by Jason Bodner

November 24, 2020

As quickly as you can, name your favorite:

  • Actress?
  • Song?
  • Athlete?
  • Show?
  • Movie?
  • Vacation spot?
  • Piece of clothing?

And now… what is your favorite stock?

I bet you didn’t hesitate to answer the first seven but struggled for a quick response to that last one. The brain only has so much capacity to recall a list of items quickly. That magic number is 7. Countless psychological experiments confirmed that 7 is the limit of human recall, on average. Hence, 7 is known as “the limit.” That’s why phone numbers are 7 digits, because beyond that they are hard to memorize.

There’s probably another good reason why stocks don’t make it on your personal favorites list: They just don’t make most people feel good. That’s not true for me. Stocks make me feel good. I could name my favorite stock before my favorite movie, but I’d bet stocks are boring for most people. They know they may own them somewhere in a 401 (k) fund managed by someone they never met. And that’s it. But the great irony is that the very things that can make us rich are the things we generally pay little attention to.

For example, say your refrigerator died. You need a new one fast. You hop on the internet and search the types of fridges. You read reviews and watch videos. You research measurements and depths. You must match specifications to know what to replace. You might visit multiple stores. You might talk to multiple salespeople or other customers. You narrow it down to three models. Then you return to the internet for more in-depth reviews. You then go back to the stores to see which one could offer you the best price.

Only after all that deliberation do you pull the trigger. You didn’t want to jump into a huge decision too soon. You wanted to know the best value before buying. But you ordered food in for nearly a week and never factored that in, nor the cost of replacing old food that went bad but wouldn’t if you had acted fast.

By comparison, how much time do you spend researching a stock you plan to buy? I’d bet that if I told you a ticker symbol right now and said it’s a great buy, you’d go buy it without hesitation. Most people wouldn’t even look up any of its fundamentals if they heard that it was a “hot stock tip.”

Refrigerators won’t make you rich, but buying stocks that go up two, three, or even 10-fold or more will. So why do we spend vastly more time researching appliances than we do buying investments? It’s a fascinating phenomenon. The mind focuses on small gratifications but leaves the big ones up to chance.

Fortunately, there are many financial advisors or research services that “do it for you.” That frees you up to focus on fridges, cars, Netflix shows, and other practical or fun stuff in life.

This brings me to market shocks and getting shaken out of great stocks when things get rough.

When the 2020 presidential election reached its conclusion, several COVID-19 vaccine announcements immediately followed. The stock market looked like a rocket launching into space. Every stock went up. Quickly a nasty pattern emerged – a rotation out of growth stocks into value stocks. Companies battered by COVID looked to benefit from a country reopening after widespread vaccination and defeat of the virus. Big tech and growth stocks were suddenly poised to be out of favor as, hypothetically, every American might soon get back on planes, eat at restaurants, shop at malls, and enjoy the good old life.

This can be seen in the Russell 2000 index – full of small cap and value stocks. That index is +16% this month vs. the NASDAQ tech and growth-heavy index +8.6% (Source: FactSet). That’s nearly double.

Suddenly, “stay at home” stocks looked like last year’s news. Many who owned these great stocks must have looked at their portfolios bleeding and started wondering: “Is their time over? Should I sell?”

Those who answered ‘yes’ may be kicking themselves years from now. You see, the massive rotation we saw was likely caused by a mini-quant-quake. Algorithmic traders were crowded into long growth stocks and short value stocks. When you add leverage to that equation, and get a hairpin turn in the opposite direction, you get a mad rush for the exits. When you must sell growth stocks because you are long and they are falling and you must cover short value stocks because they are rising, you intensify the move killing you. Several articles last week came out detailing the woes of quant funds.

You may ask, “Why not just wait?” When professional investors like hedge funds use leverage, brokers control their credit. And when things get uncomfortable, they have the right to make margin calls.

The takeaway is that the market rotation looked to be forced selling of growth and forced buying of value.

The key is to not lose sight of the big picture which is: Big money is buying bigly.

Last week saw another huge week of stock buying:

MapSignals Sector Rankings Table

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Every sector saw more than 25% of its universe of stocks bought in an unusually large way. This echoes my view that stocks get sold into and bought out of elections. The fact that value stocks have been bought more aggressively while growth is being held back does not mean that one should rush to exit growth stocks. In fact, I’d argue that you should look for deals in that space as others must reduce their exposure.

Focusing on quick trades is like focusing on the fridge instead of your stock portfolio. Don’t miss the big picture. Picking stocks with excellent sales and earnings growth being bought by Big Money is a great recipe for long-term success. Trying to capture the quick chop or avoid short-term pain might cost you in the long run. The amazing Helen Keller may have said it best: “Avoiding danger is no safer in the long run than outright exposure. The fearful are caught as often as the bold.”

All content above represents the opinion of Jason Bodner of Navellier & Associates, Inc.

Please see important disclosures below.

Also In This Issue

A Look Ahead by Louis Navellier
What to Expect this Holiday Season in Retail Sales

Income Mail by Bryan Perry
One Bulldog of a Senate Runoff is Shaping Up

Growth Mail by Gary Alexander
Twenty Reasons to Be Thankful in 2020

Global Mail by Ivan Martchev
Junk Bonds See Light at the End of the COVID Tunnel

Sector Spotlight by Jason Bodner
What is Your Favorite Stock, and Why?

View Full Archive
Read Past Issues Here

About The Author

Jason Bodner

Jason Bodner writes Sector Spotlight in the weekly Marketmail publication and has authored several white papers for the company. He is also Co-Founder of Macro Analytics for Professionals which produces proprietary equity accumulation/distribution research for its clients. Previously, Mr. Bodner served as Director of European Equity Derivatives for Cantor Fitzgerald Europe in London, then moved to the role of Head of Equity Derivatives North America for the same company in New York. He also served as S.V.P. Equity Derivatives for Jefferies, LLC. He received a B.S. in business administration in 1996, with honors, from Skidmore College as a member of the Periclean Honors Society. All content of “Sector Spotlight” represents the opinion of Jason Bodner

Important Disclosures:

Jason Bodner is a co-founder and co-owner of Mapsignals. Mr. Bodner is an independent contractor who is occasionally hired by Navellier & Associates to write an article and or provide opinions for possible use in articles that appear in Navellier & Associates weekly Market Mail. Mr. Bodner is not employed or affiliated with Louis Navellier, Navellier & Associates, Inc., or any other Navellier owned entity. The opinions and statements made here are those of Mr. Bodner and not necessarily those of any other persons or entities. This is not an endorsement, or solicitation or testimonial or investment advice regarding the BMI Index or any statements or recommendations or analysis in the article or the BMI Index or Mapsignals or its products or strategies.

Although information in these reports has been obtained from and is based upon sources that Navellier believes to be reliable, Navellier does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Navellier’s judgment as of the date the report was created and are subject to change without notice. These reports are for informational purposes only and are not a solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in these reports must take into account existing public information on such securities or any registered prospectus.To the extent permitted by law, neither Navellier & Associates, Inc., nor any of its affiliates, agents, or service providers assumes any liability or responsibility nor owes any duty of care for any consequences of any person acting or refraining to act in reliance on the information contained in this communication or for any decision based on it.

Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any securities recommendations made by Navellier. in the future will be profitable or equal the performance of securities made in this report. Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.

None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The holdings identified do not represent all of the securities purchased, sold, or recommended for advisory clients and the reader should not assume that investments in the securities identified and discussed were or will be profitable.

Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for every investor. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. Investment in fixed income securities has the potential for the investment return and principal value of an investment to fluctuate so that an investor’s holdings, when redeemed, may be worth less than their original cost.

One cannot invest directly in an index. Index is unmanaged and index performance does not reflect deduction of fees, expenses, or taxes. Presentation of Index data does not reflect a belief by Navellier that any stock index constitutes an investment alternative to any Navellier equity strategy or is necessarily comparable to such strategies. Among the most important differences between the Indices and Navellier strategies are that the Navellier equity strategies may (1) incur material management fees, (2) concentrate its investments in relatively few stocks, industries, or sectors, (3) have significantly greater trading activity and related costs, and (4) be significantly more or less volatile than the Indices.

ETF Risk: We may invest in exchange traded funds (“ETFs”) and some of our investment strategies are generally fully invested in ETFs. Like traditional mutual funds, ETFs charge asset-based fees, but they generally do not charge initial sales charges or redemption fees and investors typically pay only customary brokerage fees to buy and sell ETF shares. The fees and costs charged by ETFs held in client accounts will not be deducted from the compensation the client pays Navellier. ETF prices can fluctuate up or down, and a client account could lose money investing in an ETF if the prices of the securities owned by the ETF go down. ETFs are subject to additional risks:

  • ETF shares may trade above or below their net asset value;
  • An active trading market for an ETF’s shares may not develop or be maintained;
  • The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track;
  • The cost of owning shares of the ETF may exceed those a client would incur by directly investing in the underlying securities; and
  • Trading of an ETF’s shares may be halted if the listing exchange’s officials deem it appropriate, the shares are delisted from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.

Grader Disclosures: Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested. The sample portfolio and any accompanying charts are for informational purposes only and are not to be construed as a solicitation to buy or sell any financial instrument and should not be relied upon as the sole factor in an investment making decision. As a matter of normal and important disclosures to you, as a potential investor, please consider the following: The performance presented is not based on any actual securities trading, portfolio, or accounts, and the reported performance of the A, B, C, D, and F portfolios (collectively the “model portfolios”) should be considered mere “paper” or pro forma performance results based on Navellier’s research.

Investors evaluating any of Navellier & Associates, Inc.’s, (or its affiliates’) Investment Products must not use any information presented here, including the performance figures of the model portfolios, in their evaluation of any Navellier Investment Products. Navellier Investment Products include the firm’s mutual funds and managed accounts. The model portfolios, charts, and other information presented do not represent actual funded trades and are not actual funded portfolios. There are material differences between Navellier Investment Products’ portfolios and the model portfolios, research, and performance figures presented here. The model portfolios and the research results (1) may contain stocks or ETFs that are illiquid and difficult to trade; (2) may contain stock or ETF holdings materially different from actual funded Navellier Investment Product portfolios; (3) include the reinvestment of all dividends and other earnings, estimated trading costs, commissions, or management fees; and, (4) may not reflect prices obtained in an actual funded Navellier Investment Product portfolio. For these and other reasons, the reported performances of model portfolios do not reflect the performance results of Navellier’s actually funded and traded Investment Products. In most cases, Navellier’s Investment Products have materially lower performance results than the performances of the model portfolios presented.

This report contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are “forward-looking statements” within the meaning of The U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by such forward-looking terminology as “expect,” “estimate,” “plan,” “intend,” “believe,” “anticipate,” “may,” “will,” “should,” “could,” “continue,” “project,” or similar statements or variations of such terms. Our forward-looking statements are based on a series of expectations, assumptions, and projections, are not guarantees of future results or performance, and involve substantial risks and uncertainty as described in Form ADV Part 2A of our filing with the Securities and Exchange Commission (SEC), which is available at or by requesting a copy by emailing All of our forward-looking statements are as of the date of this report only. We can give no assurance that such expectations or forward-looking statements will prove to be correct. Actual results may differ materially. You are urged to carefully consider all such factors.

FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.

IMPORTANT NEWSLETTER DISCLOSURE:The hypothetical performance results for investment newsletters that are authored or edited by Louis Navellier, including Louis Navellier’s Growth Investor, Louis Navellier’s Breakthrough Stocks, Louis Navellier’s Accelerated Profits, and Louis Navellier’s Platinum Club, are not based on any actual securities trading, portfolio, or accounts, and the newsletters’ reported hypothetical performances should be considered mere “paper” or proforma hypothetical performance results and are not actual performance of real world trades.  Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier Investment Products’ portfolios and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters contain hypothetical performance that do not include transaction costs, advisory fees, or other fees a client might incur if actual investments and trades were being made by an investor. As a result, newsletter performance should not be used to evaluate Navellier Investment services which are separate and different from the newsletters. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or hypothetical Newsletter performance claims, (which are calculated solely by Investor Place Media and not Navellier) should be referred to InvestorPlace Media, LLC at (800) 718-8289.

Please note that Navellier & Associates and the Navellier Private Client Group are managed completely independent of the newsletters owned and published by InvestorPlace Media, LLC and written and edited by Louis Navellier, and investment performance of the newsletters should in no way be considered indicative of potential future investment performance for any Navellier & Associates separately managed account portfolio. Potential investors should consult with their financial advisor before investing in any Navellier Investment Product.

Navellier claims compliance with Global Investment Performance Standards (GIPS). To receive a complete list and descriptions of Navellier’s composites and/or a presentation that adheres to the GIPS standards, please contact Navellier or click here. It should not be assumed that any securities recommendations made by Navellier & Associates, Inc. in the future will be profitable or equal the performance of securities made in this report.

FactSet Disclosure: Navellier does not independently calculate the statistical information included in the attached report. The calculation and the information are provided by FactSet, a company not related to Navellier. Although information contained in the report has been obtained from FactSet and is based on sources Navellier believes to be reliable, Navellier does not guarantee its accuracy, and it may be incomplete or condensed. The report and the related FactSet sourced information are provided on an “as is” basis. The user assumes the entire risk of any use made of this information. Investors should consider the report as only a single factor in making their investment decision. The report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. FactSet sourced information is the exclusive property of FactSet. Without prior written permission of FactSet, this information may not be reproduced, disseminated or used to create any financial products. All indices are unmanaged and performance of the indices include reinvestment of dividends and interest income, unless otherwise noted, are not illustrative of any particular investment and an investment cannot be made in any index. Past performance is no guarantee of future results.