Foreword by Steve Forbes
Here’s why this book will be so helpful to you.
Most individuals in the stock market swear that they are long-term investors and that they are disciplined in their investment decisions. Alas, most end up being the exact opposite. When the market takes a hit, for instance, all too often people ask, “Is it too late to get out?” And when it comes to trading individual securities, folks are swayed by an infinite variety of factors – something they have seen on TV, heard at a cocktail party, read in newspaper or magazine articles or spotted in a newsletter.
Result: You get whipsawed by buying too high and/or selling too low. The market masters you instead of it being the other way around.
That’s why the two most pregnant phrases in investing are: “down the slope of hope” and “climbing walls of worry.” In a bear market, which invariably follows a vigorous up market, people believe the downturn is an aberration. When a market rally occurs, they figure the bad news is behind them and the market is back on an upward trend. Then stocks get hit again, and this is followed by yet another “suckers’ rally.” Finally investors cry, “Just get me even and I’ll never go into the market again.” That’s usually a stock- market bottom.
Conversely, in a bull market investors are aware of the bad news and the things that can go wrong. They are cautious, wondering if the market is about to take a big hit. They either sit on their cash or go into equities very cautiously. Only in the latter stages of a bull market does euphoria take over.
Are you tired of being whipsawed by the market, of letting your emotions dominate your investing decisions, of not having a disciplined approach to fortify you in tough markets and prevent you from getting too giddy in up markets?
If so, you will enjoy – and profit from – this wee book. Louie Navellier has had a most enviable long-term investment record. Sure, he has had fallow periods, and some of his stock picks have turned out to be clunkers. But – and this but is key – he has a disciplined method of investing that over time has given him, and can give you, impressive, far-above-average returns.
Navellier lists eight fundamental factors that go into his stock picking. Early on he recognized that focusing on one fundamental can lead you astray. Wall Street is one heck of an emotional place. As Louie says in this book, “The stock markets have all the psychological symptoms of your average severe schizophrenic,” and “the biggest risk of all to successful growth stock investing [is] human emotions, such as fear and greed, which all-too-often lead us to do the wrong thing at exactly the wrong time.” Wall Street is more addicted to fashions than Hollywood or the garment industry. You don’t want to fall into the rut of the “flavor of the month.” A particular variable may serve you well for a period of time, but it can then let you down as other investors catch on to it. The weighting Louie gives to each of his eight variables will vary over time, but he avoids the perils of focusing only on one or two that seem hot at the moment.
His book also takes great pains to discuss reducing risk while shooting for excellent returns. He includes an eye-opening discussion on the much talked- about-but-sometimes-misunderstood terms, Beta and Alpha.
Bottom line: Louie shows you how he looks for equities that can do well in whatever the overall market conditions are. And because there are always surprises lurking, he urges investors to diversify their portfolios – into, say, 30 to 40 equities.
So my advice is to take the time to read and ponder this little book. You will learn many useful things and, most important, you may truly grasp the lesson that investing takes not only hard work but also stick-to-itiveness and a consistent approach. Louie Navellier demonstrates that focus and discipline will indeed fatten your portfolio with profits.
Copyright © 2007 John Wiley & Sons. All rights reserved.