by Jason Bodner

August 25, 2020

Thomas Edison may have been a murderer.

Or so some have speculated.

Edison was a prolific inventor and also a fierce competitor. Many of his inventions are purported to be taken from others. Nikola Tesla and Edison fell out and it is thought Edison appropriated Tesla’s work.

For example, Edison claimed to be the sole inventor of the light bulb, which was the technological prize of the time. Yet, historians say he borrowed and even stole ideas from other inventors. He wanted to be the sole patent owner for many innovations, and so he relentlessly promoted his image as a sole inventor.

He was also in a race to be the first inventor of cinematography, but in October of 1888, French inventor Louis Le Prince recorded the first set of moving images. Edison wanted the patents for himself and was frantically trying to secure them. On September 16, 1890, Le Prince left his brother in Dijon on a train bound for Paris. Neither he nor his belongings ever arrived. He simply vanished, never to be seen again.

It was convenient for Edison’s main competitor to suddenly evaporate. Conspiracy theories percolated. Was Edison a murderer? Maybe farfetched, but, either way, through a series of court battles, Edison eventually won. He refiled his patents, allowing him to dominate the film industry for years.

That seemed to be the end of that, until 118 years later, historian Alexis Bedford was digging through papers on Edison’s lighting work. In them he saw a leather notebook. Edison used these for ideas and data. Deep inside, Bedford saw an entry from September 20, 1890. Thomas Edison’s handwriting said:

“Eric called me today from Dijon. It has been done. Prince is no more. This is good news, but I flinched when he told me. Murder is not my thing. I’m an inventor and my inventions for moving images can now move forward.”

History tends to get whitewashed. Today few know about this potential bombshell or Edison’s fierce “win at all costs” attitude. For most, he’s the guy who invented the lightbulb, and so much more. But he made the equivalent of billions of dollars, potentially by stealing the work of others.

Louis Le Prince and Thomas Edison Image

Perception becomes reality, regardless of actual reality. That holds true in stocks, too.

People often ask, “Why is this stock up so much?” because they need a reason for everything.

They don’t like hearing my frustrating answer: “Stocks rise because more people are buying than selling.”

There’s never a shortage of more interesting reasons, since it is against human nature to accept that there may not be an observable reason for prices to do what they do.

The real answer lies in big money. The true mover of stocks going up and down is simply: Money is either moving into the market or out of it. That’s it.

I focus on big money investors. These are big firms, like pension funds, asset managers and hedge funds. They have the power to buy or sell more stock than market liquidity can handle.

When Big Money can overwhelm the market’s liquidity in available shares, one of two things can happen.

  • Buy all at once: “Full steam ahead,” like a bull in a china shop. Buy whatever shares are available and make a huge impact on price and volume. The obvious drawback here is that they are competing against themselves. Once the market knows there is a big buyer out there, they will also leap in to buy shares too. By not being discrete, the big buyer has undercut his opportunity.
  • Operate quietly under the radar for as long as possible. This is what big money usually does. They want to wait until the bulk of their order is complete to let the cat out of the bag. Maybe a press release or required SEC filing of ownership gets out. Once they own their shares, everyone else rushes in to be the next buyer. This, of course, pushes prices in the original buyer’s favor.

Which would you rather do?

Put this way, the answer is obvious. This is why I devoted decades of my life devising a system to track big money flows, even when they’re done quietly, before the knowledge becomes public. It’s crucial to be able to buy right when the big money starts flowing, while they are trying to keep it quiet. When they do this on the best quality stocks, I believe I have the best odds of making some good money in those stocks.

Big money also tends to move in herds. This is why I look at which sectors either collect or lose capital. These rotations help us identify which sectors lead and lag and therefore we can track down when big money pours into the best stocks of the leading sector.

It’s all about putting odds in your favor.

Last week, we continued to see Tech and Healthcare take a pause in leadership. The sectors collecting money last week were Discretionary and Staples. Health and Tech were close 3rd and 4th, but nowhere near the frothy buying levels we saw in prior months. Health also saw the only notable selling last week.

MapSignals Sector Rankings Table

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

Perception says Edison was a luminary and a master of invention. Digging below the surface, we find supposed evidence that he may have stopped at nothing to win, even if that meant sanctioning murder.

Perception also says stocks need a reason to go up or down. What’s the story? But digging below the surface, I find the answer is simple: What moves stocks up and down is big money flows, in and out.

Identifying big money flows early on can be one big key to unlocking high-odds success in stocks.

Edison wanted to be perceived as the most prolific inventor (and investor) of all time. He did everything to promote that as reality. Did he go too far? We may never know.

Lee Atwater understood this. He was known as a dirty-playing RNC campaign operative. He wrote the book on nasty political tricks. True or not, it didn’t matter, because Atwater said: “Perception is reality.”

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

Please see important disclosures below.

Also In This Issue

Global Mail by Ivan Martchev
The Dollar is About to Rebound Some

Sector Spotlight by Jason Bodner
Watch What Big Money Does Secretly, Not Just Openly

View Full Archive
Read Past Issues Here

About The Author

Jason Bodner
MARKETMAIL EDITOR FOR SECTOR SPOTLIGHT

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:

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 www.adviserinfo.sec.gov or by requesting a copy by emailing info@navellier.com. 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.