Investors love fads. One of the biggest fads in 2003 was Chinese Internet stocks. The group really started to lift in March 2003. At that point, the three best-known companies were Sina (NASDAQ:SINA), Netease (NASDAQ:NTES), and SOHU (NASDAQ:SOHU). Of the three, Sina was the best performer with a 400% gain last year. All three stocks are down considerably from their recent highs.

Why all the excitement? A look at Sina tells the story very quickly. Only 80 million people in China use the Internet. China's population is about 1.5 billion. Eventually, Internet use will penetrate a much larger percentage of the population. Sina stands to benefit from that, hence all the excitement. Another exciting piece of the puzzle is that the firm's dramatically cheaper than Yahoo! (NASDAQ:YHOO) in almost every statistic and has more cash per share than Yahoo! So Sina has more growth potential and is cheaper than Yahoo!? Don't log on to your brokerage account just yet.

There are numerous fundamental and political risks facing owners of Sina. China is still a communist country. The government could step in to make changes to how the Net rolls out to the rest of the country and, as a result, how Sina operates.

Sina also has a peculiar type of relationship with Chinese phone companies. The easiest way to think of it is that Sina leases space, but doesn't own it. The phone companies have the right to do away with the leases if they so choose. Sina should be cheaper than Yahoo! because Yahoo! doesn't have to contend with this type of risk.

Another risk arises in this week's Barron's interview with Mary Meeker. Meeker and her team just composed a 200-page report about the future of the Internet in China. Her track record for truly forward-looking analysis is less than enviable. She was brilliant when every single Net stock was skyrocketing, but missed the crash completely and was not heard from on the Chinese Net stocks last year. In this current interview, she is not recommending purchase yet, but says that Sina is the best proxy for the group. Based on her past performance, in my opinion, she'll only be right like a broken clock.

One thing should be abundantly clear about investing fads. Fundamentals don't play a role in the trading of these stocks. Last year's move was due to excitement about future growth. The next big move, whether it's up or down, will be triggered by fear or greed. Remember that if you're thinking about owning Sina.

Want to read more about Chinese Internet stocks? Check out:

Fool contributor Roger Nusbaum is an investment manager and wildland firefighter in Prescott, Ariz. At press time, he owned none of the stocks mentioned. His clients own Yahoo.