NCTY - The9 Limited

NCTY - The9 Limited - Company brings MMORPGs to China. Been following this company for past eight months and I can not think of too many stocks I would rather be in. My rationale is as follows:

THE FUNDAMENTALS, It is growth at a reasonable price. Look to Japan for an Asian culture where video games are a national pastime. Will it happen in China? Possibly, but even if it doesn't the growing middle class will have more and more disposable income. In addition, a legitimate well-paying job for the Chinese has been created through these games. Hardcore gamers and well-to-do casual gamers in countries with higher living standards have been increasingly paying for items in these games. These Chinese workers make their living by investing time in online games. (which of course brings value to NCTY, it has a Rockefeller™-esque market share) ERTS has $167m invested in them, why don't you? This leads me to speculate that investors may not have the chance to own The9 forever. With such a strong market niche and growth potential it would look good in many of the large internet service companies/game makers business portfolios.

ALSO, It is difficult to understand but some stocks just "trade" well. Pull up a six-month chart and the bollinger bands will tell you the story. Pull up a 5-day chart and you will see similar possibilities for short-term profits. It is not financially irresponsible to build a position in a stock you love while making small trades around the market's swings. For this strategy to work take a position (hopefully at a good entry point) , unload some of your position when it gets hot-take some $, and reload when it has lost it's way again. Using charts to determine levels to buy and sell is a good start but a valuation model probably isn't a bad idea either. Even though support/resistance can be misleading it will give you some control so you are not trading with your emotion only. For this strategy to make sense for anyone there must be a strong belief in the company's future. For NCTY I have strong belief the future looks bright.