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Technology Stocks : Alibaba Group Holding Limited

BABA 170.43

-2.0%

Oct 31 9:30 AM EDT

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To: galaxy8 who wrote (791)	1/11/2022 10:41:30 PM
From: Sun Tzu	1 Recommendation Recommended By kidl Read Replies (1) of 882

When you buy BABA on the exchange, you are buying something that has no vote in the real Alibaba enterprise, has no share of the profits, and receives no divideds. Nor is it promised anything of value. So what exactly are you buying? You are buying two things: (1) a hope that some day China removes the limits on foreign investment and ownership. And that on that day, which may be decades into the future, the Alibaba controlling shareholders will actually give up their control and convert their shares into VIE shares in an equitable manner. (2) You are buying a the right to sell that fantasy to someone else who equally believes in it, aka the greater fool theory. But you are not buying anything of intrinsic value. The Chinese "stocks" are tradeble per #2, but they are not invest-able. And this is true only so long as SEC allows them to trade in the US, which likely will end in 2025.This is true not just for BABA, but for all Chinese VIE stocks. I am eager to hear a contrary perspective.

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