MARKET OUTLOOK 1Q 2022:

The Truth About the Tech Rout &
the Top 5 Tech Trends for 2022

Rising rates will crush technology stocks. Growth stocks will suffer losses in a slowing earnings environment. And if you heed the financial media’s advice, now is the time to invest in value stocks. But before you fall for the media’s scare tactics, we encourage you to read the latest Special Report from Navellier & Associates.

In this special report, we’ll pull back the curtain on the sell-off in tech stocks in January, reveal the truth about the correlation between rising rates and tech stocks, and discuss why I believe the recent pullback is actually presenting us with an incredible buying opportunity. Today, I will present 5 tech trends that are benefiting from the current market environment.

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

February 2022

Navellier & Associates, Inc.
One East Liberty, Suite 504
Reno, Nevada 89501
800-887-8671
info@navellier.com
www.navellier.com
NCD-22-0231

I often say that Wall Street likes to “react” first and “think” later—and that’s certainly been the case in 2022 so far. All of the major indices—S&P 500, Dow, and NASDAQ—ended the month of January lower, and continued lower through the first 20 days of February, despite their early trek to all-time highs at the start of the year. Considering all the negative headlines recently, it’s no wonder that many investors were heading to the exits&helip;

  • “Stocks End Lower as Bond Yields Hit Two-Year High”
  • “Jump in Treasury Yields Sinks Equity Markets, Notably Tech”
  • “Stocks Extend Losses as Rate Worries Persist”
  • “Stock Selloff Deepens as Treasury Yields Climb”
  • “Stock Market Faces Lingering Perils in 2022”

Are you starting to notice a theme? The surge in Treasury yields in January clearly spooked individual and institutional investors alike. The 10-year Treasury yield rose from 1.51% on December 31, 2021, to a peak of 1.88% in mid-January before tapering off a bit. That dramatic rise in the 10-year Treasury is one of the main reasons why we saw a massive rotation on Wall Street in January.

First, we saw a bout of profit taking in dividend growth stocks. Then, the next bucket of stocks to take it on the chin was technology stocks, with the NASDAQ retesting its early December 2021 lows on numerous occasions throughout January and ultimately falling into correction territory. Small caps weren’t spared either, as the Russell 2000’s 50-day moving average dipped below its 200-day moving average—or what market technicians like to a call a “death cross.”

Wall Street was throwing the baby out with the bathwater. Nothing worked.

If I’ve said it once, I’ll say it again… Wall Street is a manic crowd, and crowds are not smart. As a result, Wall Street stopped thinking and overreacted to headlines about rising Treasury yields, fears that the Federal Reserve would raise rates too quickly and inflation would crush technology stocks. In turn, a lot of the selling pressure that we saw in January emanated from ETFs and index funds—and practically all stocks ended up succumbing to the selling pressure.

The financial media will continue to fret about the Fed, interest rates, and inflation, and the talking heads will lock-in on their favorite January adage: “As January goes, so goes the year.” But personally, I don’t put much stock in Wall Street adages. I prefer to let the data do the talking, and the numbers tell me that the stock market should retrace its steps back to all-time highs.

Consider this: The NASDAQ has ended the month of January down 5% or more in six prior instances, 2016, 2010, 2009, 2008, 2005, and 1990. Our friends at Bespoke recently pointed out that in those years, the NASDAQ continued to decline in February, slipping another 1.12% on average. February 1990 and February 2010 were the two outliers, rising 2.41% and 4.23%, respectively. After that, the NASDAQ posted an average gain of 4.93% in the next three months and an average 11.01% gain in the next 12 months.

Now, when you consider all months where the NASDAQ has declined 10% or more, there are 22 instances. The tech-heavy index’s performance in the ensuing month is a toss-up, as the NASDAQ has rebounded 50% of the time. But, looking further out, the NASDAQ has posted an average gain of 3.93% in the following three months and a 7.92% gain in the next 12 months.

I suspect the market could follow historical precedence this time around, too, with the NASDAQ recovering in the upcoming months. The fact is there is one very big catalyst set to ignite the rebound in stocks: earnings. The fact is earnings are working, and you can’t keep a good stock down for long.

Of course, the financial media wants you to believe otherwise, proclaiming that rising Treasury yields will crush tech stocks, and in turn, also crush growth stocks. Tech stocks are widely recognized as the epitome of growth stocks, in that they are constantly innovating and offer above-average growth. So, a few big-name money managers have recently claimed that it’s time to sell growth stocks and buy value stocks. “Value is back!” they claim. But I believe, nothing could be further from the truth.

I’m obsessed with selecting stocks with strong sales and earnings growth, as well as positive analyst revisions. Essentially, every three months, I count on quarterly earnings to “drop kick” and drive my stocks higher. Institutional buying pressure is the primary component propelling my stocks higher, and I often see an increase in buying pressure when my stocks release positive quarterly results.

I expect this could be the case in 2022. The reality is that as any stock market meanders higher, it typically grows more narrow. That will likely play out this year as the market retraces its steps back to all-time highs, and also because year-over-year earnings comparisons will be more difficult. The “smart money” will start to “think” first and chase fewer stocks—and institutional buying pressure should intensify in stocks with robust forecasted earnings and sales growth.

Superior fundamentals will be super important as the stock market becomes more selective in 2022—and growth stocks, especially tech stocks, have some of the strongest earnings momentum out there. So, in my opinion, growth will trump value in 2022. Once you finish reading this special report, I think you may agree with me.

Today, the experienced team at Navellier & Associates and I will explain why growth wins, and we’ll pinpoint which trends offer the most opportunity this year. The fact is the Federal Reserve’s action—quantitative easing (QE) tapering and key interest rate hikes—and rising Treasury yields have virtually nothing to do with growth stocks…

The Truth About Interest Rates & Growth Stocks

The Federal Reserve finally pulled its head out of the sand and admitted inflation is here to stay. As a result, the Federal Open Market Committee (FOMC) unanimously agreed to end its bond-buying program sooner rather than later.

Fed officials agreed to reduce Treasury purchases by $20 billion per month and mortgage-backed security purchases by $10 billion per month. Essentially, this sets the Fed up to end its bond-buying program by March 2022, much faster than the previously set November deadline.

Once the Fed turns off the money spigot and ends its quantitative easing, FOMC members also unanimously agreed to start raising key interest rates in 2022. At least one rate hike is now on the docket for 2022, but based on the Fed’s dot plot, there’s a very real possibility that our central bank could raise key interest rates by 0.25% three times in 2022—and another three times in 2023.

While Wall Street initially cheered the Fed’s decision back in December, the release of the FOMC minutes in January spooked investors. Bryan Perry, a Senior Director with Navellier Private Client Group, had this to say about the latest FOMC minutes and the market’s response…

The release of the FOMC minutes from the December meeting set in motion a round of collective fears that the Fed is having an epiphany moment of doubling down on its admission that they wrongly downplayed inflation—and the market responded accordingly. Seeing the benchmark yield move from 1.37% to 1.77% in the span of three weeks was not a scenario the NASDAQ anticipated.

The question that we need to ask now is whether the bond market has adjusted enough to take a wait-and-see approach to further economic and earnings data. The one-year technical chart of the 10-year Treasury (above) suggests that a short-term top in bond yields will define the near-term. If not, then a move to 2.0% is almost assured.

Now, I agree with Bryan in that the 10-year Treasury yield could trek back up to 2.0% this year. But in the near-term, I anticipate yields will moderate a bit. Not only have we had some successful Treasury auctions of late, but it’s also important to remember that the Fed’s quantitative easing (QE) program is still ongoing. They are tapering, but they’re still purchasing Treasuries and that’s supporting yields. So, yields should find some semblance of equilibrium.

I should add that market rates are much, much more important than Fed rates. Remember, the Fed follows market rates—and it doesn’t like to fight the tape. As a result, the Fed will still keep rates artificially low because the federal deficit is now approaching $30 trillion. The Fed simply cannot raise key interest rates significantly or it would risk the interest on the nearly $30 trillion in cumulative federal debt crushing the U.S. economy.

The Fed has already announced that it will increase short-term rates three times this year, 0% to 0.75%. It’s important to understand that’s your interest on bank deposits, your money market funds—and things like that. So, these interest rate hikes should not derail the stock market because inflation is still running a lot hotter than interest rates.

How bad is inflation? It is now running at its highest pace in nearly 40 years!

The Labor Department announced its Consumer Price Index (CPI) rose 0.5% in December, and core CPI, which excludes food and energy increased 0.6%. In the past 12 months, CPI and core CPI are running at an annual pace of 7% and 6.8%, respectively. Clearly, inflation persists on the consumer level, and it is not expected to abate until possibly the second half of 2022.

If you thought CPI was bad, hold onto your hat. The Producer Price Index (PPI) was even more problematic. PPI increased only 0.2% in December, but PPI surged an incredible 9.7% in the past 12 months. Ouch! Core PPI rose 0.4% in December, and it’s up 6.9% in the past 12 months.

So, the Fed will have to be very, very careful as it rolls back its QE and raises key interest rates.

Still, I know the talking heads of the financial media continue to proclaim that tech stocks were crushed because of interest rates. Folks, that’s not true. Tech stocks have nothing to do with interest rates.

The Fed’s actions will impact more cyclical stocks like housing and financial stocks like banks. In fact, the slope of the yield curve is the most important factor impacting banks’ profitability. So, as the Fed raises short-term interest rates in the upcoming months and if bond yields don’t rise the same amount, then banks’ operating margins can get “squeezed” as the yield curve tightens. If their operating margins shrink, so does their profitability.

Growth stocks, on the other hand, are largely immune to interest rate increases. The fact is the financial media wants to scare you to boost their ratings—and to cause you to overlook the truth. I believe that growth stocks should continue to announce stunning sales and earnings in a decelerating environment.

A Return to Growth

Jason Bodner, who writes Sector Spotlight in the Navellier & Associates weekly Marketmail, on January 12, 2022, commented on the correlation between the Fed, interest rates, and tech stocks—and also concluded that investors will return to growth stocks this year.

Two years ago, all stocks seemed good—the good, the bad, and most in between. The party seemed like it wouldn’t end; investing seemed easy. Though unpopular, I called that market “overbought” in late January 2020. Naturally, I had no idea that a pandemic would soon grip us and crush stocks. The data just said that the buying wouldn’t last.

But the crash didn’t last long, either. The data soon screamed “oversold,” and I predicted a market low for Friday, March 20, 2020. The bottom happened just one trading day later—Monday, March 23. Stocks then soared, up 20% in three days, eventually hitting new highs. Huge money flows and stimulus checks fueled the rally. The Fed’s aim was to flood us with liquidity, calm nerves, and lubricate commerce. Rates dropped to zero (negative in some places), and the spigot of government funds was on full blast.

Naturally, all good things come to an end, but no one ever wants them to. Now the Fed says easy money must at least slow and growth stocks have been hit hard. But looking even further back to similar big reactions to potential Fed policy changes might hint at what’s in store for us going forward.

In 2013, another Fed chair caused turmoil. This time, Ben Bernanke just said that, at some point in the future, the Fed would slow bond purchases. This caused an immediate panic, because in the Great Financial Crisis of 2008, the Fed bailed us out by buying bonds. This injected desperately needed liquidity into an ailing system. Five years later, Bernanke was signaling that was just going to slow.

This market overreaction was soon dubbed the Taper Tantrum.

Investors freaked and sold bonds, shocking the market. Stocks followed the next spring, in April 2014; “momentum stocks” sold off hard. Many of my recommendations and personal holdings were suddenly under immense pressure. It was ugly and very uncomfortable. But those losers are today’s big winners.

This sounds familiar, doesn’t it?

Today, Fed Chair Jerome Powell is faced with a dilemma similar to Bernanke’s “taper tantrum” in 2013. He must fight inflation and hint at tighter money policy, but not too much to tank the economy. I think this is Taper Tantrum 2.0.

The Fed has to send signals because it needs to engineer a soft landing. Rates can’t rise too fast because all the stimulus, aid, and QE was designed for one thing—to keep our economy afloat and progressing.

Why would the Fed undo all those years of work now? And given how huge the balance sheet is, the Fed can’t hike rates too fast, as the interest on our federal debt will become crippling. But a raise of rates to 2% or less isn’t crippling. Even if it did raise rates that high, we’d still be under mid-2019 levels:

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

The Fed must fight vicious inflation, but I doubt that it will cut our nose off to spite our face. That’s why I think growth stocks are actually a good buy right now. I know, it may have been volatile, ugly, and painful to be a growth investor in recent months, but it’s been glorious for the past 30 years.

The only thing that can keep our economy forging ahead is the growth of commerce. Over the long term, there’s been no better place to invest than in growth stocks. And now, with growth stocks under pressure from an overreaction—just like we’ve seen before—I think it’s good to buy growth on dips.

I couldn’t have said it better myself!

But let me add something: You may recall that growth stocks fell out of favor in the early Spring of 2021, too. From mid-February to mid-May, Wall Street had shifted its attention and value was outperforming growth. The shift came at the onset of surging inflation. The talking heads proclaimed inflation would hurt growth stocks, and value stocks would outperform over the long term.

We all know how that played out. Growth came roaring back in the second half of 2021.

The fact is that it was never a real value rally in 2021. It was a “mean reversion rally.” Once the first-quarter 2021 results were released, growth reasserted itself, as the results proved that growth stocks can still add to their top and bottom lines in an inflationary environment. And they proved this fact over and over and over again in 2021.

As a result, the “mean reversion rally” wasn’t sustainable last year, and I don’t expect it to be sustainable this year either. The reason why is simple: stocks are a great inflation hedge, and any stock that can earn money in this environment should emerge as an oasis.

The great news is that the stock market was grossly oversold at the end of January, which has given us an incredible buying opportunity. We can scoop up shares of companies with superior fundamentals at bargain-basement prices. And the best bets, in my opinion, are technology stocks that are prospering from five major trends.

Top 5 Tech Trends for 2022

Over the past two years, there’s been an increase in remote, or stay-at-home work, which has accelerated technological change and boosted productivity in the U.S. The Bureau of Labor Statistics has even reported that overall labor productivity is up 2.9% since the fourth quarter of 2019—and more than 5% since January 2019.

In my opinion, folks are simply more productive when they aren’t stuck in traffic on long commutes and are working from the comfort of their own homes. Still, remote work came with its own challenges, primarily reliable and fast internet connections. So, businesses invested heavily in technology in order to improve productivity and to reduce upfront costs by making more with less.

There are several industries that have profited from and will continue to lead this “productivity miracle” in 2022. Personally, I think the biggest winners are the Artificial Intelligence (AI), cybersecurity, 5G, electric vehicles (EVs), and semiconductor industries.

Tech Trend #1: Artificial Intelligence

Dictionary.com defines artificial intelligence as: “the capacity of a computer, robot or other programmed mechanical device to perform operations and tasks analogous to learnings and decision-making in humans, such as speech recognition or question answering.”

In even more simplified terms, AI is a computer system, software program, or platform that can act and learn similarly to a person. And it’s not a new phenomenon. AI applications have been around for decades.

Back in the 1950s through 1970s, AI gained attention for problem solving through “neural networks,” which then became the building blocks for the next iteration. “Machine learning,” or training for computers to analyze buckets of data without human intervention, came onto the scene in the 1980s through the early 2010s. Today, “deep learning”—which utilizes several layers of machine learning to better mimic a person’s decision-making and actions—is at the forefront of AI breakthroughs.

So, AI has quickly become more than just a buzzword these days; it is fueling a new revolution in technological advancements.

Let’s consider a few examples. Take the auto industry, which has benefited from AI for years and years. A lot of the big car manufacturers utilize robots for the shaping of car bodies, for welding the vehicle’s joints, for painting and overall assembly. Your back-up cameras and side mirrors that alert you when you’re too close to another vehicle or object are AI.

The health and fitness industry has boomed in recent years with the addition of smart watches and fitness apps for your smartphone. These watches and apps can do everything from tracking your activity (steps walked and flights of stairs climbed) to calculating your step length, walking speed, and walking asymmetry to checking your heartrate. That’s AI.

The overall healthcare industry has also utilized AI in the production of medical treatments, vaccines, and medicines, and it supports cancer research. Surgeons can also perform minimally invasive surgeries with the aid of robots, as it offers a more magnified view of the surgery site and provides more precision and fewer complications.

The reality is AI can be applied to a variety of applications, and the aforementioned ones are a very small sampling. AI is utilized in everything from self-driving vehicles, smart homes, and manufacturing robots to financial algorithms, advertising, and personal electronic devices. And its future doesn’t appear to have any major limitations as technological advancement continues to create even more applications.

As a result, AI will continue to revolutionize our everyday lives and could reward savvy investors with the fortitude to invest early.

Tech Trend #2: Cybersecurity

Internet usage has soared over the past two years, as more and more folks turned to streaming services for entertainment and home laptops and PCs for work and education. The United Nations International Telecommunication Union noted that internet use expanded by more than 10% in the first year of the COVID-19 pandemic. And the UN agency estimates that about 4.9 billion people used the internet in 2021, up from 4.1 billion in 2019.

Breaking this down further, approximately 600,000 new internet users were added every day! The number of internet users worldwide is growing at nearly a 5% annual rate, with much higher figures in developed economies.

With more than half of the world’s population now online, more folks are susceptible to cyberattacks.

Cyberattacks are a malicious and deliberate attempt by an individual or an organization to hack another person or organization’s information. This could entail using another person’s social media account, stealing someone’s identity, breaking into their bank account, or using their credit cards for purchases.

The number of cyberattacks has grown exponentially over the past two years. Just consider a few disturbing statistics…

  • 36 billion records were accessed in the first three quarters of 2020 in data breaches.
  • In 2020, malware cases surged 358%, while ransomware cases jumped 435%.
  • The threat of banking trojans skyrocketed in 2021, with Android banking malware soaring 158.7% in TI and 49% in T2.
  • The FBI fielded 791,790 cybercrime complaints in 2020, and these incidents cost $4.2 billion.

The Cost of a Data Breach Report 2021 revealed that these cyberattacks and data breaches have been costly to individuals and businesses. The report notes that the average cost of a data breach was between $3.86 million and $4.24 million on an annualized basis in 2021. Remote work also played a big role in data breach costs, with the average cost $1.07 million higher when remote work was involved.

Cybercrime damages overall are expected to total a whopping $6 trillion in 2021!

Clearly, cyber threats are very real and aren’t going away any time soon, as more folks and businesses rely on the internet daily. As a result, companies are spending money hand-over-fist on cybersecurity initiatives to detect and mitigate threats. Much of these funds are dedicated to protection and risk management solutions for application, cloud, and data security, as well as identity access management—just to name a few examples.

Interestingly, AI and machine learning are also playing a key role in cybersecurity initiatives. AI-enabled platforms can analyze data and identify potential threats more quickly, while machine learning is helping detect ransomware and malware before a file is even accessed.

Overall, the global cybersecurity market is forecast to reach nearly $540 billion by 2030, up from $183.34 billion in 2020. That represents an 11.6% compounded annual growth rate. So, investing in a few top cybersecurity stocks could be a great financial decision in 2022.

Tech Trend #3: 5G

Along with cybersecurity, the global pandemic also accelerated the demand for 5G. All of the major telecommunications companies continue to ramp up the rollout of their 5G wireless services to better meet consumers’ demand for faster internet speeds, better connectivity, and extra bandwidth.

To review, 5G, or the fifth generation of wireless technology, will boost internet speeds and connections. Download speeds could be between 10 and 100 times faster than what’s currently available. 5G networks will also provide more capacity for connected software applications and increase global network connectivity.

Simply put, the transition from 4G to 5G could be one of the biggest trends of 2022—and beyond.

Based on the Global 5G Technology & Volume Forecast Report 2021, the global 5G market is anticipated to achieve $65.49 billion by 2026. The report also noted that the global 5G industry is expected to expand at a whopping 58.7% compound annual growth rate (CAGR) between 2020 and 2026.

To get in front of the shift to 5G networks, major telecommunications companies are already offering plenty of incentives to entice their customers to upgrade their devices to 5G-enabled devices, as well as incentives to attract new customers. As the 5G rollout continues and more folks upgrade and enhance their mobile devices, exponential growth in 5G-connected devices is expected…

The International Data Corporation (IDC) estimates that 5G smartphone shipments will breach 153.3 million units in 2025, up from 33.4 million units in 2020. That’s in the U.S. alone. Globally, the number of 5G smartphones is forecast to be in the billions this year!

5G is a very, very big deal—and many companies could make a windfall from it.

Tech Trend #4: Electric Vehicles

VW Group’s CEO Herbert Diess has been quoted as saying, “Electrification is the way forward. There’s no other alternative. No competitor is serious about any alternatives anymore.”

I happen to agree with Diess. Electric vehicles (EVs) are the way forward. The shift to EVs is inevitable—and for many of the big-name car manufacturers, it is jump on the bandwagon or be left in the dust.

The reality is that internal combustion engine vehicles are facing stiffer regulations and even bans in countries around the world. A few European countries, like Norway, have even set 2025 as the drop-dead date; all new vehicle sales must be zero emissions. In other words, all new vehicles will need to run on electric or fuel cells—and the country is well on its way to achieving this goal.

Norway announced that more than 9  in 10 vehicles sold in September 2021 were electric or rechargeable hybrids—and less than 5% of all vehicles sold in the first nine months of 2021 were powered by gasoline.

Norway isn’t alone either, as demand for EVs is ramping up and sales are starting to climb around the world. The U.K. reported that nearly 22,000 battery-powered EVs were registered in November, which is up from 10,345 EVs in November 2020. Here in the U.S., hybrid vehicle sales soared 76% year-over-year to 801,550 in 2021, while EV sales surged 83% year-over-year to 434,879.

Total global EV sales for 2021 are estimated to be more than 6.3 million units, with third-quarter sales jumping 94% year-over-year to about 1.7 million vehicles.

Looking forward, Goldman Sachs has even projected that nearly half of all vehicle sales globally will be electric in 2040. Folks, that’s less than 20 years away!

The International Energy Agency (IEA) also reiterated this sentiment: it expects to see 60 million EVs on the road in 2026, compared to only 7.2 million in 2019. The IEA even took it a step further, stating that demand for diesel and gasoline is peaking. Specifically, the IEA doesn’t expect diesel and gasoline demand to return to pre-pandemic levels. Gasoline demand dropped by a record 2.9 million barrels per day during the global pandemic of 2020, which is down more than 10% from the 26.6 million barrels per day in 2019.

Now, I don’t doubt that demand for diesel and gasoline could be peaking in Europe, as it’s the largest market for EVs in the world. However, EV adoption is running at a slower pace in North America and Latin America. I don’t anticipate that we’ll reach “peak” gasoline and oil demand any time soon, since the government incentives here are not as strong as they are in many European countries.

I should also add that the battery and semiconductor shortages, the infrastructure and charging station conundrums, and the high cost of EVs compared to the typical internal combustion engine (ICE) vehicle are making the transition to EVs a bit more complicated than meets the eye. Still, that hasn’t stopped many countries like Norway, or even U.S. states from mandating EV usage. The U.K., Eurozone, New York, and California have a 2035 deadline.

So, as the issues surrounding batteries, infrastructure, and costs are sorted out in the coming months and years, more auto manufacturers should increase EV production and offerings. In other words, we can’t deny that the EVs are hot, hot, hot right now and should be one of the hottest trends in 2022—and beyond.

Now, with that said, not all EV manufacturers are created equal. So, you need to be strategic in your investments in the EV revolution, as many companies are losing money or not projected to make a dime for many years to come.

Tech Trend #5: Semiconductors

Guess what all of the four aforementioned trends have in common? They need semiconductors!

The Consumer Electronics Show (CES) was held in Las Vegas, Nevada, in early January. The popular event revealed that the latest and greatest products—like televisions, virtual reality, video games, 5G, and electric vehicles—now require more high-powered chips than ever. Consider this…

Artificial Intelligence: According to McKinsey & Company, by 2025, AI-related semiconductors could add up to nearly 20% of all chip demand, amounting to approximately $67 billion in revenue. AI-specific chips could see 18% annual growth over the next five years, which is approximately five times more than the rate for non-AI applications.

Cybersecurity: Thwarting cyberattacks is more than just having anti-virus protection, firewalls, and threat detection software. Flawed chips can also make everything from smartphones to data centers more vulnerable to cyber threats and hacks. That’s why it’s vital for the latest generation of chips to be developed with more secure designs, and for companies to eliminate flaws in semiconductor designs.

5G: 5G phones actually have 30% to 40% more semiconductor chips than previous models. The continued launch of 5G-enabled smartphones is expected to create even more demand for chips, with the global 5G semiconductor solutions market anticipated to reach $10.8 billion by 2029. That represents a compounded annual growth rate of 24.5%.

Electric Vehicles: Semiconductors are vital to the operation of all vehicles, as they’re used in safety features, displays, vehicle controls, sensing, and more. EVs require even more semiconductors than their internal combustion engine (ICE) peers. In fact, according to a study by IDTechEx, EVs utilize twice as many semiconductors as ICE vehicles, with up to 2,000 to 3,000 chips used in EVs.

Considering all this, is it any wonder that semiconductor demand is skyrocketing?

Even amidst the semiconductor shortage in 2021, the semiconductor market continued to expand. The Semiconductor Industry Association (SIA) even reported that global semiconductor industry sales were $49.7 billion in November 2021, which represented a 23.5% year-over-year increase. The cumulative annual total of semiconductors sold through November 2021 reached 1.05 trillion, or the highest-ever annual total. Makes you wonder how high sales will soar once supply chains operate more normally.

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

Currently, the global semiconductor market is forecast to grow from $425.96 billion in 2020 to $803.15 billion in 2028. But as more and more companies boost their chip production to meet rising demand, we could see the semiconductor market exceed these forecasts.

So, it’s also not too shocking that semiconductors were a little more resilient amidst the NASDAQ correction and tech stock sell-off in January. For Income Mail article published on 1/19/2022, Bryan Perry commented that there’s been evidence of this resilience in the tech sector with semiconductor equipment and semiconductor manufacturers, and he called out one such company’s stunning fourth-quarter results as proof.

Taiwan Semiconductor (TSM) is the largest chip foundry in the world. I normally try to avoid naming specific stocks here, but TSM’s set of numbers and guidance is remarkable.

For the fourth quarter, TSM earned $1.15 per share on $15.74 billion in revenue, up 24.1% year-over-year. Gross margin for the quarter was 52.7%, operating margin was 41.7%, and net profit margin was 37.9%. The company said that spending in 2022 would well exceed last year’s levels. For the quarter, shipments of 5-nanometer accounted for 23% of total wafer revenue; 7-nanometer accounted for 27%.

While discussing these results, TSM’s Chief Executive, C.C. Wei, said that the company would spend between $40 billion and $44 billion on capital expenditures to help ease the chip shortage facing the world now, and it was able to capitalize on demand. Wei said the added production capacity was due to higher demand for high-compute electronics, such as smartphones, electric vehicles, and servers.

The biggest catalyst for the stock’s impressive move higher was the company’s upside guidance for the first quarter, seeing revenues of $16.6 billion to 17.2 billion vs. $15.78 billion S&P Capital IQ Consensus.

This is worth getting excited about from both a fundamental and technical standpoint, as TSM forecasts accelerating 2022 revenue and earnings growth in addition to breaking out of a one-year base formation.

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

This two-fold signal is a great tell for the sector. Taiwan Semiconductor is not only a true bellwether for what lies ahead this year for business conditions, but it is also the #1 holding for SMH, accounting for 14.1% of its total assets. Being a foundry that builds chips for customers with proprietary technologies, other chip and chip equipment stocks may outperform TSM when it comes to total price appreciation.

The key point is the magnitude of future demand being laid out by TSM and the bullish spillover to what it means to the rest of the leading chip and chip equipment companies that should report impressive fourth-quarter results, while also raising guidance for the current quarter and the year ahead.

Personally, I’ve always been a fan of companies that provide the “picks and shovels” to a hot trend or industry. Think back to the California Gold Rush in the 1850s. The folks that sold picks, shovels, and jeans to aspiring miners made more money than the vast majority of gold miners trying to get rich in mining.

So, there’s something to be said about investing in semiconductor companies in 2022, as they’re supporting all the aforementioned trends—and should experience exponential growth as port bottlenecks and supply chain disruptions ease.

The Path to Prosperity in 2022?

Considering our discussion today, I think it’s unwise to let the financial media scare you out of the market and to bet against growth stocks, especially technology stocks.

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 those tech stocks profiting from the AI, cybersecurity, 5G, EVs, and semiconductor trends, are positioned to rebound impressively in the upcoming months—and should continue to appreciate handsomely throughout 2022.

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. 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.

Capital Preservation/Defensive Portfolios

These portfolios aim to outperform 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 Defensive Alpha portfolio, as an example, aims to provide clients with an asset allocation that combines stocks and cash. Its ultimate goal is help protect a portfolio’s value during prolonged market downturns.

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 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 have a very bullish outlook for 2022. As we just discussed, technology stocks are gearing up for a significant rebound from the January lows,  we believe they could lead the market higher in the upcoming months as investors grow more selective and fundamentally focused. We can help you build a personal portfolio.

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 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.

The year of 2022 has just begun—and it’s had a bit of a shaky start. But in our opinion, 2022 should shape up to be a great one for all of us here at Navellier. The stock market is narrowing, investors are growing more selective, and growth stocks are returning to favor. 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.

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 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.

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 2022.

All the best to you and yours,

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

Claim Your No-Obligation Personal Portfolio Review

Available Until March 31, 2022
Yes Louis, I want to put the experience of Navellier & Associates to work for my portfolio.

Sign me up for a confidential, no-obligation personal portfolio review.

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.

Navellier & Associates owns Taiwan Semiconductor (TSM) in managed accounts. Bryan Perry does not own Taiwan Semiconductor (TSM) personally. Louis Navellier and his family do own Taiwan Semiconductor (TSM) via a Navellier Managed account.

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.

This report is for informational purposes and is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in an investment making decision. The views and opinions expressed are those of Navellier at the time of publication and are subject to change. There is no guarantee that these views will come to pass. As with all investments there are associated inherent risks. Please obtain and review all financial material carefully before investing. Although the information in this communication is believed to be materially correct, no representation or warranty is given as to the accuracy of any of the information provided. Certain information included in this communication is based on information obtained from sources considered to be reliable. However, any projections or analysis provided to assist the recipient of this communication in evaluating the matters described herein may be based on subjective assessments and assumptions and may use one among alternative methodologies that produce different results. Accordingly, any projections or analysis should not be viewed as factual and should not be relied upon as an accurate prediction of future results. Furthermore, to the extent permitted by law, neither Navellier 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. Opinions, estimates, and forecasts may be changed without notice. The views and opinions expressed are provided for general information only.

The S&P 500 Index consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock ’s weight in the index proportionate to its market value. The reported returns reflect a total return for each quarter inclusive of dividends. Presentation of index data does not reflect a belief by Navellier that any stock index constitutes an investment alternative to any Navellier equity strategy presented in these materials, or is necessarily comparable to such strategies and an investor cannot invest directly in an index. Among the most important differences between the indexes and Navellier strategies are that the Navellier equity strategies may (1) incur material management fees, (2) concentrate investments in relatively few ETFs, industries, or sectors, (3) have significantly greater trading activity and related costs, and (4) be significantly more or less volatile than the indexes. All indexes are unmanaged and performance of the indices includes 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.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.

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.

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.