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NVIDIA = Ford in 1982

Posted April 02, 2025

Davis Wilson

By Davis Wilson

NVIDIA = Ford in 1982

In the early 1980s, Ford Motor Company was a disaster.

The U.S. economy was in turmoil – interest rates were sky-high, inflation was biting, and the auto industry was in deep trouble.

Ford, once an industrial titan, was hemorrhaging cash, closing plants, and watching its stock price collapse.

Wall Street had given up on it.

But one legendary investor saw something different.

Peter Lynch, then managing Fidelity’s Magellan Fund, wasn’t afraid to buy stocks that others hated.

What looked like a dying company to most was, in reality, a temporarily broken giant.

Lynch bet big on Ford, and in just a few years, his investment paid off massively.

The lesson? The best opportunities often come when stocks are left for dead.

Ford’s Darkest Days: A Company in Crisis

By the early ‘80s, Ford was viewed as a relic of the past – too bloated, too slow, and too vulnerable to foreign competition from Japan’s rising automakers like Toyota and Honda.

The U.S. economy had also just endured a brutal recession, and demand for cars had plummeted.

To make matters worse, investors wanted nothing to do with auto stocks.

The entire sector had been crushed, and with high unemployment and soaring oil prices, consumer confidence was in the gutter.

Who was going to buy a new car?

Ford’s stock reflected this despair. Shares were dirt cheap, trading at levels that assumed the company’s best days were behind it.

Lynch’s Bet: Finding Value in Despair

Lynch had a simple but powerful investing philosophy: “Invest in what you know.”

He understood that great companies sometimes go through temporary pain but ultimately come out stronger.

While most investors were avoiding Ford, he saw the potential.

Ford was cutting costs, innovating new models, and preparing for a recovery.

The auto cycle would eventually turn, and when it did, Ford would still be standing.

At the time, the company was trading at an absurdly low valuation, meaning that even a modest recovery could lead to enormous stock gains.

Lynch loaded up on shares.

By 1985, Ford’s business had improved, the economy had rebounded, and the stock had skyrocketed.

Those who had bought at the depths of its crisis saw returns of several hundred percent in just a few years.

The Ford Lesson: Today’s Market Has Its Own Beaten-Down Giants

Right now, plenty of high-quality companies are in the same position Ford was in during the early 1980s.

I talk about a few of these stocks often here in The Million Mission.

  • Nvidia (NVDA) is trading at $108/share and 19x next year’s earnings.
  • Meta Platforms (META) is down to $582/share and trading at 20x next year’s earnings after reaching a high of $735 in February.
  • Alphabet (GOOG) is down to $159 and 15.5x next year’s earnings after trading above $200 in February.

These are stocks that have fallen out of favor due to short-term fears – whether it’s economic uncertainty, temporary tariff fears, or shifting investor sentiment.

But like Ford back then, these companies will adapt, survive, and thrive again.

The best investments aren’t made when a stock is loved by Wall Street.

They’re made when a stock is hated but still has the fundamentals to recover.

This recent selloff has created exactly this kind of opportunity.

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