sahtt

Money is money to me. BIDU made me a lot of cash. The conflict occurs the second you forget what you are doing. In this case, if you weren't taking lofty profits you were asking for it. Life is a gamble, you could get hit by a car tomorrow and never touch your 401k $. You take the risk anyways, but because everybody does it you don't think twice. STV made people a lot of cash if they were smart about it. The bottom line is if you play with money you can afford to lose you will always come out OK. Otherwise, stick to more "conservative" plays that are more predictable and have solidified their holds on the market.

Not every company outside of Europe and the U.S. is speculative and you are fool if you aren't getting a peice of the only real growth in the world right now overseas.

chroot

Actually, sahtt, all of my long positions are international at the moment, mostly in metal mining and its complement, dry bulk shipping. Neither got beat up today anywhere near as badly as these high-flying 200+ P/E Chinese gambles. RIO, for example, has performed extremely well over the last three months. Not quite as well as BIDU, of course, but with a greatly reduced risk, as today's price action indicated. It is indisputable that mankind is always going to need iron ore, but there's a very real possibility that the Chinese tech sector is a bubble waiting to burst.

Every day these stocks are in the black is another day you should be counting your blessings, if you ask me. (And I know, no one did! ) If you got in a couple of years ago and are already sitting on a four-bagger, go ahead and accept the risk. If you're trying to figure out where to invest your cash, though, I personally don't think BIDU is a reasonable play at all.

I'm certainly not telling anyone else where to play their dollars, but I think it's pretty silly to claim that these Chinese tech gambles are the only way to make decent profits.

- Warren

sahtt

People have been telling me how risky, over bought, and unstable Chinese stocks have been for about a year now. Going off emotions or intuition is pointless. If you want to show some data as to what has changed, that will mean something. At 100 FXI was too high, at 225 BIDU was over bought, etc. etc. etc...

China is still growing fast and steadily. The only "real" identifiable issue is China's government dealing with the CPI numbers of over 6%. It's not sustainable and sooner or later they will deal with it. That and all those other details that semi developing countries face.

I've made all my losses up from yesterday two fold today. It doesn't really matter because I've already taken my personal money out of the equation a long time ago.

Some tech companies have reached a certain state that their stock is overvalued simply because it's ran up more than the growth of the underlying asset. However, Chinese stocks in general will follow an upward trend as long as the government maintains the control/plans it has today and GDP continues as a whole to expand rapidly. I've gone over this enough times, probably not going to in a while.

chroot

Who said I was making judgements based on emotion?

It's a fact that BIDU has a P/E at or above 200. That means if you bought BIDU outright and became its sole proprietor, it'd take the company 200 years to make you a profit. To me, that turns it into a poker game -- it's you versus the other speculators, with very little correlation to the company's actual ability to make profit.

If you got in in 2006 when the P/E was around 50, you picked a winner and you're sitting on a pile of cash now. Congrats! I would have agreed with you on the purchase back then. And now that you've recovered your cost basis and are playing the poker game with the market's money, I'd also agree that you should keep playing.

However, if you're a new investor, I think BIDU is a bad play simply because it's too volatile. It'll be one of the first stocks to tank on any given bad day, and if we enter a bear market, it'll sustain the largest losses of virtually any company I can name.

I agree with you that China is the most promising economy in the world right now, with virtually nowhere to go but up. I would completely support anyone's decision to pick up shares of, for example, the S&P China ETF (GXC). Most of my investments directly benefit from the Chinese economy as well. I just don't think anyone should be moving cash into a single ultra-high-profile Chinese website like BIDU right now.

My risk tolerance is different from yours of course, and if you still suggest new investors dig into BIDU, so be it. I just can't say I share the sentiment.

- Warren

SD_S2K

crash? what crash? only you stock traders and market-timers should be worried...

cthree

BIDU has 80% earnings growth you aren't factoring in.

chroot

I'm aware it has impressive earnings growth -- actually greater than 100% y-o-y. But that's "easy" for small companies, and it will become harder and harder to sustain as it other, much larger companies swoop in. In fact, I think the only reason it hasn't been bought out is because of its ridiculously inflated market cap.

I have no doubt that BIDU will continue to make tremendous gains as long as the market is so bullish. In that sense, if you play it well, there's probably still a lot of cash left to be made. I just believe it's one of those securities you'll need to watch like a hawk, because I think the market could turn sour on it very suddenly.

I've heard investors say things like "P/E is an outdated concept," but I (personally) strongly believe in the significance of P/E and PEG and other earnings-based metrics. YMMV.

- Warren

cthree

I dunno, Oracle did it for 7 years, 100% earnings growth, and BIDU isn't exactly in a saturated market. The point is that so long a it does have that sort of growth, be it a year or a decade, it will have that sort of stock appreciation to maintain the multiple it has. You have to buy something like BIDU with a specific exit strategy. It's not the sort of thing you should put in a portfolio and forget about. It's too risky to leave unattended but that's why you get the big bucks for tending it.

chroot

So you're suggesting that BIDU might be the next ORCL? That's quite an assertion...

And ORCL sure didn't hang onto its sky-high P/E for too long, either.

- Warren

cthree

It doesn't mean people didn't make a truckload of cash in it while it did.