Long term investing is the way to go, but that doesn't mean you should hold every stock forever. We really hate to see fellow investors lose their hard-earned money. Anyone who held China Dynamics (Holdings) Limited (HKG:476) for five years would be nursing their metaphorical wounds since the share price dropped 82% in that time.

While a drop like that is definitely a body blow, money isn't as important as health and happiness.

View our latest analysis for China Dynamics (Holdings)

We don't think China Dynamics (Holdings)'s revenue of HK$5,361,000 is enough to establish significant demand. We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. Investors will be hoping that China Dynamics (Holdings) can make progress and gain better traction for the business, before it runs low on cash.

As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). Some China Dynamics (Holdings) investors have already had a taste of the bitterness stocks like this can leave in the mouth.

China Dynamics (Holdings) had cash in excess of all liabilities of just HK$3.2m when it last reported (September 2019). So if it has not already moved to replenish reserves, we think the near-term chances of a capital raising event are pretty high. That probably explains why the share price is down 29% per year, over 5 years . The image below shows how China Dynamics (Holdings)'s balance sheet has changed over time; if you want to see the precise values, simply click on the image. The image below shows how China Dynamics (Holdings)'s balance sheet has changed over time; if you want to see the precise values, simply click on the image.

In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. Would it bother you if insiders were selling the stock? It would bother me, that's for sure. You can click here to see if there are insiders selling.