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The Amazing Story of Singles Day
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The Amazing Story of Singles Day
I think I just heard a major news story go swooshing by without attracting much attention, and I want to try to catch up to it. The news was that Alibaba-the Chinese e-commerce site that everyone who follows the stock market (and even most who don't) heard of during its record-setting IPO in September-had done a record $9.3 billion of business on November 11.
To put that one-day number, $9.3 billion, into perspective, it's greater than the market caps of U.S. Steel ($5.1 billion) and Sears ($3.9 billion) combined.
I have Alibaba (BABA) in the portfolio of Cabot China & Emerging Markets Report and I've recommended to my subscribers that they buy it. But that's not what I want to write about today.
Rather, I want to write about what November 11 has come to mean in China, which has neither a Black Friday nor a Cyber Monday. It's a unique, relatively new shopping tradition that puts U.S. competitors like Amazon and eBay in the shade. It's called Singles Day.
November 11 is always the date for Singles Day (the Chinese name, Guanggun Jie, means "bare sticks holiday," a reference to the four ones of the date, which the Chinese also see as an image of branches with no fruit, or single people with no children).
It used to be that Singles Day was thought of as a day for single men to buy electronic gadgets for themselves, presumably because they lacked a romantic partner to buy something for them. But the concept has morphed a bit to resemble Valentine's Day, a day when Chinese single people, mostly young, hold parties and other events to meet new friends, often with the hope that a romance might ensue. It's also become a day for dedicated shopping.
The significance of Singles Day for retailers is in the numbers. On November 11, 2012, Taobao, Alibaba's online marketplace, sold about $3 billion of goods. The 2013 Singles Day produced $5.57 billion in sales for Alibaba, more than twice the total for all American retailers on Cyber Monday. And this year, that number swelled to $9.3 billion.
Alibaba has been as important to the growing scale of Singles Day as Hallmark was to Valentine's Day cards. Retailers now build entire campaigns of ads and promotions combined with special prices to encourage buying. It's become an occasion that everyone talks about and an increasing number of Chinese participate in.
There are plenty of differences between Chinese consumers and shoppers in the West. It might, for instance, be difficult to explain the origins of Black Friday to someone outside the U.S. (The best explanation I've seen for the origins of Black Friday cites the eagerness of retailers to jump-start the Christmas shopping season and the eagerness of many U.S. women to escape a house full of men watching football on television. The door-buster specials and other sales enticements were just the accelerant in the shopping inferno.)
Whatever the reasons, shoppers worldwide are united by their love of buying stuff. And modern, stable economies are largely built on a foundation of people within a country buying and selling goods and services among themselves.
That means that the success of Singles Day is good news on all fronts. It's good news for China, because it signals a shift toward domestic consumption and away from exports as a cornerstone of their economy. It's good news for Alibaba because the company has a dominant position in Chinese e-commerce. And it's good news for me and my subscribers because we're now well-positioned to benefit from Alibaba's success.
There are no guarantees, of course, but getting good odds on a Wall Street bet is always exciting.
If you would like to receive additional updates on BABA an additional strong emerging markets stocks consider taking a risk-free trial subscription to Cabot China & Emerging Markets Report. Currently we hold 6 double-digit winners and have many potential market leaders on our watch list.
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In this week's Stock Market Video, I talk about the remarkable turn the market has taken, pushing major indexes to new highs. I look at several kinds of stocks that look good-liquid leaders, tractors and stocks that are breaking out after long basing periods. I also look at a class of stocks whose success I don't really understand. Click below to view the stocks on my watch list. Click below to watch the video.
The original language, barely readable by most people today was:
"'Nay than,' quod he, 'I shrewe us bothe two, And first I shrewe my-self, bothe blood and bones, If thou bigyle me ofter than ones."
Tim's Comment: I like to say that the stock market always does what it can to fool the majority. If you're really smart, you'll learn from your predecessors (and Cabot) and never be fooled in a big way. More commonly, you'll learn some hard lessons by making some big mistakes yourself and thus learn the hard way. And if you make the same mistakes again and again, well, shame on you.
Paul's Comment: This saying has been translated from Chaucer's Middle English and tidied up some, but the thought is still the same. In Chaucer's tale, Chanticleer the rooster escapes a fox that has him by the neck by encouraging the fox to brag about his feat. When the fox opens his mouth to speak, the rooster flies up into a tree. And it's when the fox tries to coax him back down by promising to keep him safe that the rooster retorts with the proverb. As for the meaning for investors, it's that the market will always try to fool you, so a level head and a list of tried-and-true rules are your best defense. Don't let the market get its teeth around your neck.
In case you didn't get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, there are links below to each issue.
Tim Lutts, head of Cabot Stock of the Month, relates how a government program designed to protect pension funds wound up with financial professionals replacing doctors as the top earners in the U.S. Stock discussed: Praxair (PX).
Cabot Dividend Investor's Chief Analyst Chloe Lutts Jensen runs down how a strong jobs report on November 7 was bad news for income investors (good news that more people were employed; bad news that wages remain stagnant). Stock discussed: Xcel Energy (XEL).
Nancy Zambell, Editor of Dividend Digest and Investment Digest, looks at the ins and outs of insider buying and selling, especially selling, which may or may not be useful information for equity investors.
Chief Analyst, Cabot China & Emerging Markets Report
And Editor of Cabot Wealth Advisory