of a record IPO. Alibaba raised more than $20 billion, making the Chinese internet company's IPO the biggest in U.S. history! All these records are of course followed by the comments, "Is this 2000 all over again?" Is this another dot.com bubble approaching? The most simple explanation is - No! Why? Alibaba is an extremely profitable company with billions in revenue and billions in cash flow. This is in comparison to the early 2000 where companies like PETS.com and eToys.com were valued on the amount of "eyeballs" that where on the company. A dot.com company could raise hundreds of millions if not billions in an IPO without being profitable! We have seen companies this past year raise concerns as to its valuations metrics, however, Alibaba is by no means a PETS.com.
New records after new records seems to be the common phrase as of lately and like mentioned it raises concerns. How long is this going to last? Artificial stimulus will burn us in the long run and the most popular, the Federal Reserve is fueling the equity market into the biggest bubble that has to burst! Well, all this has influenced investors to miss out on a 10% gain this year. Yields remain low and with the recent comments from Janet Yellen, they will remain low for a "considerable amount of time" after the bond buying program ends! You have heard this a hundred times, however the constant fear mongering has withheld some investors from a more than 40% gain in almost 2 years! No one can time the top or the bottom in the market, the best approach is to try and understand what is driving the market! The old proverb goes - those who cannot remember the past are condemned to repeat it! The million dollar question everyone wants to know is, of course, when are we going to repeat it?
The Rant: Going Off on a Tangent with my 2 cents
This was a good week!
Making the Watchlist: Below are the stocks that I will be looking at over the coming months. I will provide the the current stock price and why I am watching them. I will comment on them as I continue to keep an eye on them. You will be able to see and follow their growth and/or decline. Chart links may be attached.
Alibaba (BABA) $93.89- This eCommerce giant finally IPO'ed in the U.S. on Friday! 85% of online sales in China come from Alibaba, where only 46% of the population in China is online compared to the U.S. where north of 85% are online! BABA brings in $248 billion in gross merchandised volume compared to Amazon's $116 billion and eBay's $88 billion. BABA also kills it on the margin side in comparison as well. There is a tremendous amount of growth when BABA decides to scale their business and more people become aware of all the tools this company has to offer small business around the world.
From the Trading Floor to the Option Pit: A quick look at whats on the trading desk:
S&P 500 (SPX) -no trades
FireEye (FEYE)- Sold out of my FEYE common position entered weeks ago for a 22.70% gain. This was done to free up cash to purchase shares in Alibaba. I have again opened a new position in FEYE at $33.75.
Alibaba (BABA)- was able to buy shares throughout the day and have a cost basis of $93.50. This is a giant in the eCommerce world.