People often ask me why I steer clear of Chinese stocks except in very tightly defined short-term trading environments. Today is all the answer we need.

Alibaba (BABA) is now on the SEC list of Chinese companies that may be banished from Wall Street if they don’t comply with U.S. auditor standards. That’s a big deal. BABA is a $240 billion company.

But two years ago, it was an $800 billion company, so you see the amount of pain here. There’s a lot of politics and diplomacy going on behind the scenes . . . but if BABA can suddenly leave U.S. shareholders in the lurch, every smaller Chinese company requires additional due diligence and extreme conviction.

Think about what happened with Russian stocks early this year. Shareholders went to effectively zero on names that they can’t sell. The market value of a company that doesn’t trade or pay any form of dividends is zero.

China has a vibrant economy, but let the air clear before diving on these names.