Common Mistakes That Kill Your Portfolio

In 2020, American driving specialist AAA released a study on one of the most dangerous things on U.S. roads…

Overconfidence.

In the AAA study, researchers found that when autonomous driving capabilities are marketed as self-driving, drivers become overconfident in the vehicle’s ability to protect them in dangerous driving situations. As a result, they were more comfortable eating, drinking and using their cell phone while driving. But the reality is vehicles aren’t fully autonomous yet; the self-driving features are there to simply assist drivers, not completely navigate the roads for them.

Now, overconfidence isn’t limited to poor driving decisions, it’s also one of the most dangerous mistakes in investing.

Researchers have studied this for years in the field of “behavioral finance.” What they find is this:

Psychology is responsible for many of our worst blunders — if left unchecked. That’s what we’ll be discussing here in Market360, in our week-long Peak Performance Series.

Each day, I’ll detail the human behaviors that can cost investors big money… how you can neutralize their costly effects… and the rewards of overcoming them.

The human brain is a marvelous tool for creating feats of art, music, language, and engineering, but it’s a terrible tool for investing.

The more you know about the workings of your own mind, the “bugs” inside it, and how they work against your investment performance, the more you can develop strategies to mitigate the negative effects of those bugs.

In today’s essay, we’ll talk about the challenge investors and drivers alike face: Overconfidence. I’ll detail overconfidence bias, how it works, and how you can neutralize its negative effects.

Let’s get started.

Confidence vs. Overconfidence

First, let me get something out of the way: Confidence is a good thing.

Without it, you wouldn’t do many of the things that make life great. Whether it’s applying for a job, asking someone for a date, or even investing money in the market, confidence is part of what gets you to a great result.

However, overconfidence refers to the phenomenon that peoples’ confidence in their judgments and knowledge is higher than the accuracy of these judgments.

Put more simply, overconfidence blinds you to the reality of your ability and the circumstances around you.

Maybe you’re a fan of the popular television show, American Idol? During the auditions there are always a few people whose confidence in their singing ability goes way beyond their actual skill — often leaving them on the receiving end of some ridicule.

These singers do not listen to criticism, and often end up accusing the judges of bias against them.

Overconfidence can affect your investing life any number of ways, and sometimes it can take time to experience the consequences.

For instance, the latest Retirement Confidence Survey by the Employee Benefit Research Institute found that 2 out of 3 workers are confident they are doing a good job saving for retirement and know how much they will need to save to live comfortably, but only 44% have actually tried to calculate how much money they will need.

If these workers feel confident about their retirement savings, but haven’t calculated how much money they will need, they’re acting without supporting evidence. And without “crunching the numbers,” they may never build a big enough nest egg to enjoy a comfortable retirement. That’s a lesson ALL of us should heed.

How Do You Combat Overconfidence?

I’m a numbers guy. Always have been. Since I was a kid, I’ve loved math and I knew that math was the right way to understand the world.

Said another way, I depend on evidence for my decisions.

And math and technology combined have helped me create a tremendous amount of wealth for myself and my subscribers.

I depend on an objective set of criteria that signals what I should buy, when I should buy it, and when I should sell and collect the profits.

But I still wasn’t satisfied. I knew that math and technology could lead me to find the stocks that are poised to soar in a much shorter period of time.

We’re talking about opportunities like Baozun (BZUN). That stock had been flat for months, but my system picked up on the change in company performance, so I did some did some final vetting and decided it was time to “get in.”

Over the next 5 months, the stock soared 159%.

But then, things changed again…

One of Baozun’s precursors dropped off. My system noticed the drop in performance, and I confirmed it: it was time to “get out.” When you’re sitting on a great profit like the one we had, that can be a tough call to make. It’s all too easy to become too emotionally invested – too stubborn to sell. But numbers don’t lie…and you’re usually better off heeding them.

Sure enough, over the next several months, Baozun’s stock started heading down. Luckily, because I’d seen the signs, my subscribers and I were well out of harm’s way! And that’s just one stock – just the tip of the iceberg.

I’ve been working on this project for years, and I recently shared it with everyone.

I call this effort “Project Mastermind.”

Even just a few years ago, this kind of analysis seemed like a dream.

But using modern technology and loads of data, I am able to identify which stocks are ready to skyrocket, and the gains can come in months, not years!

Gains like these can be a retirement game changer. A chance to collect triple digit returns in a short time. And, it’s all based on facts!

After extensive analysis, I isolated the eight key qualities that these super-performing stocks shared… and I developed a system for riding them.

As I noted earlier, as wonderful as the human brain is, it is a terrible tool for investing. It’s like trying to eat soup with a fork.

With Project Mastermind, I’ve taken overconfidence out of the picture; in fact, I’ve removed ALL human biases. Investing decisions are made on cold, hard data.

And a special set of that data is signaling the stocks set to soar… and in a hurry!

You can click here to watch my Project Mastermind event, where I gave everyone a glimpse at my system and revealed my number-one stock pick.

Acting on data is the ultimate hedge to overconfidence. And with Project Mastermind, I can put all the facts right into your hands.

You’re not going to want to miss out. Because of the livestock pick that’s in there, we can only make it available for a little while longer. Go here to get started.

Sincerely,

Louis Navellier

Louis Navellier

The Editor (Louis Navellier) hereby discloses that as of the date of this email, the Editor (Louis Navellier), directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Achieving Peak Performance Investing

What a great night we had!

Everyone in our office is tired but exhilarated about the response to the Project Mastermind event last night.

We’re still fielding calls today after thousands of people tuned in for the details behind Project Mastermind — my system for using the latest technology and data for more profits, fast…with a lot less risk!

You likely know I’m a numbers guy. But you may not know I’m always looking to improve my performance, including a way to make my calculations work faster than ever!

Last night I unveiled my latest pick to the public in a special event. (You still have time to catch the replay here.)

I also described Project Mastermind in detail, including:

  • The trillions of data points I use to find the most powerful group of stocks on the market. (There’s a unique set of stocks that goes up by incredible multiples FASTER than any others-without the risk.)
  • The cutting-edge technology Project Mastermind uses to “predict” which stocks are poised for a big move. (This technology is used by Wall Street but has been kept out of reach of the “little guy…” until now.)
  • The “secret ingredient” behind the biggest calls of my career-it’s how I found Apple (AAPL) at $1.49… Oracle (ORCL) at 51 cents… Amazon (AMZN) at $49.
  • AND, I revealed the number one-rated stock Project Mastermind is telling me to buy now. Ticker symbol and all-during the interview – absolutely FREE!

You can still view my presentation, plus get the free pick, if you listen to the replay now – it will only be available for a short time.

Achieving Peak Performance

Over the next several days in Market360, I’m going to share a special editorial series called Peak Performance. This series will get to the heart of why I developed Project Mastermind: investors get lousy market returns because we let our emotions and our biases influence our decisions.

When you delve into how human beings operate, you find that the human brain is a marvelous tool for all sorts of things, but it’s a terrible tool for investing.

Why? Because we make decisions based on our emotions and our inherent biases about ourselves and the world around us.

The more you know about the workings of your own mind, the “bugs” inside it, and how they work against our investment performance, the more you can develop strategies to mitigate the negative effects of those bugs – and achieve peak performance.

I hope you’ll find the content entertaining and informative.

Sincerely,

Louis Navellier

Louis Navellier

The Editor (Louis Navellier) hereby discloses that as of the date of this email, the Editor (Louis Navellier), directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Amazon (AMZN)

The Next Evolution in Investing

I’ve always loved numbers, and I’ve always been fascinated with the stock market.

I’ve turned my love of those things into a successful career as an advisor and investor. Along the way I’ve helped my readers claim double- and triple-digit gains in the market and create a more secure future for themselves.

But my career as an investor really started with a homework assignment.

As a grad student at Cal State Hayward some 30 years ago, a professor gave me an assignment that would change my life … and lead me down a path that would make me, and many of my subscribers, rich.

The assignment was to create a model that would mimic the S&P 500.

My professor wanted to prove that indexing was the best way to invest. Using Wells Fargo & Company’s  powerful mainframe computers, I completed the assignment—but there was one little problem.

My model didn’t just mirror the S&P’s performance, it actually beat it!

I was one of the first analysts to use advanced computer models to analyze the market – back when computers were cutting-edge technology.

Using those tools, and lots and lots of data, I was able to make calls like Nike Inc. (NKE) at 39 cents per share and Intel Corporation (INTC) at $3.57 per share.

Leveraging mathematical analysis and the latest technology, I’ve established an impressive track record of growth. In fact, over 15 years, my large-cap stock picks beat Warren Buffet!

The lessons I learned in grad school are still serving me well today. Advanced technology is the single greatest tool investors can use to make investment decisions.

The truth is that the technology is moving so fast that even the proprietary market terminals are relics!

And that’s why I’ve kept evolving my system and used technology to take investing to the next level.

And now I’m ready to reveal the next evolution to the world.

I call it: Project Mastermind.

Using the latest tech, I’ve discovered a way to do even better in the markets. The results are faster, and come without any additional risk, — that’s what Project Mastermind is really about.

Click here to hear more from me about how my system works, and join me on Tuesday, January 19, at 4 p.m., as I unveil my system and give you my #1 Project Mastermind stock!

Sincerely,
Louis Navellier

Louis Navellier

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Nike Inc. (NKE)

Predictions Become Reality with Project Mastermind

Have you ever heard of Isaac Asimov? He was a famous science-fiction author and professor of biochemistry at Boston University in the mid-1900s. A good chunk of his science-fiction work was centered around robots, gadgets and the future.

One piece of writing Asimov is most famously known for is his “Three Laws of Robotics”:

  1. “A robot may not injure a human being or, through inaction, allow a human being to come to harm.”
  2. “A robot must obey orders given it by human beings except where such orders would conflict with the First Law.”
  3. “A robot must protect its own existence as long as such protection does not conflict with the First or Second Law.”

Of course, these laws are fictional. But to this day, folks are still arguing about their validity and accuracy… especially as the fascination with robots and the future in our society continues to grow.

To be clear, though, while there are engineers and scientists building robots all over the world, there are none that are even remotely close to “human-like.” So, there’s no need to worry about a robot breaking one of Asimov’s laws!

However, there’s something else Asimov is famous for that is applicable to today….

After going to the 1964 World Fair, Asimov wrote this in a New York Times article:

“Much effort will be put into the designing of vehicles with ‘Robot-brains’ — vehicles that can be set for particular destinations and that will then proceed there without interference by the slow reflexes of a human driver. I suspect one of the major attractions of the 2014 Fair will be rides on small roboticized cars which will maneuver in crowds at the two-foot level, neatly and automatically avoiding each other.”

Sound familiar? He’s talking about self-driving cars.

Today we have Google (GOOGL), Tesla (TSLA) and Apple (AAPL) – just to name a few – racing to release the first fully autonomous vehicle (AV). We’re not quite there yet, but that goalpost sure is moving closer with each new generation of AV technology.

And companies showing a ton of growth are focused on developing this kind of next-generation technology.

NVIDIA Corporation (NVDA) is a great example…

NVIDIA is a leading computer graphics company, making graphic processing units (GPUs) for consumers and businesses.

Thanks to Project Mastermind, I recommended this stock to my subscribers back in 2016. In 2019, we sold it for a whopping 166% gain!

It might surprise some people, but I owe all my investing success to one college assignment. At Cal State Hayward, one of my professors tasked me with creating a model portfolio that would mimic the performance of the benchmark S&P 500 index.

It was a dream assignment for a numbers guy like me… but I failed at it spectacularly.

The problem? My model kept beating the S&P 500.

This was back in the late 1970s, when everyone believed it was virtually impossible to beat the market without taking on excessive risk. Conventional wisdom was that you might get lucky for a while, but no one could consistently beat the market.

Thankfully, my professors gave me unprecedented access to Wells Fargo’s expensive and powerful mainframe computers to continue to build my stock selection models. (Remember, this was more than 30 years ago, before laptops and PCs.)

Through hundreds of hours of research, I discovered how an elite type of stock consistently outperformed the broad market, year in and year out. After extensive analysis, I isolated the eight key qualities that these super-performing stocks shared… and I developed a system for riding them.

The research I did back then serves as the foundation of what is now an advanced, high-tech method of computerized market analysis, or Project Mastermind.

Finding the Next Big Winners with Project Mastermind

As you can now see, with Project Mastermind I can find the next big winners in the stock market without the risk.

Over the next several days, we’re going to talk a lot about Project Mastermind and how this system can work for you.

And then, on January 19, at 4 p.m., I’m hosting a special event where I unveil Project Mastermind and reveal the stock I’ve rated number-one based on insights from Project Mastermind – ticker symbol and all…

I can already tell you with confidence – this recommendation has the potential to double your money or more over the next three months.

I hope you join me, so click here to sign up now so you don’t miss my special event!

Between the glimpse at my system and potential access to its number-one stock pick, you’re not going to want to miss out on what I’ll be sharing on Tuesday.

Sincerely,
Louis Navellier

Louis Navellier

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Google (GOOG), NVIDIA Corporation (NVDA)

Bitcoin Cracks 40K, Will the Dow Do the Same?

My hat’s off to my InvestorPlace colleague Matt McCall for winning our friendly wager on which would reach 40K first – bitcoin (BTC) or the Dow.

On Saturday, bitcoin reached a new all-time high close of $42,000, after smashing through its previous record high around $20,000 on December 23, 2020. Bitcoin then hit a roadblock later in the weekend, plunging over 22% to around $32,000 on Monday, it’s largest two-day drop since March. It’s already gained back some of its lost momentum since, rising back to around $35,000 today.

Talk about market gyrations!

Since August 5, 2020, the day I made my bet with Matt, bitcoin climbed more than 260% to its all-time high on Saturday, while the Dow gained 14% over the same timeframe. In other words, stocks have also performed well.

But a bet’s a bet, so I’m going to donate $5,000 to the charity of Matt’s choosing.

I can also tell you this — I’m more certain fundamentally superior stocks will outperform this year than ever. Part of the reason why is a weak dollar and favorable year-over-year earnings and sales comparisons coming for the fourth quarter of last year and this year’s first quarter. I also think the Dow will hit 40,000 later this year, and when it does, we won’t see the accompanying volatility like with bitcoin.

The United Kingdom’s financial regulator, the Financial Conduct Authority, warned cryptocurrency investors on Monday they should be prepared to lose their entire investment due to volatility and the difficulty of valuing crypto assets.

Prices had grown so overheated, even cryptocurrency analysts had been warning about overbought conditions leading into the rapid drop, and that a stronger dollar and higher bond yields in recent days likely contributed to bitcoin’s fluctuations.

Recently, the correlation between bitcoin and the dollar reached -0.95, indicating they’re likely to move in opposite directions than in tandem. And on Monday, the dollar was 0.4% higher against other major currencies and trading at a two-week high, while the 10-year Treasury yield reached 1.14%.

The bottom line is that cryptocurrencies have had an amazing run, but they’re also extremely volatile.

Back on March 14, 2020, when the pandemic began to take hold and hit the markets, bitcoin dropped to a low of around $5,425. It’s been a long climb back as investors began to pour money into the cryptocurrency.

Despite bitcoin’s fall in recent days, the cryptocurrency is still up 90.6% over the past month.

Interestingly, bitcoin remains popular with a certain segment of investors, many of whom have had greater access to the cryptocurrency thanks to payments giants Square (SQ) and PayPal Holdings (PYPL).

In Square’s third-quarter earnings announcements, the company saw $1.63 billion in bitcoin revenue, up 11X from a year prior. Square’s Cash App allows users to buy and sell bitcoin, and the payments company recently said it will allow customers to get bitcoin back on every transaction, which is likely to drive even more interest in bitcoin.

In October 2020, Square rival PayPal launched its own cryptocurrency buying and selling, as well as crypto merchant payments. The cryptocurrencies held in PayPal accounts can be used to pay for purchases at 28 million stores around the world. And not to be outdone by its payments competitors, Visa Inc. (V) said it will partner with cryptocurrency lending business BlockFi to release a bitcoin rewards credit card early this year.

Some companies are even beginning to shift part of their own corporate treasuries into bitcoin.

In October 2020, Square joined firms like software intelligence company MicroStrategy Inc. (MSTR) and the Grayscale Bitcoin Trust, with $24.2 billion in assets under management, by adding $50 million worth of bitcoin to its own treasury. MicroStrategy Grayscale currently owns about $2.2 billion worth of bitcoin, while Square has about $150 million worth.

Legendary hedge fund manager Paul Tudor Jones has put 1% to 2% of his multi-billion-dollar portfolio into bitcoin, deeming it a store of value and inflation hedge similar in some senses to gold with its finite supply. He also said he’s confident digital currencies will dominate the world’s economies of the future. Jones even compared bitcoin to internet stocks in 1999, when investors were still trying to figure out which technology companies would come to grow and prosper on the internet.

While that all appears to be positive news for the sector, personally, I’m not a fan of bitcoin or cryptocurrencies.

Instead, I prefer high-quality stocks that have outstanding earnings and revenue growth and will continue to grow in the coming quarters.

Setting Up for a Prosperous New Year

Looking forward, I expect fundamentally superior stocks to step into the spotlight in January and lead the market higher in 2021. My Platinum Growth Club Model Portfolio stocks are directly in line to prosper, given that they are characterized by at least double-digit earnings growth and have benefited from positive analyst revisions in recent months. So, as investors return to their trading desks, I look for my Platinum Growth Club Model Portfolio stocks to continue to meander higher.

It’s why I made several changes to my Platinum Growth Club Model Portfolio in my Platinum Growth Club January Monthly Issue to ensure that my Platinum Growth Club subscribers are well-positioned to profit in the New Year, including selling four stocks and adding eight new names. I also recommended three new names in my Breakthrough Stocks service last Friday.

So, if you’re interested in my latest recommendations and want to get into position to take advantage of the coming strength with fundamentally superior stocks, now is the time to join me here at Platinum Growth Club. Currently, I have more than 100 stocks across all my services to choose from, and as a Platinum Growth Club subscriber, you have full access to each and every one.

Of course, you don’t have to invest in all 100+ stocks to grow and prosper this year. If you’d rather start small, I have you covered there, too. My Platinum Growth Club also comes with my exclusive Model Portfolio. I handpick all of my Model Portfolio recommendations from my different services – Growth Investor, Breakthrough Stocks and Accelerated Profits – so you can rest assured that you’re always invested in the crème de la crème.

Plus, you’ll also have full access to Power Portfolio 2021, a portfolio Matt and I created that currently hosts 11 growth stocks across a variety of sectors that we expect to surge this year. Just last Wednesday, we released a tech stock recommendation that is leading its market. This company makes semiconductors that have special capabilities which lends them particularly useful in the expansion of 5G and the Internet of Things (IoT). Its earnings are expected to surge a stunning 285% over the next couple of years, so there is no better time to invest than now.

If you’re interested and would like to learn more about my Platinum Growth Club, please click here for full details.

Sincerely,
Louis Navellier

Louis Navellier

P.S. Last Monday, I released my latest Portfolio Grader 500, a quarterly list of some of the best and worst stocks on the stock market right now. In it, you have access to 250 A- and B-rated powerhouses and 250 D- and F-rated sell immediately stocks. As a valued Platinum Growth Club subscriber, this reference guide is yours free. Read it here now.

 

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

PayPal Holdings (PYPL), Visa Inc. (V)

How to Choose the Crème de la Crème of “The Cloud”

Before the pandemic struck, cloud computing was simply a buzzword flying around corporate board rooms and Wall Street corner offices. Then as COVID-19 began to take hold across American and the world, many of us shifted to a work from home environment. We began to rely on “the cloud” more and more to facilitate our daily business operations and keep the economy humming.

This year, according to Forrester Research, the global public cloud computing infrastructure market is expected to grow 35% to $120 billion. The research firm had to revise its prior estimate of 28% growth for 2021, after taking into account the global trend to adopt cloud computing even faster in light of the “new environment.”

And that’s just the beginning. The worldwide proportion of IT spending on the cloud should climb 18% in 2021 to $304.9 billion, Gartner says. About 93% of enterprises surveyed in the Flexera 2020 State of the Cloud report already use some cloud service.

No doubt you’ve heard the term, but just what is cloud computing? Simply put, it’s on-demand access via the internet to computing resources. We’re talking everything from servers and apps to data storage, development tools, networking capabilities and more.

Cloud computing as we know it today started back in late 1996 in a Houston office park. According to the MIT Technology Review, a Compaq marketing executive and another technologist coined the term “cloud computing-enabled applications” for their idea that business software would eventually come to be stored on the internet.

Ever since, some of the most competitive technology companies on the planet have been vying for a slice of the multi-billion-dollar industry, including behemoth cloud providers like Amazon (AMZN), Microsoft (MSFT) and Google (GOOG).

The reality is that cloud computing can help lower IT costs, speed the time an organization needs to start using computing resources, and provide an easier, more cost-efficient way to scale computing capacity within a business.

Investors have taken note.

One of the sector’s bellwether ETFs, the WisdomTree Cloud Computing ETF (WCLD), has gained 31.86% in the past six months, and 101% over the past year.

However, I’m not a huge fan of ETFs, as they’re often comprised of winners and losers in a given sector.

For example, the IT services company Pluralsight, Inc. (PS), a stock that currently makes up 1.46% of the WisdomTree Cloud Computing ETF, is a “Hold” in my Portfolio Grader, earning a Total Grade of “C,” a Fundamental Grade of “C” and a Return on Equity grade of “F.”

Not the best report card at the moment. This is why I look for fundamentally superior stocks on a case-by-case basis.

My InvestorPlace colleague, Matt McCall, and I believe we’ve found even better ways to play the cloud. I’m talking about the kinds of picks and shovels companies that are using the cloud to ring in fundamentally superior sales and earnings.

In fact, we recommended several stocks taking advantage of the cloud in their business models in our Power Portfolio 2021 in December.

One is a leading provider of cloud software for business call centers. The company is on a mission to replace the old on-premise contact center systems with quickly deployable solutions that come with seamless upgrades.

The business’s solutions can also be integrated with a company’s customer relationship management (CRM) system and other business applications. Customers feel as though they are getting more personalized and more attentive service.

Over the last 10 years, the company’s revenue has grown at a strong 33% compound annual rate without a down year. This stellar consistency is just as evident in its quarterly revenue. Since 2012, the company has grown its top line quarter-over-quarter every time. And it has multiple avenues for growth – adding new customers, expanding existing relationships, and entering international markets, so we don’t expect that growth to slow anytime soon.

Another stock added more recently to our Power Portfolio 2021 is using the cloud to operate a residential real estate brokerage platform. This allows realtors to expand their business without the burden of brick-and-mortar offices and redundant staffing costs.

Over the last decade, the company’s network has grown to more than 36,000 real estate professionals throughout the U.S. and Canada. The platform is beneficial to agents as well, as they can get professional support and the infrastructure to run their businesses – including a full suite of back-office functions like paperless file sharing and transaction management.

The power of a cloud-based business model can be seen in the company’s profitability. Through mid-December, the company’s cash flow had already grown by more than 6X compared to the same period last year!  And with record-low mortgage rates and lean home inventories, the outlook for the housing market is very bright.

These aren’t the only cloud plays we like right now, either. There are three cloud companies in our Power Portfolio 2021 that are great buying opportunities.

You can check them out in full detail by clicking here.

P.S. We just released another tech stock recommendation on Wednesday that is a leader in the semiconductor industry. This company makes semiconductors that have special capabilities which lends them particularly useful in the expansion of 5G and the Internet of Things (IoT). Its earnings are expected to surge a stunning 285% over the next couple of years, so there is no better time to invest than now. For more information on this stock, click here.

The Editor (Louis Navellier) hereby discloses that as of the date of this email, the Editor (Louis Navellier), directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Amazon (AMZN), Microsoft (MSFT) and Google (GOOG)

Are You Ready for the January Effect?

Small-cap stocks have been on a roll lately. The Russell 2000 index just posted its strongest quarter ever, soaring over 22.1%, while the S&P 500 increased 9.1% and the Dow grew by 8.1%.

My Breakthrough Stocks, on average, have continued to benefit from an early “January effect” that begins as yearend pension funding, annual gift-giving and other positive seasonal events create buying pressure on higher trading volume.

Yearend pension funding and annual gift-giving often create forced buying pressure under smaller-cap stocks, which are more sensitive to volume. As a result, they tend to flourish between November and May.

This played out about a year ago. You can see in the chart below how the Russell 2000 grew over 14% from November 2019 through mid-January 2020.

What has been even more amazing this year about the fourth quarter is that many of my small-cap Breakthrough Stocks appreciated on light trading volume. The first quarter could bring much higher trading volume, so the price appreciation potential could be even stronger, thanks to their superior earnings and sales growth.

FactSet analysts predict the S&P 500 will achieve year-over-year earnings growth of 22.1% in full-year 2021, which is well above the 10-year average growth rate of 10%. Revenue growth should also rise 7.9%, which is close to double the 10-year average rate of 4.5% revenue growth.

Of course, I fully anticipate my own fundamentally superior Breakthrough Stocks are poised to do even better this season thanks to strong forecasted sales and earnings.

My Breakthrough Stocks’ average sales are forecasted to accelerate to 102.6% in the fourth quarter, up from an average of 80.5% in the third quarter. Naturally, due to profit margin expansion, Breakthrough Stocks’ average earnings are forecasted to rise to 455.9% in the fourth quarter, down slightly for an average of 544.2% in the third quarter.

However, my Breakthrough Stocks have had their earnings estimates revised 41.4% higher in the past three months, so they are expected to post big earnings surprises for the fourth quarter, which, in turn, should drive them higher as Wall Street cheers the strong results

One of the reasons that my Breakthrough Stocks are posting incredible sales and earnings growth is that the year-over-year comparisons remain very favorable and will continue for much of 2021 due to the impact Covid-19 has had on the U.S. economy.

I’ll discuss much more about the trends fueling analysts’ predictions about the incredible earnings and sales in my Breakthrough Stocks January Monthly Issue. And I’ll lay out what it all means for my Breakthrough Stocks, which will be released tomorrow after the market close.

The bottom line: I know there have been a lot of media and political distractions, which is why focusing on fundamentally superior stocks is the best way to control your own investing destiny. The upcoming announcement season is expected to be stunning and I fully expect wave-after-wave of better-than-expected results to propel my stocks substantially higher! I also expect very strong guidance, so I remain especially positive for my Breakthrough Stocks.

As I said, I’ll talk much more about the trends that will propel stocks higher in the coming months in tomorrow’s Breakthrough Stocks January Monthly Issue. I’ll also unveil three new buy recommendations.

Now, if you join me at Platinum Growth Club, you will have access to this Breakthrough Stocks January Monthly Issue and my three newest recommendations and more than 100 stocks across all my services – Growth Investor, Breakthrough Stocks and Accelerated Profits.

Of course, you don’t have to invest in all 100+ stocks to grow and prosper this year. If you’d rather start small, I have you covered there, too. My Platinum Growth Club also comes with my exclusive Model Portfolio. I handpick all of my Model Portfolio recommendations from my different services, so you can rest assured that you’re always invested in the crème de la crème.

It’s a great time to join, as I also recently made several changes to my Platinum Growth Club Model Portfolio last week to ensure my Platinum Growth Club subscribers are “locked and loaded” for the New Year, including selling four stocks to make way for eight new, exciting names.

If you’re interested, please click here for full details. And if you decide to sign up today, not only will you have instant access to all of my recommendations, but you’ll be just in time for my first Platinum Growth Club Live Chat Event of 2021, scheduled for next Monday, January 11, at noon. I will be covering several topics, including my latest thoughts on the current market environment. I will also take some time at the end to answer subscriber questions. So, if you join me at Platinum Growth Club today, don’t forget to send me your questions early!

Sign up here now so you don’t miss out!

Sincerely,

Signed:
Louis Navellier

P.S. On Monday, I released my latest Portfolio Grader 500, a quarterly list of some of the best and worst stocks on the market right now. In it, you have access to 250 A- and B-rated powerhouses and 250 D- and F-rated sell immediately stocks. As a valued Platinum Growth Club subscriber, this reference guide is yours free. You can check it out here.

You’ll also have access to a select group of recommendations that my InvestorPlace colleague Matt McCall and I have lined up for investors this year. We call it our Power Portfolio 2021, which is “locked and loaded” with 11 stocks we expect will crush the market, including our latest recommendation, a semi-conductor leader, which we released Wednesday. Get all the details here.

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

The Big Trends to Watch in 2021

Happy New Year! 2020 was a wild ride to say the least, but it’s in the rearview mirror and we can all be thankful for that.

Now, I’m particularly optimistic about 2021. We’ve got a lot to look forward to this year, and it kicks off with the fourth-quarter earnings announcements in mid-January. That’s when Wall Street should begin to refocus its attention on superior fundamentals, like corporate sales and earnings.

The fact of the matter is that year-over-year sales and earnings comparisons are going to be particularly favorable in 2021. Analysts have also revised earnings estimates up by an average 10.4% in the past three months, so the fourth-quarter earnings season should be spectacular.

In this environment, the best defense remains a strong offense of fundamentally superior stocks. In Growth Investor, on average, my stocks are characterized by 41.6% annual sales growth and 204.2% annual earnings growth.

The bottom line: The New Year is a time for optimism, and my Growth Investor stocks are “locked and loaded” for another prosperous year.

So, while my investment strategy at Growth Investor is not changing in 2021, there are a few big changes on the horizon you should be aware of.

One important one is a weak U.S. dollar.

The U.S. dollar weakened considerably against other major currencies in 2020. The greenback isn’t expected to recover any time soon either, as out-of-control spending and massive federal budget deficits will continue to weigh on the U.S. dollar for the foreseeable future.

Believe it or not, a weak U.S. dollar is actually great news for the multinational and international companies that dominate the S&P 500. Keep in mind that about half of the S&P 500’s sales are from outside of the U.S., so a weak U.S. dollar boosts both sales and earnings. In other words, a weak U.S. dollar can create windfall profits for multinational companies.

Technology companies were certainly some of the biggest beneficiaries of the weak U.S. dollar in 2020, and they should continue to prosper in this environment in 2021. As a result, several of my Growth Investor stocks are well-aligned to benefit from this change in the New Year. Two of my favorites are Adobe, Inc. (ADBE) and Microsoft Corporation (MSFT).

Adobe basically controls the PDF format for documents, and it is the ideal and most-preferred format for email attachments. However, you now have to pay Adobe a license fee to modify PDF documents, and that has added nicely to the company’s top and bottom lines. For the fourth quarter, the consensus estimate calls for earnings of $2.78 per share, or 22.5% annual earnings growth, and revenue of $3.76 billion, or 21.6% annual revenue growth.

Like Adobe, Microsoft charges an annual license fee for individuals and businesses to use its software. So, all those folks—employees and students—that are working and studying remotely are now paying new license fees, and that’s been a boon for Microsoft. Analysts are anticipating that Microsoft’s earnings and sales will grow 8.4% and 9.0%, respectively, in the fourth quarter.

The Scramble for 5G Bandwidth

Another trend to watch closely is 5G wireless technology.

As the work-from-home environment will continue this year, I expect more people and businesses are going to rely on the lightning fast internet speed and low latency (basically, the time it takes to transfer data between its source and destination) that 5G offers. And they’ll do so as they seek to take part in the wave of advances in autonomous vehicles, smart factories and connected sensors that 5G will help enable.

U.S. cellphone carriers are currently scrambling to secure access to 5G wireless licenses being auctioned off by the Federal Communications Commission (FCC), and setting records as they do so.

Already, the FCC has raked in $68.9 billion after three weeks of bids for 5G licenses in the mid-band spectrum, according to the Wall Street Journal. The huge increase has crushed Wall Street’s forecasts for the auctions and blown past the $44.9 billion the FCC raised in 2015 for midrange cellular licenses that mobile carriers used to beef up their 4G offerings.

And the FCC isn’t even done yet. The next auction is scheduled for January 4. The public doesn’t know who won which licenses as the process is a secret until complete, but you can be sure the major carriers like AT&T (T) and Verizon Communications (VZ) are vying for access.

So, let’s take a quick look at how these companies rate in my Portfolio Grader.

As you can see, AT&T gets an overall “Strong Sell” and “F” grade, with an “F” for the Quantitative Grade and a “D” for Fundamentals. Verizon doesn’t fare much better, earning a D-rating for its Overall Grade and Quantitative Grade. This tells me that there’s little interest in the stock from institutional investors like hedge funds and mutual funds.

The good news is there’s a better way to play the rollout of 5G and the technologies it will enable, including several opportunities among my Growth Investor Buy Lists.

One is Taiwan Semiconductor Manufacturing Company Limited (TSM). It was the first dedicated semiconductor foundry in the world when it was founded in 1987. In other words, TSM does not develop or market any semiconductor products under its own brand. So, the company is never in direct competition with its customers. Today, Taiwan Semiconductor is the largest semiconductor foundry in the world, with a 56% market share.

Taiwan Semiconductor manufactures more than 10,760 products that use 272 unique technologies for its nearly 500 customers. The company manufactures semiconductors that are used for computers, consumer, industrial, communications and standard markets. In 2019, Taiwan Semiconductor’s total managed capacity reached more than 12 million 12-inch equivalent wafers.

As the world’s largest semiconductor foundry, it’s not too surprising that Taiwan Semiconductor is benefiting immensely from the 5G boom. Did you know that 5G phones actually have 30% to 40% more semiconductor chips than previous models? This alone has contributed strongly to the demand for TSM’s semiconductors. During the third quarter, the company achieved 46% of its sales from mobile chip sales, and it anticipates 5G demand will drive demand for 5nm chips to account for 20% of sales next year.

The launch of Apple’s (AAPL) new 5G smartphone series will certainly add demand for TSM’s chips. The company is supplying the 5nm chips for Apple’s iPhone 12 5G phones. The chipset, A14 Bionic SoC, contains 171.3 million transistors in each square nanometer, or 15 billion transistors, which compares to only 8.5 billion transistors in Apple’s iPhone 11.

Along with providing chipsets for Apple’s 5G mobile phones, TSM also develops chips for several of the other largest semiconductor companies in the world, including Qualcomm (QCOM), NVIDIA (NVDA), Advanced Micro Devices (AMD) and Huawei. Increased 5G chip demand from each of these companies is sure to add to TSM’s top and bottom lines for the foreseeable future.

In the third quarter of 2020, total revenue rose 21.6% year-over-year to NT$356.43 billion, and earnings jumped 35.9% year-over-year to NT$137.37 billion, or NT$5.30 per share. In U.S. dollar terms, TSM achieved earnings of $0.90 per ADR and revenue of $12.14 billion. The analyst community was looking for earnings of $0.77 per ADR on $11.51 billion in revenue. So, TSM posted a 16.9% earnings surprise and a 5.5% revenue surprise.

Looking forward, TSM expects fourth-quarter revenue between $12.4 billion and $12.7 billion. That forecast was nicely higher than analysts’ initial estimates. As a result, analysts have upped fourth-quarter earnings and revenue forecasts. For the fourth quarter, analysts now expect earnings of $0.93 per ADR on $12.33 billion in revenue, which represents 27.4% annual earnings growth and 18.6% annual revenue growth.

It also earns an A-rating in Portfolio Grader, with an “A” for its Quantitative Grade and “B” for its Fundamental Grade, making the stock a “Strong Buy” right now.

Preparing for 2021 Trends

But I’m just getting warmed up. In my Growth Investor January Monthly Issue, I’ve outlined four other major trends I expect will be important this year, and some of the companies best positioned to take advantage of these trends. In this Monthly Issue, I also unveil my newest buy in the cybersecurity space, as well as two Elite Dividend Payers. You can get the names and my buy advice here.

We’ve got an exciting year ahead of us, and I can’t wait to get started.

But before I go, I have to let you know about one more trend I’ve been keeping a close eye on.

The disturbing fact is that a great divide is opening up in America. On one side is a new aristocracy that’s amassing more wealth, more quickly than any other group in American history. For people like me, the one percent, life has never been better, more prosperous.

On the other side, the opposite is happening. Wealth is flowing out of the pockets of ordinary Americans at an unprecedented rate.

What’s happening is only going to gather in strength over the coming decades. It certainly won’t weaken.

Few Americans even know that any of this is going on. I’ve never seen anyone from my side of the chasm step forward to explain any of these things.

It’s why I put together this video. In it, I’ll lay out exactly what is happening, including several key steps every American should take right now.

It doesn’t matter if you have $500 in savings or $5 million. You can benefit from the information in this video.

It’s free to watch and by doing so I know you’ll be ahead of everyone else struggling to understand what is really going on.

Note: The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Adobe, Inc. (ADBE), Advanced Micro Devices (AMD), Microsoft Corporation (MSFT), NVIDIA (NVDA), Taiwan Semiconductor Manufacturing Company Limited (TSM)

My Favorite Cybersecurity Plays Right Now

The cybersecurity industry has been all over the headlines this past month – and not in a good way.

It started on December 8 with FireEye, Inc. (FEYE). If you don’t know, FireEye is considered one of the best cybersecurity companies in the country. It offers a wide variety of cybersecurity services, including consulting, network security, email security and threat intelligence.

The company was climbing nicely higher following its strong third-quarter earnings results in late October. FireEye unveiled record revenue and earnings. For the third quarter, the company posted earnings of $0.11 per share on revenue of $238 million. Analysts were expecting earnings of $0.07 on $227.7 million in revenue, so FEYE posted a 53.6% earnings surprise and 4.7% sales surprise. It also represented a whopping 450% year-over-year earnings growth and 5% year-over-year sales growth.

However, FEYE’s uptrend came grinding to a halt on December 8 after company management announced that FEYE had been hacked by foreign actors and their Red Team tools stolen.

This is a big deal. According to FireEye CEO Kevin Mandia, “These tools mimic the behavior of many cyber threat actors and enable FireEye to provide essential diagnostic security services to our customers.” He also noted that “the attacker primarily sought information related to certain government customers.”

The stock plummeted more than 13% the following day. While the stock has since regained its losses, I still wouldn’t recommend buying it right now, simply based on its fundamentals. FEYE currently earns a C-rating in Portfolio Grader, making the stock a “Hold.”

Aside from mediocre earnings and operating margin growth, what really stands out to me is the company’s C-rating for its Quantitative Grade. My exclusive quantitative formula measures the institutional buying pressure supporting a stock and then determines the quantitative grade.

Like individual investors, large institutional investors, such as corporations, cities or school systems, invest in stocks for income. These large institutional clients buy chunks of a stock, often worth millions of dollars. Typically, the more attractive a stock currently is to institutional investors, the better the stock will perform in the near term.

Clearly, that’s not the case with FEYE right now.

But it’s not just FEYE that’s had a hacking problem recently. A wide range of U.S. government agencies were attacked, too, including the Treasury Department, Commerce Department, Department of State, Department of Energy, the Cybersecurity and Infrastructure Agency, the National Nuclear Security Administration, Department of Homeland Security, three U.S. states and the City of Austin.

This was due to a breach in SolarWinds Corporation (SWI), which provides IT software management software to more than 425 of the Fortune 500 companies, the top ten U.S. telecommunications companies, the U.S. military, U.S. departments, the top five U.S. accounting firms and universities and colleges. Its Orion Platform, a network monitoring and management software, was hacked via a Trojan horse. This created a “backdoor” for hackers to enter and control the software. Interestingly, it was a FEYE employee who first spotted the SolarWinds hack.

This is a very serious issue, but make no mistake, I believe the need for cybersecurity will only grow in years to come.

The reality is there’s a lot of opportunity here for investors. In 2019, the cybersecurity industry was worth $161.07 billion. In five years, that’s expected to nearly triple to $363.05 billion, according to Mordor Intelligence. So, there’s a lot of growth ahead. It’s just a matter of investing in the right cybersecurity company with superior fundamentals to back it up.

Two Top Cybersecurity Plays

The good news is that I have two for you in Growth Investor. The first is Fortinet, Inc. (FTNT). The company provides unified security solutions that can be deployed over digital networks to protect users against malware, spam and network intrusions. The company provides its security solutions to data centers, enterprises, carriers and distributed offices around the globe. Fortinet currently boasts a portfolio of over 530 patents worldwide.

Since its founding back in November 2000, the company has had a meteoric rise. Over the past 18 years, it has shipped more than four million units of its security solutions. It has built up a base of over 360,000 customers. And since 2002, its revenues have surged from just $2 million to nearly $2.5 billion.

For the third quarter, Fortinet achieved total revenue of $651.1 million, or 19% year-over-year growth. Product revenue accounted for $223.8 million, while service revenue accounted for $427.3 million. Analysts were expecting total revenue of $639.12 million.

Third-quarter earnings increased 24% year-over-year to $145.4 million, or $0.88 per share, up from $117.3 million, or $0.67 per share, in the same quarter a year ago. Analysts were looking for earnings of $0.78 per share, so Fortinet topped estimates by 12.8%.

Looking forward to the fourth quarter, Fortinet expects total revenue between $710 million and $730 million and earnings per share between $0.95 and $0.97. That’s up from earnings of $0.76 per share and revenue of $614.4 million in the fourth quarter of 2019.

Given FTNT’s solid fundamentals and positive future guidance, I look for this high-quality stock to only head higher from current prices.

FTNT also carries a B-rating in Portfolio Grader, making it a “Buy.”

As you can see in the Report Card above, unlike FEYE, FTNT receives a B-rating for its Fundamental Grade, Quantitative Grade and Total Grade. Not only are its fundamentals better, but clearly there’s still a lot of institutional buying pressure to continue driving the stock higher.

The second is a cybersecurity company that I just recommended in my Growth Investor January Monthly Issue last Friday. It recently posted a strong third-quarter earnings report, and walloped analysts’ expectations by more than 18,000%! Looking ahead to the fourth quarter, company management continues to see strong growth ahead. Click here for the name and latest buy advice.

The bottom line: There’s a lot happening in the cybersecurity industry right now, and I look for specific, high-quality stocks to continue to do well as the magnitude of the importance of cybersecurity becomes front and center. If you’re interested in profiting in this growing space, join me here at Growth Investor today.

Note: There’s a great divide that’s opening up in America. On one side is a new aristocracy that’s amassing more wealth, more quickly than any other group in American history. For people like me, the one percent, life has never been better, more prosperous.

On the other side, the opposite is happening. Wealth is flowing out of the pockets of ordinary Americans at an unprecedented rate.

The thing is, what’s happening is only going to gather in strength over the coming decades. It certainly won’t weaken.

Few Americans even know that any of this is going on. I’ve never seen anyone from my side of the chasm step forward to explain any of these things.

That’s why I put together this video. In it, I’ll lay out exactly what is happening, including several key steps every American should take right now.

It doesn’t matter if you have $500 in savings or $5 million. You can benefit from the information in this video.

It’s free to watch and by doing so I know you’ll be ahead of everyone else struggling to understand what is really going on.

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Fortinet, Inc. (FTNT)

Stuff Your Stocking Portfolio With This Gaming Stock

Santa Claus is coming to town, and while the mood turned a bit sour on Monday, I look for the holiday cheer that typically spreads across Main Street to perk Wall Street right back up.

So what stocks should you stuffing in your stocking before the Christmas holiday?

Personally, I like companies in the booming online and mobile gaming business, which has been surging during the pandemic and into the holiday season.

The global mobile gaming market alone reached $75.4 billion so far this year, up 19.5% from 2019, according to Sensor Tower. Five games achieved $1 billion in revenue in 2020, including PUBG Mobile, Honor of Kings, Pokemon Go, Coin Master and Roblox. Some of these games were around last year but saw sales surges in 2020. An example is PUBG Mobile, which brought in $2.6 billion in sales this year, up 64.3% from 2019’s sales figures.

Industry analysts have noted they don’t expect 2020’s uptick in games sales will dwindle next year, either. For instance, in China, one of the world’s largest mobile gaming nations, and where COVID-19 infections and lockdowns are mostly a thing of the past, elevated interest in gaming has persisted.

With that in mind, a great gaming “stocking stuffer” is Logitech International SA (LOGI).

Back in October, LOGI shares surged after the company smashed analysts’ expectations for its second quarter in fiscal year 2021 and upped its full-year guidance.

In its latest quarter, Logitech achieved sales of $1.26 billion, or a 75% year-over-year increase. That crushed analysts’ estimates for $834.55 million. Second-quarter earnings soared 295% year-over-year to $354 million, or $1.87 per share, compared to $89 million, or $0.50 per share, in the same quarter a year ago. Analysts were looking for earnings of $0.57 per share, so Logitech posted a whopping 228.1% earnings surprise.

The outstanding quarter can be attributed to four major trends the company sees working in its favor: working and learning from home, video everywhere, electronic sports driving gaming engagement and participation and the further democratization of content creation.

Sales of PC Webcams climbed 258% from a year prior to $102 million, the first time the company saw sales of the device top $100 million in a quarter, while video collaboration sales rose 161% to $237 million — Logitech’s best ever quarter for the metric. Gaming sales also rose 84% from a year prior as the company’s racing simulation game took off.

Logitech stated, “Our products are essential to helping customers work, play and create wherever they are. Logitech is well positioned for long-term growth.”

As a result, Logitech increased its full-year 2021 outlook. The company now expects to achieve sales growth between 35% and 40%, up from its previous forecasts for 10% to 13% annual sales growth. Full-year earnings are forecast to be between $700 million and $725 million, compared to previous estimates for $410 million to $425 million.

The company also earns the rare AAA-rating in my Portfolio Grader, as it holds an A-rating for its Fundamental Grade, Quantitative Grade and Total Grade.

I added the stock to the Growth Investor Buy List back in August, it’s already up about 31%. I also listed it as one of my Top 5 stocks in Growth Investor.

Aside from being a strong play on the gaming industry, LOGI is also a good example of the type of stock investors will rotate to in 2021 as Wall Street turns its focus more on superior fundamentals.

If you’re interested in the other stocks I expect do well next year, I recommend giving my latest Growth Investor January Monthly Issue a read. In this Monthly Issue, I discuss how I expect the investment landscape to change and where to find the best opportunities. I also unveil my newest buy in the cybersecurity space. You can get the name and my buy advice here.

In the meantime, I hope you have a wonderful holiday weekend! Remember, the stock market will close early on Thursday, December 24, and will be closed on Friday, December 25, in observance of the Christmas holiday.

Note: There’s a great divide that’s opening up in America. On one side is a new aristocracy that’s amassing more wealth, more quickly than any other group in American history. For people like me, the one percent, life has never been better, more prosperous.

On the other side, the opposite is happening. Wealth is flowing out of the pockets of ordinary Americans at an unprecedented rate.

The thing is, what’s happening is only going to gather in strength over the coming decades. It certainly won’t weaken.

Few Americans even know that any of this is going on. I’ve never seen anyone from my side of the chasm step forward to explain any of these things.

That’s why I put together this video. In it, I’ll lay out exactly what is happening, including several key steps every American should take right now.

It doesn’t matter if you have $500 in savings or $5 million. You can benefit from the information in this video.

It’s free to watch and by doing so I know you’ll be ahead of everyone else struggling to understand what is really going on.

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Logitech International SA (LOGI)

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