Louis Navellier hasn’t popped his head up here in Gumshoedom in a while, so when a reader asked me to pour his latest slurry of tantalizing tidbits into the Thinkolator, well, I hopped right to it.
For those who don’t know him, Navellier has been around for a few decades as one of the original “quants” in newsletter world — he runs several newsletters that have large lists of stocks in their portfolios, selected by screening for his quantitative signals that indicate stocks will rise (my interpretation is that his system relies heavily on earnings growth, changes in analyst forecasts, revenue growth, and the momentum and size of those growing numbers — with a special interest in accelerating growth and “surprise” growth).
“Growth” and momentum pretty much always works as an investment strategy… until it doesn’t. “Buy what’s going up” works great… unless you happen to be the last one buying. And, of course, no one can really know in advance when the end of an upward move comes, which is why most investors who use quantitative systems like this are sure to diversify and just follow the system… the more you think about it and analyze the results, the more you mess up the chances for the system to work by layering your personal psychological biases on top of it.
(Quantitative analysis and the search for the “signal” that a stock will rise is also a far more crowded business than it was 20 or 30 years ago… the consensus among hedge fund traders seems to be that quantitative strategies don’t work for long, the supercomputers and MIT grads seek out their edge every second of every day and they’re getting better and better at it — so once a few folks find an edge that “beats the market” by following a quantitative signal, you’re sure to see others also identify it quickly, so you’re lucky if that “signal” works for more than a year or so before it becomes too widely followed to be effective. But we’ll leave that bigger picture concern for another day.)
The newsletters service that Navellier is selling today is called Ultimate Growth, which will cost you $1,695 a year (FYI, don’t get too excited about the “urgent opportunity” or “3 days only!” sales you might see in these ads, they say this “normally costs $5,000”, but I don’t think I’ve ever seen them charge that much for it… most newsletters habitually charge an “on sale” price with a “limited time offer!” just because they know you need an extra impetus to pull out your credit card before your attention drifts to the next email in your inbox).
And Navellier pulls out everyone’s favorite growth stock, NVIDIA, which was the best large cap stock in the market last year with a phenomenal gain, and essentially says that he’s going to ID the next NVIDIA for you… here’s a taste of the ad:
“NVIDIA is on the verge of becoming a household name after having outperformed every other stock in the S&P 500 in 2016, stealing the spotlight at the famous Consumer Electronics Show, announcing a huge partnership with Audi for a self-driving car and more.
“But the rest of the stocks I want to tell you about are like NVIDIA was a year ago—off the radar companies with monster earnings and sales growth and huge profit potential.
“There’s just something especially exciting and rewarding about buying a little-known company that most other investors have never heard of on the ground floor and riding it all the way up, isn’t there?”
It’s true… another human weakness, many of us would subconsciously prefer to find a new and exciting unknown stock rather than make just as much (or more!) money on a stock that everyone already knows about. Sometimes being “in the know” is more fun than maximizing your gains.
So what is the first stock he pitches as this “like NVIDIA was a year ago” stock? Here’s part of the pitch:
“The Man Who Went the Last Mile
“Disruptive companies—those that bring about real change—start with disruptive leaders willing to take a chance.
“… this company was founded by a young engineer who originally went to work at Apple for a visionary he looked up to.
“While there, he soaked up the Apple culture and learned to do things the Apple way.
“And then, one day while running tests to evaluate the performance of Apple’s Wi-Fi devices, he noticed something…
“He noticed that by bumping up the power of the devices, he could get much greater range without exceeding regulatory limits for electromagnetic emissions.
“And that means the Wi-Fi signal could go much, MUCH farther.
“We’re not talking just covering the dead zones in your house… we’re talking spanning over ten city blocks.
“But when he approached his bosses at Apple with the discovery, they weren’t interested in pursuing it. So, he did something Steve Jobs himself might have done… he quit and started his own company.”
That’s a good back story — it’s more fun to buy a stock when you feel like the guy in charge is a swashbuckler and a rebel who does things his own way, right? So what is it that the company actually does? Here’s a bit more, hint-wise:
“Today, his company has solved what networking professional call the ‘last mile’ problem—how to get internet to rural