TASR and BIDU

TASR reported good earnings today but fluctuated roughly with the market. It started with an upward movement, then during the middle of the conference it started to drop with the market, eventually it recovered most of the loss, what a day.

The market is volatile as well. Dropped by a lot due to bad earnings reports from AMZN and MER. All financial stocks dropped by a lot, many made yearly new lows. In the meantime I'll avoid any financial stocks for now, as I'm holding closed-end funds and mutual funds that hold financial stocks already.

I started a position in BIDU at $337. BIDU is going to report earnings tomorrow, good or bad, I'm keeping BIDU if it drops. Yes, I already anticipated even if it drops, I'll hold onto it. If I have more reserve later and if it drops after earnings report, I may add more to the position. But I think the probability of up or down from here is like 50/50 to me, so I think it's okay to use some money to start a small position. After all, if I give BIDU a few years and if it can continue to lead in market share in China, I don't see a reason why it cannot grow to as big as half of a Google (which will mean $100 billion, 10 times from now) in let's say 5 years. So yes, I'm anticipating to invest in BIDU for long term.

If anyone reads one of the Chinese newspaper here you'll see someone shows a paper portfolio once every Sunday. Currently in that portfolio the columnist is shorted BIDU since $180. I don't know when did he short in his paper portfolio, but holding the short position of BIDU all the way to as high as $359 is kind of silly. Assuming shorting 100 shares it is now sitting at a loss of $15,600, or percentage-wise, a loss of 87%. I don't know how professional this columnist is, but no way a trader would like to keep a losing position for so long to see a 87% loss.

Going back to my long term idea. China definitely is a hot spot, it may encounter stock and real estate bubble and the burst. But if the market is that big it is that big. For example, for longer term hold I'll pick LFC rather than CHL, as CHL is already sitting at a market cap of close to $400 billion, how fast can it go from here? On the other hand, LFC is still below $100 billion, and it is the biggest insurance company in China. With the assistance of the government (as no government would like to see insurance companies collapse), LFC can have a long way to go from here. A triple to worth $300 billion in 7 years will not surprise me.

So I think the strategy to China should be, hold a few bigger names (but still not very big) and bet a smaller amount on upcoming mid-cap as "satellite" portfolio. Let me think of some names first.