The Dog of the Chinese ADRs (1) — GSOL

I have had this idea on my mind for a while, but only implemented this month.

The idea is to buy last month’s worst performing Chinese stock (ADR) at the beginning of the month and hold it for one money. At the end of the month, sell the stock and buy again the worst performer of the previous month.

This sounds like the “Dogs of the Dow” theory, except that there’s no dividend yield involved (most of Chinese ADRs don’t pay dividend anyway) and I only plan to hold the stock, and only one stock, for one month instead of one year. My selection is based on the monthly Chinese ADRs performance that I have been updating in the past two months.

There’s no theory behind this idea and there’s no guarantee of profit either. Therefore, I only want to use a small amount of money to play with it. And since at least one sell order and one buy order will be executed every month, the cost of the trades is critical. For this reason, I decided to use my Zecco account to play “The Dog of the Chinese ADRs.” I have about $228 cash in my Zecco account, from left-overs from previous stock purchases, dividend distributions, and bonus money from referring others to Zecco. I want to see how much I will have at the end of 2008.

On February 1st, I bought my first dog, Global Sources (GSOL), at $14.26 apiece. The stock was down more than 53% in January, making it the worst performer among Chinese ADRs last month. The $228 was enough for me to get 16 shares of GSOL. As of today, however, the stock is traded around $13.00. Not a good start of my experiment :(

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5 Responses to “The Dog of the Chinese ADRs (1) — GSOL”

  1. aa |  Feb 08, 2008 at 3:00 pm

    You should tweak the game plan a bit to “blue-chip Chinese stock with worst performance” – start with the biggest stocks (blue chips)/best stocks in 2007…

    BTW, this dog theory will only kill you when the market is down, LOL!

  2. Sun |  Feb 08, 2008 at 10:55 pm

    Well, since I only plan to hold the stock for a month, I don’t really care any long term market trend. In fact, I am trying to take advantage of short term fluctuation.

    Anyway, losing $228 won’t kill me :)

  3. Blaze Fabry |  Nov 15, 2008 at 8:34 am

    I really like your effort to make some money off Chinese ADRs. As a China stock analyst over the last five years, I give you credit being so bold.

    On the same time I think you need more than just buying the most oversold China stock to make a profit.

    BTW, there are Chinese companies paying out hefty dividends!!! Yanzhou Coal (YZC) or Guangshen Rail (GSH) just to name a few.

    Anyway, if you’re serious about picking the right Chinese ADRs for your portfolios – long or short term – give me a call and I’ll be more than happy to help you.

    Wish you successful investing,

    Blaze

  4. Blaze Fabry |  Nov 15, 2008 at 8:35 am

    I really like your effort to make some money off Chinese ADRs. As a China stock analyst over the last five years, I give you credit being so bold.

    On the same time I think you need more than just buying the most oversold China stock to make a profit.

    BTW, there are Chinese companies paying out hefty dividends!!! Yanzhou Coal (YZC) or Guangshen Rail (GSH) just to name a few.

    Anyway, if you’re serious about picking the right Chinese ADRs for your portfolios – long or short term – give me a call and I’ll be more than happy to help you.

    http://www.chinavestor.com tel: 203-463-9416

    Wish you successful investing,

    Blaze