Magical Alibaba Stock Hysteria Makes It Worth More Than It Is Really Worth

Alibaba valued at $231.44 billion after debut day: thanks to ZIRP lending by the Federal Reserve and EU banks, we have lunacy in stock markets again.  There are only a billion Chinese and I seriously doubt each will spend $200 at Alibaba.  That is, we can see the true value of something in sales this way and it is impossible for this ridiculously overbid stock to ever keep its promise of future trading value.

 

 

World’s Richest Rise $7 Billion as Alibaba Surges on IPO – Bloomberg: the bank bail out certainly is helping the richest people especially speculators.  Meanwhile, debts on the poor rise and rise especially college debts which is destroying the present generation of students.  The trillion+ student debt has made colleges flush with easy money but it is a huge black hole of debt that will haunt the younger generations for their entire lives  making them much poorer overall than previous educated generations.

 

How an online sales site nearly identical to all the others, make money in this debt raddled world baffles me.  From the Bloomberg article:

 

“He is the most charismatic CEO of a major tech company on the globe right now,” David Kirkpatrick, chief executive officer of Techonomy Media, said in a phone interview from his New York office. “He has a uniquely public persona that has benefited Alibaba tremendously.”

 

Aw, a flim-flam carney man!  No, that isn’t what is going on.  Speculators see that Alibaba is ‘growing’ so they want to jump aboard this gravy train only now it is greatly overloaded and will derail.  But they never learn from the past.  It is all about herd instincts.

 


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19 Comments

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19 responses to “Magical Alibaba Stock Hysteria Makes It Worth More Than It Is Really Worth

  1. Mewswithaview

    That’s not the only bubble the free money is feeding, take a look at the financing behind the fracking operations and the rapid depletion curves. There is a lot of money fleeing the Eurozone and Russia and being parked in the United States and what are the pension funds doing for yield? I wonder how much longer do we have to wait for the yen to implode as the Japanese central bank is practically giving the stuff away.

  2. ziff

    The ratio of ‘ money’ for investment vs trade is said [by armstrong] to be 100:1 . in the 80’s it was 50:1

  3. Before the stock even hit the 9:30 opening the insiders the ones that own the chairs bought the stock at 60 dollars. Then with the media hype the sheep came in and bought it at 100 dollars. What a racket.

  4. melponeme_k

    It is all such a scam, it’s sickening.

    The people they are trying to catch with their dud stock are the little people like you and me.

    They need the stock to go main street so they can dump the shares they already have now.

  5. CK

    If you think a stock is grotesquely overpriced on the market, call your broker and instruct him to short the stock. Sell now at the inflated price, buy back later when it has fallen to the price you think it should be.
    Conversely if you think a stock is underpriced versus its value, instruct your broker to buy that stock and hold it until it appreciates to the price you think it should carry. AliBaba has made it possible for anyone anywhere in the world with internet access to buy from any Chinese manufacturer using Alibaba. That is 6 billion potential customers.
    If you wish you can always buy into Yahoo. Yahoo holds and had held for years a large position in Alibaba. It’s an indirect way to participate
    in the brouhaha
    http://www.businessinsider.com/yahoo-stock-crashes-as-alibaba-ipos-2014-9
    Since my broker was not part of the IPO packagers, I could not get in on the $66/share that the packagers were selling the stock for.
    So if you think it is overpriced or if you think it still has legs there are ways to participate, moaning that it’s a scam/sickening, that it’s a racket; will not get you a seat at the table or much leverage with the players.
    Alibaba is not Facebook or Twitter. It offers real goods and real services between productive people worldwide.
    The future is looking more and more BRICS to my jaundiced eyes.

  6. melponeme_k

    CK

    Investing has nothing to do with betting on the latest IPO. In the past it was only about giving money to companies who would grow and offer a return on their growth, mainly companies that manufactured product.

    WTF does Alibaba manufacture? NOTHING. It is vapor. It is nothing but hype to pull in suckers.

  7. shawntoh

    Elaine, I don’t know about this sick sense of humor by these people.

    I mean, really, it probably be more truth in advertising to proclaim this financial flight of fantasy fairy tale of theirs that will play out and end as a real life long-term tragedy and disaster as, “Alibaba and the (X) Thieves”. “X” being the unknown number of flim-flam involved in the equation/looting operation.

    What’s this? “….uniquely public persona”, eh? Sounds like finishing touches to the title of the Chief Thief.

  8. larry, dfh

    The defense secrets are given to the Isrelis who sell them to the Chinese.

  9. CK

    somewhat akin to Amazon which manufactures nothing, Kmart which manufactures nothing or any other service company?
    Investing in new companies instead of existing companies is still investing.
    Being able to buy into a company when it begins is sometimes much more rewarding than buying into a company after it has existed for a while.
    I wish I could have purchased Microsoft in 75 or in 86 at its IPO.
    But then Microsoft and Oracle and Apple and Sun were all just hype too — weren’t they?

  10. emsnews

    Apple MANUFACTURES stuff and guess what? This is where they made their money, product DEVELOPMENT!

    Programming and process stuff is also stuff. Kmart and Walmart are selling stuff which is the opposite of Microsoft and Apple.

    And the selling behemoths all rot on the vine over time. Customers run off to the latest sales platforms over time. Whereas car makers or computer product makers sell things that can go up or down.

  11. CK

    Yup EMS is correct. There once was an S.S. Kreske store on every main street of every small town, there were once Sears Roebuck and Montgomery Wards catalogs in every outhouse. Now we have Alibaba and Amazon and Ebay. A couple of decades hence we will face some other formsof distribution and manufacturing. I am intrigued by the potential for 3 d printing to obsolete much of current economic behavior,
    and governance of human activities. But whatever they are; the future will be different than we imagine now and whinging about how something new is not exactly the same as what you were comfortable with yesterday is not profitable.
    As for your claim that Microsoft does not sell stuff … I think you need to rethink that. Apple manufactures stuff in China home of Alibaba.

  12. Luke

    CK, ‘ I am intrigued by the potential for 3 d printing to obsolete much of current economic behavior,’………………….tell me more.

    what will the machine use to make things? soft plastic?

  13. CK

    Luke:
    Currently there are, under $1000 machines, that use plastics of various compositions, and there are much costlier 3-d printers that can print powdered metal. 3-D printers for less than the price of a moderately competent gaming computer. Free software already available to control the printers, to design the items, even to organize the thought process of the designer. What’s not to love?
    Then there is this http://hackaday.com/2014/09/01/update-3d-printed-concrete-castle-completed/ 3-d printed concrete. The castle took a while to print but what a first attempt it is.
    There is a rule of business that goes something like this:
    Nothing can be done, until it is done the first time, after that it is just a matter of optimizing the process. A year ago the idea of 3-d printed concrete construction would have been fantasy; now it is just a matter of refining the process.
    And Alibaba will deliver to you and help you arrange the financing on a elegant Chinese 3-d printer rather soon.
    It is obvious that labour as we imagine it is a dying thing. Imagine that I have need of a wrench, I can print it, use it, and recycle it instead of storing it. Make it again if I need it again. I can, with time and a wrench and screwdriver make another 3-d printer if I need another one. I am my neighbours can buy a larger 3-d printer and print out our own design auto bodies, or refrigerators or whatever we have the combined competence to do. Weapons of course if needed can be fabbed, quietly privately.
    It is a truism that if you have a lathe you can build any other machine tool you want including another lathe. 3-D printers are the new lathes.

    As an aside, Hackaday.com is a fantastic repository of what can be done to repurpose stuff as well as a site showing the new stuff that will invade our tomorrows whether we wish it or not.

  14. Luke

    Thanks. I recall 10-20 years ago in Newsweek [I think] reading about one guy in Vermont? who redesigned the ‘tool and die’. Up till 1995 it had been the size of a room and this guy created a lathe or something that did the same but was the size of a refrigerator.

  15. emsnews

    The energy used to make tools this way is considerable.

    Making stuff and then throwing it around is a hoarder’s view of the world and is quite destructive. Look at how plastic is ruining everything.

  16. CK

    EMS
    You have been pushing for Photovoltaic energy on rooftops for years, the Chinese have made that a doable thing today. Once you have the available energy it is actually not a significant consideration.
    Hoarders don’t recycle they buy and keep and then buy more.
    Buying or making as needed is an optimizers world view. If anything, making what you need only when you need it is about as non-destructive a way to live as there is.
    Government ruins everything, plastics don’t.

  17. DeVaul

    CK,

    I agree with you on that, but what if solar panels are not available in the country where you live and will not be in the future?

    Is is not better to buy a few now and save them for future use? I doubt the Chinese will sell them to poor Americans who have no money.

  18. CK

    Money is not the only way the Chinese assess values to things. If the dollar goes to shit, that does not mean that America has gone to shit, only that some paper promises are no longer valuable. Other things will always have tradable value, knowledge, land, goods, booze, hemp, the list is long of things that folks will accept in trade when they won’t accept paper.
    They are traders.
    I agree with buying solar panels now and installing them and buying more as your budget allows. Like computing power, solar panels are a deflationary product. They will be cheaper next cycle.

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