Thursday morning I decided to use the small bounce in Ninetowns Internet Technology Group (NASDAQ:NINE) to take my loss and sell my holding at $3.11. This was clearly one of my worst trades of the year, as I fell into the value trap of looking at the company’s balance sheet without identifying any near term catalysts to drive the stock higher. To put it frankly, I didn’t to the required research, and I paid the price to the tune of a 21% loss.
My reason for getting out of NINE here is not because I think there is much potential downside, but rather, I fail to see where the potential upside can come from in the near term. NINE is trying to revamp its entire business, and the result of its efforts will likely not be known for several quarters.
While the company’s balance sheet suggests that this is a potentially compelling turnaround play, I am not willing to let my money sit idly to wait for this to happen. I am predominantly a short to medium term trader, and my time horizon is clearly not in sync with the potential trade here. Therefore, I am willing to take my loss, cut my exposure further, and wait for new opportunities.