(Editors note: This article was originally published on Real Money Nov. 12 at 6:45 a.m. EST.)
Alibaba (BABA) went down yesterday because it had run so much into China's Singles'Day holiday. Not because it is a bad company or a bad stock or because CNBC's David Faber revealed CEO Jack Ma as a bit of a big-think guy who is more of a visionary than a stock jock. The stock reversed because it had just gone too far, too fast into a big event that was now behind it. There's no doubles' day ahead, or Christmas, for that matter. The blockbuster/door-buster holiday of China, the wedding/Christmas/Hanukkah/Valentines celebration day, has now come and gone.
That's just a fact. That's just how the stock market works. It didn't matter how well Singles' Day went. After that run there was no way expectations could be topped ENOUGH to satisfy the buyers. So the stock took its worst tumble since coming public because people sold it on the event itself. That's a pattern you recognize if you have traded stocks over any brief amount of time. It happens often when a stock runs into the close for a much-hyped bit of news, whatever that news might be. The "disappointment" led to a cascade of selling that continued right into the close.
I want to stick with the stock of Alibaba. I think the holiday sales will cause estimates to be raised and the company's growth rate to accelerate. I am not perturbed about yesterday's reversal. But I suspect there could be more of a shake-out ahead as more hot money exits the building -- again, a common pattern. My target stays at $120, where it is valued similarly to Facebook (FB) .
Yet, when Alibaba had its intraday reversal, I was immediately reviled on Twitter @JimCramer as a charlatan who didn't know anything about Alibaba. Plus, of course, I was immediately accused of getting my buddies in on it and then having them blow the stocks out to the unsuspecting public on my positive statements about the stock.
First off, I wish I could sue everyone who has ever charged this kind of nonsense. They would lose their shirts and have to pay me court costs if libel law didn't assert a higher standard for public figures. I lead my life genuinely openly, but I have no hedge fund buddies I talk stocks with, and I never talk about the substance of the show with them. The idea that I "conspire" with traders is simply libelous, period. That's even if the law makes it more difficult for people with my visibility to make people pay for it in court.
That said, the standard isn't totally out of whack. If individuals who have charged this stuff on Twitter have had knowing disregard for the truth -- if there has been ACTUAL MALICE -- they would have to pay, and that's certainly the case for most of these clowns. It's often very tempting -- or it would be, if they had two nickels to pay me. Oh, and I've done it before successfully, so don't dismiss the prospect.
Second, who in the heck is stupid enough to buy a stock up $4, citing my positive comments, when I had said I would buy the stock at a moment when it had been barely up? Who would do that? Who would think that, if someone likes a stock at $115 and it goes to $119 intraday, I am still blessing the buy? Maybe someone who put in a market order and thinks that's right?
Third, there are so many people on Twitter who have no sense of personal responsibility that it is appalling, and they all seem to day trade. These particular individuals just aren't worth informing or helping. And I am learning that every day the market hits a new high and we get rookies coming into the game.
That's why, lately, when someone asks me about a stock that's speculative, I am reluctant to give anything other than, "As long as you know it is speculative, you can do what you want." Why bother to tell the person "no" if it turns out the lottery ticket hits? What's the use?
The other day my friend Josh Brown gave a real interesting treatise about why he doesn't engage with the attackers on Twitter, how he lets them go on their merry way.
Oh boy, I wish I could do that. But, if you are me, you must know that every slam or libel not met with a challenge or a denial is one that is viewed as a tacit admission of guilt. I wish I were NOT unique like this. But any charge of pumping and dumping when I don't even own stocks and don't tell people what I am going to say ahead of time are totally scurrilous and must be smacked down instantly, lest they be viewed as facts.
It is a sad state of affairs, but you couldn't let these things go unchallenged IF YOU WERE ME, because they become urban lore very quickly. I can't let that happen. You have to fight for your integrity and can never give in, especially to the morons stupid enough to pay high prices for stocks and then take the loss even though, perhaps, the rational instinct would be to buy more, not to take the loss.
So, yes, Alibaba is a buy when it comes in. No, I didn't tell people to buy up $4. Yes, I think estimates are too low. No, I don't think that you should flip out. But understand, at least, that people do sell on the news all of the time.
And those who lost money buying it high? Maybe you deserved to.