Hello, Reader.
Flanked with his Knights of the Round Table, King Arthur, famously and fictitiously, embarked on a quest for the Holy Grail.
While the king was ultimately unsuccessful in finding the fabled cup, one of his knights did.
It is, perhaps, one of the most famous quests of them all.
Well, nearly three decades ago, I ventured out on a quest of my own – albeit, for stocks of value.
On April 2, 1997, a much younger Eric Fry nervously took the podium of the Grant’s Spring Investment Conference in New York City to present an argument for buying Indian stocks.
In a 40-minute speech entitled, “Intel vs. India – The Quest for Value,” I argued that Indian stocks were woefully underappreciated… at least in relation to tech stock “darlings” like Intel Corp. (INTC).
The audience of professional investors in attendance seemed more amused by the idea than genuinely interested. After all, during the preceding three years, Intel’s stock had quadrupled, while the India Fund Inc. (IFN) had tumbled nearly 50%.
Surely the near-term future would resemble the recent past. Intel was a wunderkind; India was a basket case. End of discussion.
But despite the palpable skepticism in the conference hall, I soldiered on.
After issuing a few tongue-in-cheek comparisons between Intel and India – “One makes SRAMs; the other makes ashrams.” – I proceeded to offer a series of more substantive comparisons and contrasts…
For starters, I pointed out that Intel “is expensive and widely adored,” while Indian stocks are “inexpensive and routinely ignored.” I detailed key aspects of the bullish case for Indian stocks and predicted, “The long-term investor will fare much better by selling the popular tech stock and buying out-of-favor Indian stocks.”
That prediction played out brilliantly, but not immediately.
Intel vs. India Stocks
During the three years that followed my New York presentation, India Fund soared more than 150%. But that strong result was no match for the “dot.com” mania that powered Intel stock to a gain of more than 300% over the same timeframe.
By early 2000, every investor on Earth, it seemed, wanted to own tech stocks like Intel, as well as infamous flameouts like WorldCom Inc. and Pets.com. During that speculative frenzy, very few investors bothered to consider obscure foreign stocks, no matter how compelling their valuations and growth prospects might be.
But Indian stocks would get their revenge.
During the 27 years since I dared to admire Indian stocks in public, the India Fund has rocketed more than 2,000%, compared to Intel’s total return of only 340%.
As a result of these divergent performances, Intel and Indian stocks have traded places. Intel, the iconic U.S. semiconductor company, is now the stock that is “routinely ignored,” while Indian stocks are the ones that are “widely adored.”
To be sure, Indian stocks do not attract NVIDIA-like adulation from investors, but they certainly do not lack for admirers.
Like the U.S. stock market of recent years, the Indian stock market has been benefiting from a massive dose of “multiple expansion.” That’s the term Wall Street analysts use to describe the boost a stock receives when its valuation increases from low levels to higher levels. Back in 1997, Indian stocks were changing hands at just seven times earnings. Today, they are selling for more than four times that valuation!
I do not begrudge Indian stocks their world-dominating performance of the last three decades, but I would not be a buyer at today’s lofty levels. Instead, I advise the opposite course of action I recommended in 1997: Sell Indian stocks; buy Intel.
The rewards might not be immediate, but I expect them to be considerable.
Continuing the Quest…
Although many days have ended since that one in April 1997, my quest for value certainly has not. So, in Thursday’s Smart Money, I’ll further detail the bullish case for Intel.
More specifically, I’ll take a look at how AI is expected to impact the company’s long-term growth.
AI, as millionaire investor Matt Higgins, CEO of RSE Ventures, recently told CNBC, will “be the biggest wealth creator in history.”
And he’s right.
Just like venture capitalist John Doerr was right back in the ’90s when he predicted the internet would lead to “the largest legal creation of wealth in the history of the planet.”
The “creative destruction” brought about by the internet created millionaires, even billionaires, but the wealth it created wasn’t distributed equally. Most Americans were left to either tread water or lose ground in the decades that followed.
And that’s why I’m here today with a warning: an AI Code Red.
Because with my connections in Silicon Valley and on Wall Street I can tell you with confidence that the most disruptive technology of this century is about to blow the wealth gap wide open.
AI could soon cause millions of Americans to fall further behind, never able to recover; but folks who heed this AI Code Red could land on the winning side of the growing wealth gap.
I’m prepared to show you where you’ll have the best shot at the kind of explosive gains early investors captured at the beginning of the internet era…
Click here for all the details.
Regards,
Eric Fry
P.S. My colleague – and A.I. investing expert – Luke Lango is revealing an incredible investing opportunity tonight.
It’s an obscure company just made a major breakthrough in AI… and it’s about to send shockwaves throughout the stock market.
This new A.I. breakthrough will trigger what Luke’s calling the AI Endgame…
Tonight, Luke is going to reveal this big breakthrough live on camera for the first time ever.
