A DAY THAT WILL GO DOWN IN HISTORY

by James Boric

Mark this day down on your calendar: November 27, 2006. It is a day investors will look back to in 10 or 15 years and wish they would have realized its importance.

Unfortunately, most won't realize this until it's too late. But I don't want you won't fall into that trap. Let me explain...

For the first time since the British pulled out of India in 1947, the world's largest democratic nation opened its virgin $300 billion retail sector up to a foreign mega-retailer.
Namely: Wal-Mart.

Yesterday, Wal-Mart announced it formed an alliance with Bharti Enterprises Ltd. (a leading Indian telecommunications company) to open hundreds of stores in India over the next several years. According to anarticle on investor.com, "Under the deal, Wal-Mart and Bharti Enterprises will set up a joint venture to manage procurement, inventories and logistics, while stores will be set up under a franchise agreement, said Sunil Bharti Mittal, the chief executive of the Indian company.

"This is a massive story - although it didn't make the headline of anymainstream news source that I saw. (It was buried under about 10 storiesthat came out that day). This sole event will lead to billions andbillions in profits for investors - especially for those involved in small-caps.

For the last 49 years, the Wal-Marts, Targets and Sam's Clubs of the world were not granted access to India's blossoming consumer class. The country's leftist leaders wanted to protect the millions of small-time shopkeepers that dominate the retail sector. After all, the politicians need votes come election time. And this has been the major item on the Communist ticket for years now.

To be a true super power you cannot close yourself off competition -whether foreign or domestic. By doing so, you sacrifice your own people's long-term prosperity for short-term mediocrity. By allowing major retail outfits like Wal-Mart into India, you encourage billions of dollars to bespent on access roads, parking lots, water purification, infrastructure development, banking development, insurance writing and real-estate development. And on top of that, you encourage billions in foreign direct investment - money India can use to improve its living standard.

As a guy who has been to India twice in the last three years (and seen theproblems with my own eyes), believe me: India has a lot of room for improvement.

Of course, there will be some negatives that follow Wal-Mart and other massive retail outfits into India. Thousands of mom and pop shop ownerswill go out of business - just like they have here in the United Statewhen Wal-Mart set up shop. Politicians (who are on the hook come electiontime) will scream bloody murder - just like they do here in the United States. And thousands of folks without a job will tell Wal-Mart and itssupporters that they are the devil incarnate - just like they do here inthe United States.

BOO-HOO. Get over it. All great economic nations are founded on aprinciple of competition - both domestic and from abroad. That's how progress is made. That's how improvements are encouraged. And that's how ingenuity is promoted.

It's also how investors make a lot of money.

The last time a major Asian country opened its retail sector to foreigndirect investment was China in 1992. It opened its then $75 billion cashcow to foreign investment for the first time ever. And what followed in China was a wildly lucrative series of events...

· The Hang Seng Stock Exchange rose as much as 314%
· The Shanghai Stock Exchange's market value soared 44 times over
· And the Chinese retail market grew from $75 billion to $480 billion.

That's a 15.3% annual growth rate for 13 years.Looking forward, there are going to be a lot of investment ideas that popup in India. Many of them will be small-cap in nature. But it is going to take time to find the really good ones.