China MediaExpress Holdings, Inc. (fka CCME)

[deuspronobis]

No More China Stocks for Me, Thanks.

Since the CCME halt, I have stopped out of all the following positions:

YONG
DEER
NEP
PUDA

All very similar profiles: Bloggers who admit to being short the stock publish fraud allegations, stock takes a sharp dive, maybe gets halted -- you know the drill.

Whether the fraud allegations prove true is inconsequential for the moment, as perception is reality, and the damage is done. Can one really afford to wait around to find out? I maintain two disciplines to preserve capital: stop-losses and limiting position sizes. Thankfully, these disciplines limited my total losses on these five positions to 5% of my portfolio. That's assuming CCME opens at $1.80 or better.

Like it or not, China is the short's playground at the moment. I for one will not be investing further in this sector for a long time to come, if ever. If you can't trust the company's management, board, or auditors, you're not investing -- you're gambling. There may be some good companies in the sector, but good luck trying to find them without stepping on any land mines.

Here's hoping we get some better news on CCME in the next couple months, and a chance for a not-too-painful exit.