When Alibaba (BABA) went public on September 19th, it marked an important top. Large October sell-off started the following day.  On that day I commented on how ridiculously overpriced and over hyped Alibaba was. Alibaba Stupidity. I continue to maintain this view today.

And while Alibaba (BABA) is down 25% since its top in mid November, I believe the party to the downside is just getting started. If you haven’t noticed, Alibaba is trying incredibly hard to spend its IPO money as fast as they can. What are they doing with this money? Investing in other highly speculative and overpriced Internet business. Case and point…

• Alibaba ploughs $200 million into Snapchat in latest startup deal: source

• Zulily shares soar as Alibaba buys stake in online retailer

Alibaba is clearly suffering from a severe case of “More money than brains”. Typically, when bear markets kick in (something that is about to happen), such overextended and overvalued companies, particularly the high tech IPOs, tend to collapse 60-90%. In other words, if you have patience, Alibaba (BABA) is one juicy short here.

Alibaba (BABA): More Money Than Brains? Google