The Greatest Opportunity in Our Lifetime

On Jan. 1, 1980, the Dow Jones Industrial Average stood at 838 points. Within the past year, it has stood as high as 14,200. Even a know-nothing investor in U.S. equities over this period of time would have seen his or her money increase nearly 20 times in value just by focusing on the bluest of American blue-chip stocks.

It's the kind of opportunity that will never happen again in the United States. It can't -- our economy simply doesn't grow fast enough.

This is not to say that investing in America is dumb. This country is home to some of the greatest visionary business leaders in the world, from Apple's (Nasdaq: AAPL  ) Steve Jobs to Google's Sergey Brin and Larry Page to Berkshire Hathaway's (NYSE: BRK-B  ) Warren Buffett. These men have delivered extraordinary returns to their shareholders by doing things better and smarter than anyone around them.

But let's be clear -- Apple, Google, and Berkshire are cannibals. They won because they got all Lord of the Flies on companies trying to compete with them. The most successful company left in Google's wake is Yahoo! (Nasdaq: YHOO  ) , which apparently needs a partner like one of these.

Don't think it's true with Berkshire and the avuncular Mr. Buffett? Please refer to the company's annual report -- annually -- where he brags about how Berkshire subsidiaries like GEICO, Nebraska Furniture Mart, and NetJets are gaining market share.

This isn't a bad thing. But betting on companies to take market share is tough going. For every Chipotle (NYSE: CMG  ) , there is a Triarc (NYSE: TRY  ) , wondering how to get people who are neither drunk nor lost to come to its Arby's chain.

The better environment for finding long-term winners is in an economy that is growing so fast and generating so much wealth that companies aren't necessarily destroying each other -- yet.

That market isn't the United States. It isn't Europe. It's China.

China is a once-in-a-lifetime investment opportunity. But you have to know what you're doing.
You also have to be patient. China's like that eighth-grader you know who is going to be unbelievable at basketball someday: He's already got the crossover dribble, the court vision, he's 6'5" -- but he's 14, and still makes mistakes typical of a 14-year-old. China's still unpredictable, like the adolescent market that it is. It has an unbelievable entrepreneurial culture, but does not yet have a fully formed culture of protecting minority shareholders.

This is why the strategy most big foreign investors are following in China is such an unbelievable mistake. They're investing in the big state-owned enterprises, which, by and large, have neither an entrepreneurial spirit nor a great affinity for protecting shareholder interests. Buying these companies is sort of like buying a house in Bakersfield because you always wanted to live in California. Good idea -- bad execution.

Doing what Google did
If you want to invest in China, pay attention to our own cannibals. Berkshire bought an enormous stake in PetroChina (NYSE: PTR  ) -- an exception to the "stay away from Big-Cap China" rule -- to great effect. But Google did something different, taking a stake in a company that embodies the Chinese entrepreneurial spirit: (Nasdaq: BIDU  ) .

Why did Google, a company with the ability to throw substantial resources at any opportunity, elect to invest in Baidu rather than compete in the world's fastest-growing economy? Because it figured it'd make more money this way. And Google did, in fact, do very well with its investment.

This is why China offers the world's greatest opportunity
China's in the process of making people who compete well in its economy -- and their investors -- fabulously wealthy. This past year, I traveled to China with Global Gains to meet some of the entrepreneurs and business leaders who have so famously driven the miraculous rebirth of China as a world power.

But when we came back, I didn't recommend any Chinese companies to my subscribers, because the market was in the midst of a mania for all things Chinese. In the meantime, the Shanghai stock market has dropped by as much as 50%.

In June, Global Gains is going back to China, and this time we're loaded for bear. Now that people are focusing less on the promise of China and more on its problems, shares of its companies have become increasingly attractive. We've recommended several, to great effect, and we're seeking more. The world's fortunes tend to be found where others aren't paying attention, and that's certainly the case with China right now.

Our recommended Chinese companies are the embodiment of what we're looking for with Global Gains: smarter managers pursuing bigger opportunities in the world's highest-potential markets. We circle the globe to recommend only the best opportunities to our subscribers.

To get our free reports live from the field during the trip, simply provide your email address in the box below.

Bill Mann is willing to try nearly any food in the world, but he doesn't like ketchup, cereal, or gum. He owns shares of Berkshire Hathaway and Chipotle -- the former's A shares, the latter's B shares. and Chipotle are Rule Breakers picks. Chipotle is also a Hidden Gems selection. Apple and Berkshire Hathaway are Stock Advisor recommendations. Berkshire Hathaway is an Inside Value choice, and The Motley Fool owns shares of Berkshire Hathaway. Sunscreen is a Bill Mann recommendation. And so is reading our disclosure policy, which goes great with salmon dishes.

Read/Post Comments (15) | Recommend This Article (100)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 28, 2008, at 11:12 AM, prginww wrote:

    To extend the basketball analogy, a sport that I am much more confident in my knowledge about that any market or economy- I'd still rather bet on a Lebron prototype than a Yao. Show me a Chinese franchise player who can go coast to coast, with finesse, style, with Lebron-like, Kobe-like, His Airness-like cunning, and then we'll know that the marketplace of ideas in China has reached its potential.

    Pistons - Lakers

    Detroit in 7.

  • Report this Comment On May 29, 2008, at 10:34 PM, prginww wrote:

    I absolutly agree, China is adjusting to new freedoms and may wary of industry of mass potential and influence of its population. For instance telecom, internet, media. Under the radar inv. are great productive opps. Perfict for a new less than savey inv. such as yours truly. Curently I am building a portfolio "slowly saftly". Found fools about half way in. Skeptical of all thats commercial and with comarisons picked two fool recs "off all other dreem weaving invesment sights" to the point one is Obagi medical. My broker smart but conservitive "drives me nuts but accountant by background checked

  • Report this Comment On May 30, 2008, at 7:07 AM, prginww wrote:

    I absolutly agree, China is adjusting to new freedoms and may wary of industry of mass potential and influence of its population. For instance telecom, internet, media. Under the radar inv. are great productive opps. Perfict for a new less than savey inv. such as yours truly. Curently I am building a portfolio "slowly saftly". Found fools about half way in. Skeptical of all thats commercial and with comarisons picked two fool recs "off all other dreem weaving invesment sights" to the point one is Obagi medical. My broker smart but conservitive "drives me nuts but accountant by background checked

    Diesel Pham

  • Report this Comment On May 30, 2008, at 1:49 PM, prginww wrote:

    I desagree, i believe that BRAZIL holds a much more promissing opportunity then China, we have dramatic smaller inflation rates, and we have MUCH MORE OIL! and extremely more natural resources then China.

    And we just received the Up-Grade to investment grade from S

  • Report this Comment On May 30, 2008, at 2:44 PM, prginww wrote:

    China's structure and our own (USA) are quite different. Seems regardless of how well a company does, the govt can come in and say thanks this is now ours, leave or we'll exectute you and everyone you know... Even the volume in which everything must happen, seems they'll all have cancer before they have their own version of walmart. Beyond that that damn they are making that is rumored to hold enough water that the weight actually shifts the earth on it's axis makes me think they're going to have alot more earthquakes. A trip to see what actually is going on in China would definately be precursor to any serious investing I decide to do.

  • Report this Comment On May 30, 2008, at 3:15 PM, prginww wrote:

    Hey, I like arby's.

    My husband likes arby's.

    But I do admit I was upset when they quit serving coffee at their texas outlets.


  • Report this Comment On May 30, 2008, at 3:42 PM, prginww wrote:

    I found this article interesting, actually, I think it is not more than another commercial.

    So, don't take it too seriously, especially if you happens to be an Indian, Russian, Brail, or any other native other than China. I am sure the "once for a life time" topic will belongs to you in next couple of issue.

    Back to the topic, unfortunately, this is not new any more, the best investment timing in china seems from the middle of the 90'es to middle of the 2005, now, it will be much hard to earn the quick money over there. But, on the other hand, fortunately, "the law and order" was built up and especially in last couple of years, more and more international corp invest huge money, not only focus on the manufacture, but also the R

  • Report this Comment On May 30, 2008, at 4:03 PM, prginww wrote:

    I agree with lerej because they are still very much subject to the Chinese government - Remember what happened to the oil oligarchs in Russia. Some of them got thrown in jail and the assets siezed by the state run concern. Also, there are really serious pollution concerns in China and the willingness of companies like PetroChina to ignore humanitarian concerns like Sudan.

    Eventually Buffet dumped it and so did I because of that.

    Some people wouldn't consider ecology and humanitarian concerns relevant - that's their choice - and I am more consistent with who I am if I make a different choice.

  • Report this Comment On May 30, 2008, at 7:03 PM, prginww wrote:

    In America there are 1023 cars for every 1000 people.In China there are 9 cars for every 1000 people. Once the infrastructure development in China is completed that will change severely and that will be the start of many billions of dollars generated as a result.China is a great longterm investment.

  • Report this Comment On May 30, 2008, at 7:44 PM, prginww wrote:

    Hi All;

    I was in China invited by the goverment and given card blanche on travel and contact. They want what we have, at least the intellegencia does and the old rulers are dying off. It's just a matter of weather the earth can support all of us capitalist. It can't at present status.

    Fool on.

  • Report this Comment On May 30, 2008, at 9:06 PM, prginww wrote:

    I agree with 'peacelover' and 'bertelli1' about the chinese. I have invested in China for the last two years and have made more than with just our stocks. I have shares and have done quite well. The young people want less of the old ways and more of what we have and as the old guard die off the shift toward capitalism will be greater and so will the investment opportunities. The opportunities in China are just scratching the surface and except for a few downturns will continue grow.

  • Report this Comment On May 31, 2008, at 9:51 PM, prginww wrote:

    this board is a waste of time

  • Report this Comment On June 01, 2008, at 2:15 PM, prginww wrote:

    I agree that there are a lot of possibilities for the China economy to grow and to make large profits but with the political scene there it is very risky. A few of the things wrong over there are as follows. Communist governments can steal any business from private hands they want. China cares little for the lives of citizens. Thousands die working in coal mines yearly. People speaking against the government can be executed. Tanks run over protesters. If I were over there right now writing this my family and I could be imprisoned or executed. Families are even told how many children they can have thus causing untold numbers of females being killed at birth so they can have another chance at having a male offspring. I cannot fathom my money going into such a system.

  • Report this Comment On June 02, 2008, at 12:31 PM, prginww wrote:

    Motley Fool ... well fool on.

    Amazing to see the contradictions between its newsletters comments and MF independent writers comments. can be VERY confusing.

    That being said, the MF does not stop spilling their paid newsletters picks on these pages, and its free! So if you can

    wiggle around it all, you might get a good pick or two.

  • Report this Comment On June 08, 2008, at 8:19 AM, prginww wrote:

    The Fool hates funds of any kind ! So what, you can just buy the EEB and leave the driving to the index. It overweights Brasil, gives you China, India , and Russia/E Eur. " The {Dow Jones Industrial average} stood at 838...." There's the point. Right now India is on sale. The MINDX, IFN, PIN and EPI can all be had. While some like the gangsterocracy, the MPYMX & the deeply discounted CEE may be safer for their exposures to E/Eur and Turkey, than say RSX. In China you can let the proven pros pick your blues with MCHFX, The OBCHX is another China that has smoked. What hasn't? Get some MAPTX and GAADX to balance China with some exposure to the broader ASIA theme . As for Brazil the EWZ keeps doubling, but the FLATX can get you some nice exposure in Mexico, Argentina, and Chile even while being overweight Brasil. Don't be shy to add the BRIC Jrs either as FICDX & EWA round out the usual suspects. Stay away from So African investments as much as possible as they seem to be heading down the road to Zimbabwe/ex-Rodesia. We await the "Fund" that invests in the middle east. So far we seem only to have the GAF which has too much Africa in it. Eventually Africa will be profitable for China as they sign more contracts that allow them to defend their investments with the Red Army. In the meantime with out help from countries outside of Africa Genocide will remain Africa's most successful industry.

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