Trade Alert: Buying when it’s down
The headline on Baidu’s breakdown today:
Baidu [BIDU 111.84
-10.96 (-8.93%)
] fell after Deutsche Bank downgraded the Chinese search giant, saying it was expected to lose traffic share to Qihoo 360 Technology [QIHU 23.49
-1.09 (-4.43%)
].
Nothing new here for long-term investors, as we are betting on the Baidu platforms in web and mobile to enable huge growth for the company for the next few years. This would be like selling Google when Quora came out, which a lot of people did and I think I even remember a few GOOG downgrades off the “threat of Quora”. Building a search engine that’s good enough to compete with a company whose Chinese search solutions are so good that it has garnered 79% of the search market is easier said than done. How’s that Bing doing again?
Anyway, I’m stepping in and taking advantage of the fact that BIDU is back below my cost basis and I’m adding to the position, buying about 1/2 as much as I already own, trying to build this position up now while it’s down not later when it’s (hopefully) higher. I’ll buy more if it gets closer to $100, and I’d probably buy pretty aggressively if we get there.
