Many investors are looking at the steep skid Alibaba Group Holding Ltd. (NYSE: BABA) has taken since its IPO as a major cause for concern.
But for us, this is only an opportunity.
Because Alibaba stock represents an opportunity to create the kind of wealth that you'll be able to pass along to future generations.
That makes the Chinese e-commerce giant what I call a "Piggybank Investment." Essentially, whenever you fill up your piggybank (or a jar you store on the closet shelf) you scoop up the change and put it into Alibaba.
Today, I'll show you how "Piggybank Investing" works.
It takes just a few pennies at a time…
"Gloom" Is Opportunity
To fully explain "Piggybank Investments," it would help to take a closer look at Alibaba's closest American counterpart.
So let's go back 17 years, to the day, and see where shares of Amazon.com Inc. (Nasdaq: AMZN) were trading.
Amazon went public on May 15, 1997, at $18 a share. But thanks to three stock splits that took place in the late 1990s, the adjusted Amazon IPO price works out to $1.50 a share.
On April 9, 1998, Amazon closed at $7.94.
Fast-forward 17 years. Today, Amazon opened at $384.31. That's a 4,740.2% increase in 17 years.
For purposes of comparison, Amazon is a terrific "peer" company for Alibaba.
And you can see the profit potential when a well-chosen and well-timed investment such as Amazon – or Alibaba – is held for the long run.
Amazon and Alibaba are examples of firms so revolutionary that they change the way business in their sector is conducted.
They even change consumer behavior.
True transformational companies are a rarity – which is why the payoff is so huge.
Amazon – along with eBay Inc. (Nasdaq: EBAY) and other retailers jumping online along with them – changed the way America shops. First off, they practically invented e-commerce – and changed the landscape of our malls and strip centers.
And now Amazon has become much more than a retailer. Instead of competing against Borders, Caldor and Pets.com, it's going up against Apple Inc. (Nasdaq: AAPL) and Google Inc. (Nasdaq: GOOG, GOOGL). It's doing so by buying up every part of the value chain – and then creating a tech "ecosystem" that you never have to leave.
By emerging when it did, Amazon displayed impeccable timing.
Amazon achieved its own "critical mass" just as the Internet did in the United States.
About the Author
Michael A. Robinson is a 35-year Silicon Valley veteran and one of the top technology financial analysts working today. He regularly delivers winning trade recommendations to the Members of his monthly tech investing newsletter, Nova-X Report, and small-cap tech service, Radical Technology Profits. In the past two years alone, his subscribers have seen over 100 double- and triple-digit gains from his recommendations.
As a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs and high-profile industry insiders. In fact, he was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon. And he was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
In addition to being a regular guest and panelist on CNBC and Fox Business Network, Michael is also a Pulitzer Prize-nominated writer and reporter. His first book, "Overdrawn: The Bailout of American Savings" warned people about the coming financial collapse - years before "bailout" became a household word.
You can follow Michael's tech insight and product updates for free with his Strategic Tech Investor newsletter.