It's been a year since two of our finest Fools went mano a mano over Chinese search master Baidu.com (Nasdaq: BIDU). With that much water under the bridge, it's time to hearken back to their duel and see whose arguments turned out to be more sound.

One hoof clapping?
Having recommended Baidu to our Motley Fool Rule Breakers subscribers a couple of months earlier, duel maestro Rick Munarriz was a natural choice for the bullish side,

He pointed out that American search giants such as Yahoo! (Nasdaq: YHOO) and even mighty Google (Nasdaq: GOOG) were losing share in the Chinese search market to Baidu, despite investing untold millions in their endeavors. An upwardly mobile middle class meant guaranteed hypergrowth in an audience count that then stood at 123 million Internet users -- a mere one-tenth of the Chinese population.

Rick said it was obvious why the market loved the stock: "Baidu is the new sexy." And despite a lofty price-to-earnings ratio, the company was supposed to grow into its valuation, with its PEG ratio less than 1 -- a stat that none of its Yankee rivals could make at the time.

Zen and the art of portfolio protection
Rick's fellow Rule Breakers analyst Tim Beyers took a different view of the situation. "I strongly believe in relative valuation as described by New York University professor and Investment Fables author Aswath Damodaran," he said. "And that's where Baidu goes bad." Another Rule Breakers pick provided a very close template against which to measure Baidu's value, and the search expert came up short against Suntech Power (NYSE: STP) on every measure.

Tim conceded that Rick and newsletter chief David Gardner might end up being right on this pick, but "with technology moving as fast as it does, it's only a matter of time before a better search engine arrives. How long after you invest in Baidu will that be?" There was no patent moat and no real competitive advantage, apart from Baidu's first-mover status.

If you meet the Buddha, kill him
Our readers voted Rick the winner in a landslide, and one look at a one-year stock chart is enough to confirm the validity of that victory. Despite a recent retreat from more than $400 per share to less than $300, it's still a gainer by more than 130% since that duel took place.

Baidu's not a home run, though. Our CAPS community has soured on it. The stock carries a below-average two-star rating in CAPS, as a result of sky-high valuation and global recession fears.

And I would agree with Tim on this one. Baidu has done so well for itself because it has figured out how to run search queries against character-based texts in Mandarin and Cantonese. That's a commendable achievement and a nice head start, but it's really only a matter of time before the big boys figure out how to do the same thing for themselves. And then, pop goes Baidu's market share.

I can understand the urge to invest in rapidly growing markets like China, especially with a plummeting exchange rate on the dollar. But you know how trendy investments go -- as soon as everyone is talking about them, the opportunity is spent. And everyone most assuredly is talking about China these days. If you really believe in the Far East economic growth story, you'd be better off with less ephemeral infrastructure builders, such as Aluminum Corp. of China (NYSE: ACH) or Korean steel giant Posco (NYSE: PKX).

You won, Rick. Take a victory lap and bow to the crowd. Quick -- before the glory fades.

Further Foolishness:

This article is brimming with newsletter picks: Suntech and Baidu from Rule Breakers, Yahoo! from Stock Advisor, and Posco from Income Investor. No matter which investing style is right for you, there's a free 30-day trial only a couple of clicks away.

Fool contributor Anders Bylund is a Google shareholder but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure makes sense, in a sense, even if there is no sense to make of this sentence.