Well, the third quarter was… terrible! And the ghosts of previous quarters gave investors a scare at the start of October, which reignited investors’ fears that October is scary month for the stock market.

The fact is that much of Wall Street remains haunted by the memories of Black Mondays in 1929 and 1987. The latter is particularly unnerving for folks since it was only 36 years ago, and they vividly remember the Dow plunging nearly 23% on October 19, 1987. To this day, it’s the single-biggest, one-day decline in stock market history. [1]

Aside from these couple of outlier years, though, October is actually a positive month for the market.

Yes, October is a volatile month for the major indices, as it has proven once again this year. However, our friends at Bespoke Investment Group recently pointed out that October is also a “month of market bottoms.” According to Bespoke, in every market decline of 5% or more, without at least a 5% bounce in between, market bottoms are found prevalently in October. In fact, 33 of the market’s lows have happened in October since 1945.[2]

Interestingly, October 12, 2022, represented the bottom in the most-recent bear market. That means the current bull market is officially one-year old already!

So, if historical precedence holds, we believe that there’s a good chance that the S&P 500 found a bottom after the dismal third quarter in October—and that’s setting us up for a stunning fourth quarter. Just how spectacular could the final quarter of 2023 be? Historically, the fourth quarter is the best quarter of the year for the stock market by a wide margin.

Just consider some of the insights and data compiled by Gary Alexander (a Senior Writer at Navellier & Associates) recently…

“The stock market is a bit like sports, in that the most significant action often happens in the fourth quarter. That doesn’t mean you can ignore the first three quarters. Those nine months provide the foundation for the fireworks to come, but you can’t argue with history, either.

In the past 25 years, the fourth quarter has delivered more than twice the returns of the first three quarters: +4.76% vs. just 1.91%:

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

There were some exceptions, of course, but many times a dismal downdraft in the first nine months ended with a significantly positive fourth quarter, such as 2001, 2002, 2011, 2015 and, 2022, while the last six pre-presidential election year fourth quarters (like this year) were up 8.1%, on average.

Going back to 1950, and skipping the great turnaround in 2022, the numbers aren’t quite so dramatic, but the fourth quarter still dominates the annual returns from 1950 to 2020, with the S&P 500 up 4% in the fourth quarter, but only 2.1%, 2.0% and 0.7% in each of the previous three quarters.”[3]

What’s behind the historical market strength in most fourth quarters? Pension plan funding, tax buying/selling and yearend window dressing all add to the market’s strength in the final months of the year. But Gary and I agree that the fourth quarter also represents the “happy time of year.” In other words, folks are excited for the holiday season when they will gather with family and friends for food, fun, and football. And that positive holiday spirit often boosts consumer and investor sentiment, adding to the market’s strength in the final months of the year.

But, this year, we have a lot more than just seasonality and holiday cheer on our side.

In this special report, myself (Louis Navellier) and the advisers, strategists and writers at Navellier & Associates will detail why we’re particularly optimistic about the fourth quarter of 2023. We’ve pinpointed four reasons why we expect the market will cheer up and why we’re expecting a strong finish to the year. My hope is that by the end of this report, you’ll be as excited as we are.

Reason #1: Market’s Oversold & Due for a Bounce

It’s no secret that the stock market hates uncertainty. Just look at September… angst over the Federal Reserve’s key interest rate decision, fears of a federal government shutdown, shock over the United Auto Workers (UAW) strike at the Big 3, and soaring Treasury yields all dampened investors’ moods and drove the stock market lower.

The S&P 500 dropped nearly 5% and the Dow declined 3.5% in September. But the hits didn’t stop coming when September came to a close.

While the Fed didn’t raise rates in September and we avoided a federal government shutdown, the unemployment rate will likely hit 4% due to the UAW strike and Treasury yields are growing every closer to the 5% level, with the 30-year Treasury already breaching that level. So, the market kicked off the month of October on a pretty sour note.

That’s the bad news. The good news is that all these concerns and uncertainty pushed the market into oversold territory—and that means the market is due for a bounce, a big one. But don’t just take my word for it. Consider recent research from Jason Bodner (who writes Sector Spotlight in the Navellier & Associates weekly Marketmail):

“Financial markets are causing a lot of anxiety now, mostly due to interest rates and inflation. The bond market is going haywire. Rates have skyrocketed. For instance, the yield on the 10-Year Note has spiked 45%. That translates to an inverse drop that ranks up there with some of the worst crashes in history.

With the Fed Funds Target rate set at 5.00%-5.25%, the bond market is telling investors to expect higher rates for a longer time – or even worse, more rate hikes. This is bringing a lot of volatility to the stock market, but I remind you that October through December is historically the strongest time of the year.

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

We’re only a few trading weeks into the quarter. Pay no attention to a weak opening. There is plenty of time for the month and quarter to end on a positive note. Given where things are—that wouldn’t be too hard.

Second, and more importantly, the Big Money Index (BMI) is nearly oversold. Recently, I told you that the earliest we could go oversold was October 4th (assuming zero buying). Well, we came pretty close to zero buying, and on Friday, October 6, the BMI hit 25.3%. It should be officially oversold by now.

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

In an upcoming White Paper, we ask the question: “Do Outsized Money Flows Predict Forward Market Prices? If So, Can We Visualize Capitulation?” These are great questions, and the timing is perfect, because (without spoiling the paper’s conclusion), the answer is that we can. We start with the BMI touching that green oversold line. When that happens historically, expect a big rally. There have been 24 times that the BMI went oversold since 1990, and in the vast majority of instances, we saw equity markets materially higher 1, 3, 6, 9, and 12 months later.

That’s great news if it plays out as strongly as it has in the past.”[4]

Reason #2: Inflation Still Elevated But Cooling

The recent surge in Treasury yields (and subsequent market decline) snagged the lion’s share of investors’ attention in September and early October. It’s been a huge distraction that has overshadowed a big development: key inflation components are cooling off.

The Personal Consumption Expenditure (PCE) index—the Fed’s favorite inflation indicator—rose only 0.1% August and was up 3.5% year-over-year. Core PCE, which excludes food and energy, also increased 0.1% in August and was up 3.9% in the past 12 months.[5] This is great news for the PCE, which excludes less owners’ equivalent rent (shelter costs) than the Consumer Price Index (CPI).

Speaking of the CPI, headline inflation rose 0.4% in September and was up 3.7% year-over-year. That compares to a 0.6% rise in August. Economists expected a 0.3% month-to-month increase and a 3.6% annual rise. Core CPI, which excludes food and energy, increased 0.3% in September and was up 4.1% year-over-year. That compares to a 4.3% annual rise in August.[6] So, core CPI showed a slight year-over-year improvement and was in line with economists’ expectations for a 4.1% annual increase.

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

Now, the PPI recorded a 0.5% gain in September, down from the 0.7% increase in August. Year-over-year, PPI rose 2.2%, compared to a 2% year-over-year in August. Core PPI, which excludes food, energy and trade increased 0.3% in September and was up 2.7% in the past 12 months.[7]

Overall, the CPI and PPI reports weren’t the best, as high shelter costs and elevated energy prices distorted the overall CPI and PPI data. For the CPI, shelter costs jumped 0.6% in September and accounted for more than half of the increase in CPI last month. And for PPI, gasoline prices increased 5.4% in September, and energy prices overall increased 3.3% in September.

The reality is that much of the recent inflation is tied to higher energy prices, but the majority of other inflation components have improved. And due to slowing global economic growth, I expect inflation (excluding energy) to continue to ebb in the coming months.

Folks, inflation fears will begin to dissipate, and as long as inflation continues to cool (especially the PCE), then the Federal Reserve will be more inclined to finally end its rate hike cycle.

Reason #3: Federal Reserve Taps the Brakes

Given that the latest inflation data was a little warmer than anticipated, it threw a bit of a wrench into my earlier prediction that the Federal Reserve would cut key interest rates at its December Federal Open Market Committee (FOMC) meeting. However, the FOMC meeting minutes from September and dovish commentary from several Fed officials in early October raised hopes that we’re finally at the end of the Fed’s tightening cycle.

The FOMC minutes revealed that there remains dissension among Fed officials whether further rate hikes are necessary. Some members feel another rate hike is appropriate and others don’t think further increases are warranted. All FOMC members, though, are in agreement to “proceed carefully” and keep policy restrictive for an extended time to further drive inflation back down to its 2% target.

Specifically, the FOMC minutes stated that public communications “should shift from how to raise the policy rate to how long to hold the policy rate at restrictive levels.” Translated from Fedspeak, our central bank plans to keep key interest rates high for the foreseeable future.

Overall, I still think the Fed will stand pat at its next FOMC meeting, especially after a few outspoken Fed officials provided very dovish comments recently. As an example, Atlanta Fed President Raphael Bostic stated that the Fed doesn’t need to raise rates again, and even noted that the Fed has historically lowered key interest rates in the wake of escalating geopolitical risks like the conflict currently in Israel.

I should also add that Fed Vice Chair Philip Jefferson and Fed official Lorie Logan both noted that the recent surge in Treasury yields could place further strain on the U.S. economy. So, even though inflation remains above the Fed’s 2% threshold, elevated interest rates could keep our central bank from raising key interest rates again.

Again, a key interest rate cut at the December FOMC meeting is now off the table, but I fully expect the Fed to maintain the current Fed funds rate at its upcoming meetings—and then, a key interest rate cut in early 2024 is likely, otherwise the Fed risks a recession.

Reason #4: Earnings Environment Improves

Now, while the previous three reasons have made me bullish about the fourth quarter, what really has me excited is the fact that the earnings environment is set to improve dramatically over the next four quarters. I’m a growth investor, after all, so for me, it’s all about earnings.

Consider this: The S&P 500 has reported three-straight quarters of negative earnings growth. For the fourth quarter of 2022, the S&P 500 posted a -4.9% drop in earnings. And in the first and second quarters of 2023, the S&P 500 recorded an earnings decline of -2.2% and -4.1%, respectively.[8]

At the time of this writing third-quarter earnings are still pouring in—but the results, so far, have come in much better than expected. Eight of the 11 S&P 500 sectors are expected to achieve positive year-over-year earnings growth, and nine of the 11 sectors are anticipated to post positive year-over-year revenue growth. If it all shakes out as anticipated, the S&P 500 will likely achieve flat to slightly negative year-over-year earnings growth and revenue growth north of 1.5%.[9]

I know what you’re thinking… Louis, that’s not very impressive earnings and revenue growth. And you’re right! But it’s better than the previous three quarters—and it’s simply the prelude to incredible earnings growth in upcoming quarters.

According to the folks at FactSet, the S&P 500 is expected to post 7.8% average earnings growth in the fourth quarter of 2023. After that, the S&P 500 is set to achieve 8.2% average earnings growth in the first quarter of 2024 and 11.8% average earnings growth in the second quarter of 2024. For calendar year 2024, the S&P 500 is anticipated to report 12.2% average earnings growth.

In other words, earnings momentum is accelerating!

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

Now, a strong U.S. dollar—currently at its highest level for the year—could hinder earnings from some multinational stocks. But if you’re invested in the crème de la crème—i.e., stocks with positive forecasted earnings growth and positive analyst revisions—then you’re already well-positioned in the fourth quarter and beyond.

And if you’re uncertain if the stocks in your current portfolio make the grade, don’t worry. We can help!

How to Build a Winning Portfolio for 4Q—and Beyond

If you haven’t figured it out already, I’m obsessed with fundamentally superior stocks, i.e., stocks with strong sales and earnings growth, as well as positive analyst revisions. In other words, my main focus remains on the stocks with accelerating earnings momentum, as they should outperform in the final quarter of 2023 and throughout 2024.

My fascination with growth stocks started back in the late 1970s during my college years at Cal State Hayward. I wanted to uncover how to beat the market without taking on too much risk—and what I discovered was that a select group of stocks can consistently outperform the S&P 500: stocks with superior fundamentals.

Today, I’m a self-proclaimed “number guys” because the numbers do not lie—and right now, the numbers are telling me that stocks with accelerating earnings and sales momentum are the best way to prosper in the final quarter of 2023 (and beyond!).

Our best defense is always a strong offense of fundamentally superior growth stocks.

Let me break it down for you…

Here at Navellier & Associates, we believe in the power of a well-balanced portfolio. I believe it can literally neutralize the stock market’s uncertainty and take advantage of unique growth opportunities the market throws our way. That’s why we encourage our clients to take a diversified approach to managing their investments—one that can include growth, income, and capital preservation strategies.

Growth Portfolios

These portfolios feature companies that are committed to growing their sales and earnings. Our growth portfolios are segmented by market capitalization, are actively managed, and seek inefficiently priced growth stocks with opportunities for long-term price appreciation. We screen for small- and large-cap companies that are consistently growing sales and earnings. Our team actively manages this portfolio to find undervalued growth stocks.

Income Portfolios

These offerings provide dividend growth and income opportunities with capital appreciation. At Navellier, our dividend and income portfolios strive for portfolio growth through securities with capital appreciation, strong dividend growth, and income opportunities. We seek out companies that have a history of growing and paying dividends. Most importantly, these dividend-paying companies have free cash flow to cover each dividend payment. This can make it much easier to have reliable income in retirement.

Capital Preservation/Defensive Portfolios

These portfolios aim to outperform in up markets and limit losses in declining markets by moving to cash or bonds. This asset allocation plan allows investors to play defense in a declining market. Our capital preservation strategies can help you mitigate steep market losses with defensive ETFs and covered calls. Defensive ETFs can serve this need as they shift to cash or bonds when conditions permit.

When you add up everything we have discussed today, you can quickly see the importance of having a diversified approach to managing your investments—one that can include growth, income, and capital preservation strategies. The power of a well-balanced portfolio cannot be overstated.

When you dive deeper into the details of our exclusive portfolios and strategies, you will see that many of them cross boundaries and can be combined to form an overall portfolio strategy. That portfolio can then be customized to your personal financial goals and risk tolerance.

To build a personal portfolio that strives to deliver returns, it is important to think about things such as your retirement goals, how long you have to reach those goals, and what your risk tolerance is … just to name a few.

At Navellier & Associates, our team is here for you. We will work with you to answer these questions and discuss a customized solution tailored specifically towards you and your retirement goals.

Right now, we are optimistic about the fourth quarter (and New Year), especially if inflation continues to cool, the Federal Reserve halts its aggressive key interest rate hikes, and earnings momentum hits the gas. But not all stocks will participate, as the market has grown more fundamentally focused and the improving earnings environment has stepped back into the spotlight. We can help you build a personal portfolio of fundamentally superior stocks not only in the fourth quarter of 2023 but also well into 2024.

In fact, here’s a sneak peek at how we select stocks for each of our custom portfolio offerings…

Our Proprietary 3-Step Stock Selection Process

At Navellier & Associates, our system was built to find inefficiency in the market, uncover what we think are the market’s best growth stocks, and utilize a disciplined quantitative and fundamental analysis system to create a customized portfolio for individual investors.

Consider an example of the three-step proprietary stock-selection process that we utilize for most portfolios:

1. Quantitative Analysis: Using our proprietary screening process, we measure reward (alpha) and risk (standard deviation) indicators to the appropriate market capitalization range for each portfolio. We rank stocks based on the reward/risk measure and reduce the initial investment universe to a select bucket of stocks that fall into the upper percentiles of the reward/risk measure.
2. Fundamental Analysis: We then apply fundamental variable screens to the stocks with the highest reward/risk measures. This shines the spotlight on which companies have exceptional profit margins, excellent earnings growth (and positive earnings surprise potential!) and reasonable price/earnings ratios (based on expected future earnings).
3. Securities Optimization: We use a proprietary optimization model to maximize alpha, while minimizing portfolio standard deviation. This can efficiently allocate the stocks and create portfolios that are well diversified across sectors and industries.

Primarily, our goal with the three-step stock selection process is to develop portfolios that have a low correlation to their benchmarks, increasing diversification, decreasing risk, and maximizing profits for investors like you.

We’re still in the early innings of 2023, yet we’ve already seen firsthand how the stock market is narrowing. Investors are growing more selective, and growth stocks with accelerating earnings momentum at a time when earnings growth is dipping will continue to attract the most institutional buying pressure. So, we believe that now could be a good time for you to have a custom investment strategy that focuses on your financial goals and risk tolerance, as well as diversification.

Navellier & Associates can help you build your own customized portfolio strategy. We rely on our extensive research, trend analysis, customized strategies, and historic market knowledge to manage our client-only portfolios and help our clients take advantage of opportunities that are presented by market corrections—short and long-term—as well as raging bull market situations.

Our proprietary models are built to work on U.S.-based portfolios with a minimum account value of $250,000. If your portfolio meets these criteria, please contact my Navellier & Associates team. They are standing by ready to discuss your personal portfolio and investment strategy to help you make the most of the remainder of 2023.

Schedule Your Portfolio Review Today

Need some help determining if your portfolio is well-balanced? We can help!

The first step is contacting us to set up a no-obligation portfolio review. This is our opportunity to get to know you a bit more. And don’t worry, there is never a charge for this portfolio review. If you decide you would like Navellier & Associates to manage your portfolio—or one aspect of your portfolio—we will discuss any management fees for that service.

If you decide you’d like to continue to manage things yourself, we hope that we have given you some important information to consider during your portfolio review.

We are not here to simply preach to you, but rather share information that we have gained from our extensive market research and analysis. We also want to know about you so that we can make the right suggestions for your personal situation.

Click here now to schedule your no-obligation portfolio review.

I’m confident that Navellier & Associates can help guide you to build a portfolio to navigate the current environment and help you achieve your individual financial goals in the fourth quarter of 2023 and beyond!

All the best to you and yours,

Louis Navellier
Chief Investment
Navellier & Associates, Inc. │ Private Client Group

[1] https://www.federalreservehistory.org/essays/stock-market-crash-of-1987

[2] https://www.bespokepremium.com/interactive/posts/think-big-blog/q4-and-october-seasonality

[3] https://navellier.com/10-3-23-the-fourth-quarter-explosion-is-about-to-start/

[4] https://navellier.com/10-10-23-emotions-have-no-place-in-picking-stocks-or-market-turns/

[5] https://finance.yahoo.com/news/feds-preferred-inflation-measure-shows-slowest-monthly-increase-since-2020-143541587.html/a>

[6] https://finance.yahoo.com/news/inflation-consumer-prices-rose-37-over-last-year-in-september-matching-augusts-increase-123202893.html

[7] https://www.cnbc.com/2023/10/11/ppi-september2023-.html

[8] https://insight.factset.com/topic/earnings

[9] https://advantage.factset.com/hubfs/Website/Resources Section/Research Desk/Earnings Insight/EarningsInsight_100623A.pdf

Navellier & Associates owns Nvidia Corp (NVDA), Apple Computer (AAPL), Microsoft (MSFT), Amazon (AMZN), and a few accounts own Meta Platforms (META). We own Tesla (TSLA), per client request in managed accounts. We do not own Alphabet Inc. (GOOG). Louis Navellier and his family own Nvidia Corp (NVDA), and Apple Computer (AAPL), via a Navellier managed account, and Apple Computer (AAPL) and Amazon (AMZN) in a personal account. He does not own Tesla (TSLA), Microsoft (MSFT), Meta Platforms, (META), Alphabet Inc. (GOOG), personally.

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5. Composite Dispersion – If applicable, the dispersion of annual returns is measured by the standard deviation across asset-weighted portfolio level gross returns represented within the composite for the full year.

6. Benchmark – The primary benchmark for the composite is the Russell 1000® Growth Index. The Russell 1000® Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The secondary benchmark for the composite is the S&P 500 Index, which measures the performance of the 500 leading companies in leading industries of the U.S. economy, focuses on the large cap segment of the market, with approximately 75% coverage of U.S. equities. These indices are considered reasonable measures of the performance of the large cap, growth oriented U.S. companies. The returns for the Russell 1000® Growth and S&P 500 indices include the reinvestment of any dividends. The asset mix of large cap growth equity accounts may not be precisely comparable to the presented indices. Presentation of index data does not reflect a belief by the Firm that the Russell 1000® Growth or S&P 500 indices, or any other index, constitutes an investment alternative to any investment strategy presented in these materials or is necessarily comparable to such strategies.

7. General Disclosure – GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. The three-year annualized standard deviation measures the variability of the gross composite and the benchmark returns over the preceding 36-month period. Actual results may differ from composite results depending upon the size of the account, custodian related costs, the inception date of the account and other factors. Past performance does not guarantee future results. Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested. Results presented include reinvestment of all dividends and other earnings. The securities identified and described do not represent all of the securities purchased, sold, or recommended for client accounts. 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. A list of recommendations made by Navellier & Associates, Inc. for the preceding twelve months is available upon request.

1. Compliance Statement – Navellier & Associates Inc. claims compliance with the Global investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Navellier & Associates Inc. has been independently verified for the periods January 1, 1995 through December 31, 2020. A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. The Navellier Power Dividend Composite has had a performance examination for the periods January 1, 2015 through December 31, 2020. The verification and performance examination reports are available upon request.”

2. Definition of Firm – Navellier & Associates, Inc. is a registered investment adviser established in 1987. Registration does not imply a certain level of skill or training. Navellier & Associates, Inc. manages a variety of equity assets for primarily U.S. and Canadian institutional and retail clients. The firm’s list of composite descriptions as well as information regarding the firm’s policies for valuing investments, calculating performance, and preparing GIPS reports are available upon request.

3. Composite Description – The composite creation date is March 31, 2006. As of October 1, 2019, the Navellier Power Dividend strategy was redefined to include both wrap and institutional accounts to more broadly market the strategy. Prior to this date, only wrap accounts were included in the composite. The Power Dividend Composite name changed from the Power Dividend Wrap Composite to the Power Dividend Composite. The Navellier Power Dividend Composite includes all discretionary Power Dividend equity accounts and are managed with similar objectives for a full month, including those accounts no longer with the firm. The strategy is designed for aggressive investors seeking to capitalize on the best opportunities within the group of publicly traded companies that pay dividends. The strategy invests in U.S. listed securities with market capitalizations greater than $250 million that pay dividends. Statistical measures may be used in an attempt to identify unusual price movements in individual stock prices, which may result in higher-than-average turnover and cash positions for the portfolio. At any given time, the strategy may hold up to 15% in American Depositary Receipts (ADRs). Stocks in the strategy typically exhibit positive return on equity and positive return on assets, usually have higher free cash flow than what they pay in dividends, and are usually growing dividends faster than the rate of inflation. Typically, the strategy invests in approximately 15 to 30 stocks. The strategy may invest in smaller capitalization stocks that may trade fewer shares than larger capitalization stocks; the liquidity risk among these types of stocks may increase the strategy’s risk. Performance figures that are net of fees take into account advisory fees, wrap fees, foreign withholding tax, and any brokerage fees or commissions that have been deducted from the account. “Pure” gross-of-fees returns do not reflect the deduction of any trading costs, fees, or expenses, and are presented only as supplemental information. Performance results are total returns and include the reinvestment of all income, including dividends. The composite inception date is January 1, 2006. Valuations and returns are computed and stated in U.S. Dollars.

4. Management Fees – The management fee schedule for accounts ranges from 0.30% to 1.25% of assets under management; however, some incentive fee, fixed fee, and fulcrum fee accounts may be included. Wrap fee schedules are provided by independent wrap sponsors and are available upon request from the respective wrap sponsor. Wrap fees generally range from 100 to 200 basis points and include custody, trading expenses, and other expenses associated with the management of the account. There are zero commissions accounts included in the composite. The client is referred to the firm’s Form ADV Part 2A for a full disclosure of the fee schedule. Net performance is calculated using actual fees.5. Composite Dispersion – If applicable, the dispersion of annual returns is measured by the standard deviation across asset-weighted portfolio level gross returns represented within the composite for the full year.

6. Benchmark – The primary benchmark for the composite is the Russell 3000® Index. The Russell 3000® Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. The secondary benchmark for the composite is the Standard & Poor 500 Index (“S&P 500 Index”). The S&P 500 Index measures the performance of approximately 500 companies listed on U.S. stock exchanges selected by Standard & Poor. These indices are considered reasonable measures of the general performance of the broad U.S. equity market. The returns for the Russell 3000® and S&P 500 indices include the reinvestment of any dividends. The asset mix of Navellier Power Dividend equity accounts may not be precisely comparable to the presented indices. Presentation of index data does not reflect a belief by the Firm that the Russell 3000® or S&P 500 indices, or any other index, constitutes an investment alternative to any investment strategy presented in these materials or is necessarily comparable to such strategies. As of June 2012, the Russell 3000 Index is listed as the primary benchmark because it is a better representation of the investment strategy. The S&P 500 Index has replaced the Russell 1000 Index as the secondary benchmark.

7. General Disclosure – GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. The three-year annualized standard deviation measures the variability of the gross composite and the benchmark returns over the preceding 36-month period. Actual results may differ from composite results depending upon the size of the account, custodian related costs, the inception date of the account and other factors. Past performance does not guarantee future results. Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested. Results presented include reinvestment of all dividends and other earnings. The securities identified and described do not represent all of the securities purchased, sold, or recommended for client accounts. 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. A list of recommendations made by Navellier & Associates, Inc. for the preceding twelve months is available upon request.

I acknowledge and represent that Navellier & Associates, Inc. is authorized and has my consent to call me at the phone number I provided in the registration.

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 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 product.

I acknowledge that I have read the Disclosure Language above. Also I give Navellier and Associates, Inc. express written consent to contact me with any offers or promotions via the phone number listed, which may be a cell phone, business line, or residential line (including use of automated dialing equipment and pre-recorded calls). This consent is not a condition of receiving services from Navellier & Associates Inc.

Past performance does not guarantee future results. Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested. Investment in fixed income components has the potential for the investment return and principal value of an investment to fluctuate so that an investor’s shares, when redeemed, may be worth less than their original cost.

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.