MARKET OUTLOOK Q4 2022:
The Rally Is Real: 5 Reasons Why the Market
Should Continue to Climb in 4Q
After the horrific first nine months of the year, there’s a lot of money sitting on the sidelines waiting for the right time to pour back into the market. Well, folks, based on recent market action and historical precedence, I believe now is the time to put this money back to work.
The stock market has been long overdue for a big rebound—and the bounce that started in October is now gaining momentum and should continue in the fourth quarter and well into the New Year.
But you don’t just have to take my word for it; these writers, strategists and advisers at Navellier & Associates agree the market is heading higher. You read that right. Growth, global, income and trend investors are betting on a strong finish to the year—and each of us will share why in this special report.
Authored by Louis Navellier,
Chief Investment Officer, Navellier & Associates, Inc.
Co-Authored by Bryan Perry, Gary Alexander, Ivan Martchev, and Jason Bodner
Contributors to Navellier & Associates’ weekly Marketmail newsletter
NOVEMBER 2022
Navellier & Associates, Inc.
One East Liberty, Suite 504
Reno, Nevada 89501
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info@navellier.com
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There is no sugar-coating the first nine months of the year. They were horrific.
When the stock market closed out the third quarter, the S&P 500, Dow and NASDAQ were all down approximately 21% or more year-to-date. What’s worse is that the S&P 500, NASDAQ and Russell 2000 all posted three-straight quarters of declines—a losing streak not experienced since 2009.
As you probably know, there are a lot of factors that have weighed on the stock market this year, from the Russia-Ukraine war and persistently high inflation to global central bank action and slowing economic growth. But the main cause of the recent market volatility—especially in September when the S&P 500 plunged more than 9%—was the bond market.
The bond market took out the stock market, with Treasury yields crushing stocks in September.
The fact is the Federal Reserve, as well as other global central banks like the Bank of England and the European Central Bank, have aggressively raised key interest rates and taken steps to reduce their balance sheets. The Fed has been selling $95.0 billion of Treasuries a month—and that’s placed upward pressure on Treasury yields.
So, essentially, Treasury yields sucked money out of the market in September.
Given that the Federal Reserve has two key interest rate hikes still slated for the fourth quarter, inflation remains elevated and Vladmir Putin continues his attacks on the Ukraine, most investors are nervous and expect the fourth quarter to be a continuation of an already terrible year.
Optimists are few and far between, especially with well-known agencies and CEOs providing bleak outlooks. The International Monetary Fund (IMF) recently stated, “the worst is yet to come,” in regard to inflation, and in turn, it lowered its global growth outlook for 2022 and 2023. And JPMorgan CEO, Jamie Dimon, provided a dismal outlook, stating the S&P 500 could lose another 20%.
Interestingly, while the rest of Wall Street seems to have gone to the bears recently, there’s a small group of folks who refuse to view the glass as half empty. In fact…
Folks, this doesn’t happen often! It’s very rare for growth investors (like myself, Louis Navellier), global investors, trend investors, and income investors to agree, but we are all expecting a strong finish to the year. And I hope that the data and commentary shared with you today in this Special Report helps you better understand why we are so optimistic about the market and select investment opportunities in the remainder of 2022.
5 Reasons for Optimism in the Fourth Quarter
I’ve been called an “eternal optimist,” that I view the world through rose-colored glasses and that I always want to expect the best, not the worst. But the reality is that I’m a self-proclaimed “numbers guy,” and I never make changes to my investment strategy without the data to back it up.
Numbers do not lie—and right now, the data tells me that the market is poised to move higher in the fourth quarter. But, again, you don’t have to just take my word for it. Let me and my colleagues at Navellier & Associates show you why we are expecting to see higher stock prices by yearend.
Reason #1: It’s the Seasonally Strong Time of Year
Historically, the fourth quarter is the strongest three months of the year for the market.
Our friends at Bespoke report that the Dow has rallied an average 4.5% in the fourth quarter over the past 20 years—2000 to 2020. That compares to a combined 1.2% rise in the first three quarters of the year over the same time period. In 2020, the Dow soared an incredible 10.2% in the fourth quarter, and it jumped 7.4% in the fourth quarter of 2021.
The S&P 500’s performance is equally impressive: The index has posted an average gain of 3.95% in the fourth quarter between 1950 and 2020. In 2020, the S&P 500 surged nearly 11% in the fourth quarter, while it rose 10.6% in the fourth quarter of 2021.
Essentially, what happens in the fall is that consumers cheer up as the holidays approach. When we gather with family and friends during Thanksgiving and the other holidays, consumer sentiment naturally rises. All of this bodes well for the stock market, because when consumer sentiment rises, investor sentiment also improves. And that’s why yearend rallies are common; it’s the happy time of year!
Will the fourth quarter of 2022 follow historical precedence?
No one can predict the future, but if the first two trading days of the fourth quarter are any indication—the S&P 500 surged 5.7% in the first two trading days of October—then yes, we’re in store for another strong fourth quarter.
I say this because our friends at Bespoke took a closer look at how the market performs after such a stunning start to a quarter. Bespoke noted that it’s incredibly rare for the S&P 500 to post back-to-back gains of at least 2% at the beginning of a month or quarter. In fact, counting the early October two-day surge—2.6% gain on October 3 and 3% gain on October 4—the S&P 500 has only started a month with back-to-back 2%+ gains twice. The other instance was August 1984, which is pretty similar to now with the S&P 500 down ahead of the two-day rally.
As you can see in the chart above, the S&P 500 continued to climb following its two-day surge back in August 1984. This is also primarily the case when you consider the 31 other occurrences when the S&P 500 posted back-to-back gains of 2% or more at different points in a month. Bespoke reports, in these prior instances, the S&P 500 achieved an average 0.61% gain in the following week, an average 0.24% gain in the following month, an average 1.22% gain in three months and an average 14.6% gain over the next 12 months. I should add that the S&P 500 posted positive gains in the following three months 71% of the time.
Now, history hasn’t exactly been on our side so far this year. So, I know it’s a bit difficult to look at historical precedence right now and expect strong results in the fourth quarter. But let me assure you, these aren’t the only data points signaling that the market should rally in the fourth quarter…
Reason #2: The Market Is Extremely Oversold
Jason Bodner, who writes Sector Spotlight in the Navellier & Associates weekly Marketmail, recently pointed out that he believes the stock market is grossly oversold—and that’s often a precursor to a stunning rebound. In fact, when his screens indicate an extremely oversold position, the market tends to rally impressively in the following three months, six months, 12 months and beyond!
“According to Bespoke Investment Group, all of the indexes they monitor are oversold. That includes the Dow Jones Industrials, Russell 2000, S&P 500, NASDAQ, micro-caps, small-caps, mid-caps, and even the total stock market ETF (VTI)—all are heavily oversold; all are well below their 50 DMA.
All 11 S&P sectors are oversold, with consumer staples and real estate being extremely oversold.
That points to unsustainable stock selling. And the BMI concurs…
As of the September 30 close, the Big Money Index (BMI) is now oversold for the third time in 2022—that has happened only once before, in 2008. Sellers ran rampant with close to 1,300 Big Money sell signals and just 21 buy signals on Friday, September 30. Let me remind you of the forward returns when we see an oversold BMI:
- 1 month +3.1%
- 3 months +5.2%
- 6 months +9.2%
- 9 months +9.6%
- 12 months +15.3%
- 24 months +29.8%
Those are the averages of the 22 oversold BMI instances since 1990. Time will tell what’s to come, but the odds are in favor for positive returns.
When stocks and ETFs get sold at these extreme levels, it usually signals a near-term market low. We saw stock selling at this level in January, March, May, and June. And each time the market rallied afterwards.
Right now, we have a deeply oversold market, an oversold Big Money Index, unsustainable stock and ETF selling coupled with peak fear and bearish sentiment. In late August, I said Septembers are historically weak. But fourth quarters are very strong. Since 1990, the average monthly return of the S&P 500 in September is -0.5%. But October’s average is +1.4%, November’s is +1.8%, and December’s is +1.5%.
What’s really interesting is that the Fed will likely raise rates in November, which is uncharacteristic of past Fed behavior. That’s because they typically don’t meddle with elections. But with continued hawkish talk and an expected rate hike, they are all but handing Congress to the Republicans. This is interesting because average returns in October and November during mid-term election years are historically strong. Looking at mid-term election years since 1990, Octobers average +2.5% and Novembers average +2.4%.
All this history points to a grossly oversold market, meaning that we will likely see a big bounce through the end of the year. It may not seem likely right now, but when everyone is miserable and fearful, that usually means the bottom is in sight. The Fed doesn’t want to cause a horrible recession, but they must fight vicious inflation, so their tough talk and hawkish tightening policy is aimed at doing just that.”
Guess what, folks? Bodner’s predictions of the stock market bouncing from its oversold position on September 30 have played out so far. The S&P 500 rallied more than 3% in October , as a short-covering rally and third-quarter earnings sparked an extended rally. And if the market continues to bounce strongly from this oversold position, we should be at even higher levels by yearend.
Reason #3: Federal Reserve Set to Halt Interest Rate Hikes
In early October, the United Nations issued an unprecedented warning: If central banks around the world continue to increase key interest rates, there’s a very real risk that the global economy will fall into a recession and be plagued by a period of stagnation.
The United Nations Conference on Trade and Development issued its annual report on the global economic outlook, in which it stated the Federal Reserve could harm developing economies significantly if it continues to raise key interest rates at a rapid clip. Interestingly, the U.N. failed to discuss how inflation hurts lower income people the hardest. Given that the Fed and other global central banks have inflation mandates to comply with, there’s a strong likelihood that they will ignore the U.N.’s advice—at least through yearend.
The reality is the U.N. is running counter to the Fed’s guidance for two more rate hikes this year. The latest Federal Open Market Committee (FOMC) meeting minutes revealed the Fed remains concerned about persistently high inflation. Of course, those concerns are founded with both wholesale and consumer inflation sitting at or above 40-year highs.
So, a 0.75% key interest rate hike in November is virtually certain, and another key interest rate increase of 0.50% to 0.75% is also likely in December. After that, though, I expect the Fed to be done raising key interest rates as the Fed funds rate will finally be in line with market rates.
You may recall that the fourth quarter kicked off with the S&P 500 jumping 5.7% in the first two trading days of October. At that time, rumors were spreading that the Fed would be done raising key interest rates at its November Federal Open Market Committee (FOMC) meeting—and there were hopes this rate hike would only be 0.50%.
While these rumors were completely unfounded, it does tell me one thing: When the Fed signals that it’s done raising key interest rates in the near-term—likely in December—it will spark a massive market rally. So, the Fed just might be Santa Claus and bring joy to all the folks on Wall Street this year.
Reason #4: Market Celebrates Midterm Elections
Earlier, Bodner briefly touched on how the market has historically posted positive gains in October and November in mid-term election years. He noted that in the past 30+ years, the S&P 500 has risen an average 2.5% in October and an average 2.4% in November in midterm election years.
Well, Bryan Perry (the Senior Director with Navellier Private Client Group) and Gary Alexander (a Senior Writer at Navellier & Associates) both recently pointed out that the stock market doesn’t just rally strongly in the fourth quarters of midterm election years, it also continues to climb in the following 12 months…
In Perry’s October 4 commentary, he noted that more than 80 years of market history shows that the market should pivot higher after the midterm elections.
“It should be quite a show, and if history is any guide, there is reason for optimism:
‘… the stock market in 2022 has generally followed the downward path typical for a midterm election year since 1962, according to Dan Clifton at Strategas. The S&P 500 is down slightly more than the typical 19% intra-year decline, but the news improves if stocks stick to the script. Stocks have historically bottomed in October and rallied by an average of almost 32% in the next 12 months. Clifton notes that stocks have been positive in the year after every midterm election since 1942!’
— From Forbes, October 2, 2002: “Midterm elections: Politics of the Stock Market”
That’s an amazing winning streak and would coincide with the near-capitulation price action that has a firm hold in market sentiment. Investors have been holding out for the Fed to pivot, but just maybe the stock market will pivot first.”
Perry is correct—that’s an incredible winning streak!
I should add that with the Federal Reserve set to raise key interest rates just six days before the midterm elections, it is all but guaranteeing a leadership change in Congress. Financial markets have always preferred gridlock, so that also bodes well for a more positive stock market in the upcoming months.
Alexander concurs, commenting in his October 4 article that Wall Street and Main Street view political change as a positive and that could signal that a market turnaround is near.
“We’re entering the fourth quarter—or the final reel. What’s more, in the election cycle, we’re entering the sweetest spot of the four-year spin cycle of electoral emotions, historically. Since 1962, the nine-month span encompassing the fourth quarter of the mid-term election year (starting now, October 1) to the first half of the following year (through June 30, 2023, in this case) has averaged a phenomenal 20.5% gain for the S&P 500. For NASDAQ, which began trading in 1971, the average nine-month gain has been over 27%.
October in Mid-Term Election Years Usually Launches a Spectacular Nine-MonthSurge
This table represents phenomenal consistency—until 2018—and therein lies the dilemma for Fed Chair Jerome Powell and investors. Will Powell repeat his glaring mistakes of 2018, or did he learn his lessons?
In 2018, in a spat with President Trump, Powell raised rates one or two times too many and the market fell 14% in the fourth quarter, falling sharply during Christmas week after his last Scrooge-like rate raise.
Despite Powell’s actions in 2018, the S&P 500 has risen in each of these nine-month spans from the pre-election October through the following June 30 since 1962 (and even since 1950), with 12 of the 15 gains being double-digit, averaging over 20%. I am not saying we will gain 20% or more this time around, but if Powell can subdue his Uncle Scrooge act this Christmas, we have a chance at some decent gains ahead.”
When you consider the data points that Perry and Alexander both shared—and the fact that Wall Street loves gridlock on Capitol Hill—we’re looking at what could be a very strong finish to the year, and beyond!
Reason #5: Earnings to Ignite Yearend Rally
It’s clear that there’s a lot of historical precedence on our side right now, as it signals to me that the stock market is due for a strong rebound and a rally through yearend. But there is one more factor that we need to discuss—and that’s the fact that upcoming market strength will also be driven by earnings.
Earnings remain the best catalyst for a rally and are the best explanation for the recovery that stocks have experienced since the huge spike down on the CPI report in mid-October.
, I know what you’re thinking: Earnings momentum has slammed on the brakes this year, with inflation, the strong U.S. dollar and rising rates pinching profits at many companies, especially multinational companies. And you’re right; many S&P 500 companies have faced major headwinds this year and their earnings momentum has decelerated.
However, third-quarter results have revealed a few corners of the market and select companies still have accelerating earnings momentum. As a result, FactSet estimates that the S&P 500 will achieve between 6% and 7% average earnings growth in the third quarter, which, thanks to better-than-expected earnings, is up from forecasts for only 2.4% at the start of the earnings season.
As I expected, the energy sector posted the best results of all 11 S&P 500 sectors, with 117% average earnings growth in the third quarter.
Time-and-time again I’ve seen firsthand how earnings are a boon for stocks. The fact is earnings work 70% of the time. What I mean by this is that when a company announces better-than-expected earnings and sales results, investors celebrate and drive the stock higher.
Wave-after-wave of positive results simply dropkick and drive stocks higher—and that’s exactly what we saw play out in the third-quarter earnings announcement season.
Bottom Line: It’s Time to Cheer Up
Warren Buffett famously stated that wise investors need to be “fearful when others are greedy, and greedy when others are fearful.”
Investors have been fearful all year long. The stock market came into the fourth quarter deep in negative territory, with the S&P 500 and Dow both down more than 20% year-to-date. The bond market continues to jerk around the stock market, with Treasury yields soaring in the wake of central bank action or economic data. And inflation remains elevated, pinching businesses’ profits and consumers’ wallets.
But my opinion is that now is not the time to sit on the sidelines.
Considering our discussion today, I think it’s unwise to let the financial media scare you out of the market. We’re in the seasonally strong time of year, and the data has revealed a market rebound is forthcoming. Plus, all of the Navellier & Associates advisers, strategists and writers agree that the market should bounce in the fourth quarter. And I believe it is time to load up on growth stocks, especially those prospering in an inflationary environment.
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 fundamentally superior stocks—especially oil and natural gas, building materials, food staples, shipping and fertilizer stocks—should benefit from a yearend rally and ongoing strength in the New Year.
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. 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 it 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 that the stock market should rally through yearend. As we just discussed, investors started to pour into the fundamentally superior stocks during the third-quarter earnings announcement season—and we can help you build a personal portfolio that will continue to prosper through yearend and well into the New Year.
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:
- 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.
- 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).
- 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 nearing the end of 2022, and as we close out the year, the stock market is narrowing. Investors are growing more selective, and growth stocks that can thrive in an inflationary and high interest rate environment are attracting a lot of attention. 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 2022 and the years ahead.
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you decide you’d like to continue to manage things yourself, we hope that we gave 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.
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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 2022—and beyond!
All the best to you and yours,
Louis Navellier
Chief Investment Officer
Navellier & Associates, Inc. Private Client Group
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About Louis Navellier
My name is Louis Navellier and I’m most widely known as an investment adviser and market analyst. Since 1980, I’ve been publishing my quantitative analysis on growth stocks and I’ve made it my life’s work to continuously refine and develop my analysis for investors like you.
My research and analysis have led to regular appearances on CNBC and Fox Business News and I am frequently quoted by MarketWatch and Bloomberg.
I also manage money for private and institutional clients through my money management company, Navellier & Associates, Inc.
Wealthy individuals and institutional investors want access to my 30+ years of quantitative research experience.
Our work with these professionals requires tight controls on investment risk and an exhaustive due diligence process.
The overall goal for our clients focuses on how we will achieve steady, long-term returns in up and down markets.
At Navellier & Associates, our proprietary quantitative models are designed to balance stocks, mutual funds, and income producing investments to maximize returns while controlling risk.
And today, I’m thrilled to give you the opportunity to put this same rigorous screening criteria and quantitative and fundamental analysis to work for your portfolio. For U.S.-based portfolios from $250,000 to $100+ million — my firm is here to help.
IMPORTANT DISCLOSURES
Any holdings identified do not represent all of the securities purchased, sold, or recommended for advisory clients and it should not be assumed that investments in securities identified and described were or would be profitable. Performance results presented herein do not necessarily indicate future performance. Results presented include reinvestment of all dividends and other earnings. 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. 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 mentioned in this report.
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Mapsignals Disclosure: Jason Bodner is a co-founder and co-owner of Mapsignals.com, a Developed Factor Model for isolating outlier stocks using its proprietary quantitative equity selection methodology. Mapsignals was founded in 2014. Data used by Mapsignals, for periods prior to its founding in 2014, is data derived from Factset. Mr. Bodner is an independent contractor who is occasionally hired to write articles and provide his editorial comments and opinions. Mr. Bodner is not employed by Navellier & Associates, Inc., or any other Navellier owned entity. The opinions and statements made in this article are those of Mr. Bodner and not necessarily those of any other persons or entities. 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.
The views and opinions expressed do not constitute specific tax, legal, or investment or financial advice to, or recommendations for, any person, and the material is not intended to provide financial or investment advice and does not take into account the particular financial circumstances of individual investors. Before investing in any investment product, investors should consult their financial or tax advisor, accountant, or attorney with regard to their specific situation.
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 product.
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 Large Cap Growth Composite has had a performance examination for the periods September 1, 1998 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, 2005. As of October 1, 2019, the Navellier Large Cap Growth 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 Large Cap Growth Composite name changed from the Large Cap Growth Wrap Composite to the Large Cap Growth Composite. The Navellier Large Cap Growth Composite includes all discretionary Large Cap Growth equity accounts that 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 capital appreciation from well established companies and seeks to achieve the highest possible returns while controlling risk. The strategy invests in U.S. listed securities with market capitalizations greater than $1 billion. At any given time, the strategy may hold up to 15% in American Depositary Receipts (ADRs). Typically, the strategy invests in approximately 40-50 stocks that pass Navellier’s stringent quantitative and fundamental criteria. 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 September 1, 1998. 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. Fees are negotiable, and not all accounts included in the composite are charged the same rate. 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 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.
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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.