Today I initiated a small, aggressive position in the second-largest online retailer in China. Prior last Friday, when I read the latest Motley Fool Stock Advisor recommendation, I had never heard of JD.com – and now we own it.
With our family portfolio flush with cash but light on aggressive positions, I was ready to buy shares of the next Stock Advisor recommendation with a promising, but far from certain future. There are many risks involved with investments in China from the fits and starts of a burgeoning economy to the Chinese government’s heavy-handed role in their economy. JD.com can grow along with the massive Chinese population which will become the engine to drive their economy.
The post from the Fool said JD.com’s prime competitor, Alibaba, has struggled to gain customers trust due to its lack of control over the quality of the goods for sale on its site. Alibaba is a platform, but JD.com is a retailer with the opportunity to gain the trust of its patrons through control of the customer experience. Think eBay vs. Amazon.
This position has not been over-contemplated. I trust the Fool’s research, and JD.com has a specific role in our portfolio. First, the position is 0.2% of the overall portfolio. JD.com should occupy 0.4% of our investable assets, but I like to invest in half-positions to diversify exposure to any given trading day. If the Fool re-recommends JD.com several months from today, I will add to this holding. In Summary, JD.com is an interesting company well-poised to grow with the expanding Chinese consumer-class; if JD.com is half as successful as Amazon.com, today’s investment will have been money well committed; if today’s position is a complete failure, we will live to invest another day.