The recent wave of selling has taken a bite out of the major indexes, and has undercut most of the stocks in our portfolio. While today’s pullback in iShares MSCI Emerging Markets ETF (EEM) hasn’t turned the Cabot Emerging Markets Timer fully negative, it’s clearly in near freefall. Many of the individual stocks in our portfolio are either holding their own or have sufficient profit cushions to allow us to hold on for the time being.
But this kind of market meltdown calls for a response, so I’m going to sell two of our half positions.
First, I will sell our remaining half position in Baidu (BIDU). I have been concerned that BIDU hasn’t been able to mount a sustained rally for a long time, and today’s sell-off puts the stock back to its late-July price. Selling today will allow us to book the slimmest of profits, but it will also reduce our exposure and raise a little cash, which we can put to work when markets once again come under the control of buyers. SELL.
The second action is to sell our half position in 58.com (WUBA). The stock made a new all-time high on January 29 and we still have a slim profit. But selling volume has been heavy and I think this is one of our weaker stocks. We will sell our half position and hold the cash. SELL.
There are no other changes today. The next scheduled issue of Cabot Emerging Markets Investor will come out Thursday, and I may have more actions to take then. And if conditions continue to deteriorate, I’ll send another Special Hotline.