BIDU is a Chinese search engine that has captured over 70% of the Chinese search market. It also has some operations in Japan. If you look at its PE, which currently stands around 70, you might think it is too high. However, if PE were an accurate indictor of anything in the stock market, everyone would be rich. So let’s leave it to the economists. Is BIDU too high to get in now? I do not know about you. But I am a short term speculator who has no problem riding bubbles and follows the trend. The first thing I know is that I will not short it just because it has a very high PE (aka garbage indictor). The trend says it might move up as we can see that it has been in a very clearly defined up trend in the mid term and has been consolidating in the past few weeks. On last Friday (9/6), the stock moved up with some decent volume. It is a good sign. Here is what I think
If you already have a profitable long position, hold onto it for a while. There is nothing to worry for now.
If you want to establish a long position from here, that is fine but you need to be nimble to get in and out using clearly definef risk reward ratio. After all, BIDU has moved a lot in the past few months. Once a strong stock reverses its direction, the subsequent crash seems substantial. This is because there are a lot of profitable people who want to close their positions.
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