Baidu means asylum in Chinese

Baidu is one of those stocks that attracts day traders like fly paper. It regularly has 5% moves. So far this month, the stock has traded in a range of 240 to 400, last sale around 322, no, 323, uh I mean 324. In the last 6 days, it's traded over 10 million shares a day. The float (outstanding shares that are eligible for free trading) is 33 million shares. Did the entire company change hands twice in the last week? No. Baidu is a speculative, volatile vehicle of the moment.

This morning it's marked up 5%, presumably on the better Microsoft numbers. I would venture to say there's no correlation between Microsoft selling a lot of xboxes and Vista/Office 2007 copies and Baidu's success in the search market in China. I would venture that nothing has changed in their business, despite the fact that the stock has gyrated between elation and terror all month.

What's really happened over the last 3 months has been multiple compression. The easy and good times are foreseen to be coming to an end. Maybe Baidu doesn't belong at 324, er, 325, uh 327 but it probably never belonged at 400 either.

I lied, by the way. Baidu doesn't mean asylum in Chinese. It's a reference to a poem from the Song Dynasty. But Baidu is a waystation for lunatics nonetheless.

I have no position in Baidu. My opinion is you're all nuts.