“Foreign (And Legal) Drug Trade Profits” — Dalal Street Insider

By Travis Johnson, Stock Gumshoe, November 30, 2009

On this bright and cheerful Monday we’re taking a look-see at a new entrant in the newsletter world — not only because it teases a couple intriguing investment ideas and promises great gains, as they all do, but because this is the first newsletter I’ve seen that is completely focused on India. Newsletters that look for profits in emerging markets, or in international stocks in general, are thick on the ground, of course, and there are even a few newsletters that specifically target China, but I’ve yet to see one that looks just for stocks in the Republic of India.

The justification for investing in India is quite clear, and has been for many years — it is the world’s second largest country, and the largest democracy, it is growing rapidly without being export-driven (and dependent) like China and the Asian tigers, and it has a bright demographic future — unlike China, Japan and, to a lesser extent, the United States, India is a country of young people.

Of course, the reasons not to invest in India are clear, too — the main one that I often hear cited is that it’s the world’s largest democracy, but also saddled one of the most bureaucratic and ponderous governments, with a horrifically out of date infrastructure in many areas. If you want roads and power lines and factories built quickly, choose a totalitarian regime over an impoverished and decentralized democracy. Dalal Street Insider tells us that the political woes are fading with the reelection of Manmohan Singh earlier this year, but progress is not necessarily etched in stone (Arundhati Roy is certainly catching some flak for calling Indian democracy “broken” by the thirst for economic growth, though if she’s right that “broken democracy” might be good news for India’s powerful corporations).

And investing in India has gotten significantly easier in recent years, with plenty of funds and ETFs now available in addition to a growing number of Indian stocks that trade in the US. It’s certainly not as high profile as China, though the shares of many of the stocks are up dramatically this year along with those of most of the other BRIC nations, but perhaps the stocks aren’t as inflated as Chinese stocks may be right now, either. Dalal Street Insider, edited by a guy named Ashish Advani, is trying to get itself off the ground with a special report called “Million Dollar Stocks: Three Indian Shares To Own Now!”

So what are they? Like all good newsletter promoters, they provide some nice clues for us. The one we’ll look at today is a pharmaceutical company …


“Little-Known, Overseas Drug Company Set For Triple-Digit Gains If Their New, Life-Saving Drug Passes FDA Trials…

“…And Still Projects High Double-Digit Gains In 2010 Even If The Drug Fails….

“The overseas drug company outlined in this letter had just received Phase 2 FDA approval for a new drug to treat one of the fastest growing diseases in the world (and no, it has NOTHING to do with swine flu).

“Frankly, I was skeptical at first. But after having dug through the stack of papers and did some further research – I realized that this company’s stock was quite literally a Gold-Plated Lottery Ticket – ready to be cashed in….

“This drug successfully cleared both Phase 1 and 2 FDA clinical trials…and we expect the announcement of the Phase 3 results in 2010.

“Since the big profits in new drug development come weeks…sometimes months before FDA Phase 3 approval, now is the time to grab your shares of this company’s stock.

“And if the results are positive for this new drug when it clears the Phase 3 trials as we expect based on our extensive research, this company’s stock value could shoot upwards for triple-digit gains literally overnight.”

Sounds pretty good, right? They go on a bit more, but the drug they’re talking about is a treatment for diabetes — and, as they note, India has been called the “Diabetes Capital of the World,” with more diabetics than any other nation on earth (and not just because of their large population — more on that here if you’re