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| Email Response To Navellier's Disasterous Investment Advice |
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Below is a marketing piece sent via email by Louis Navallier - one of these newsletter clowns who have no Wall Street experience and who look to make money from your greed. Have a look.
Navellier writes:
How to Profit from Today's Rate Hike
"Double Down Now and You CouldGrow 50% Richer in 90 Days
“As I write this, the market’s already up 200 points. If you have the vision to add to our positions now, you’ll thank me 1,000 times this time next year.
Fellow Investor:
Now that the FED has finally raised interest rates, please—what ever you do—don’t sit on the sidelines awaiting the NEXT rate hike.
If you do, you could do more damage to your wealth than last month’s 417-point loss!
That’s a big claim, I know.
But if you believe the bears, my friend—that this is NOT the last rate increase and that inflation will only get worse—you are simply going to miss out on the next big phase of this raging bull market.
Let me explain. . .
Despite Bernanke’s quarter-point rate hike, our behind-the-scenes research indicates that the market will continue to rebound and roar for the next six months.
Today the market already shot up 200 points! How can this be?
Because there are too many signs that the economy is having a "soft landing" and the worsening inflation the FED speaks of—the rationale for another rate hike—will evaporate the next time the FED meets and rate hikes will stop cold.
Here’s why:
Fact is, we just completed a stunning first-quarter earnings announcement season. This was the 16th consecutive quarter of double-digit earnings growth for the S&P 500…
…and I’m expecting the momentum to snowball as we head into second-quarter earnings!
You see the U.S. economy reaccelerated to a whopping 5.6% annual growth pace in the first quarter—the fastest rate in nearly three years. And corporate profits grew 11.9% quarter-over-quarter.
This leads me to believe that the upcoming earnings numbers are way too low, and that they are about to explode.
Two Reasons:
1) There have been very few earnings warnings, which is a very good omen, and
2) even some flagship stocks with erratic earnings are becoming so optimistic that the analysts are getting giddy.
On top of that, the economy couldn't be stronger. Just look:
1. The April tax surplus was almost $119 billion where $58 billion was expected.
2. The economy is so strong that the government is collecting an incredible amount of taxes. So much so, both the House and the Senate want to continue to cut taxes. So they’re extending the dividend relief and the capital gains tax cuts through 2010 and they installed AMT ("alternative minimum tax") relief.
3. What’s more, the dreaded trade deficit was about $5 billion better than expected thanks to a sliding dollar and soaring US exports. How often have you heard about U.S. exports soaring? And yet, that’s exactly what is happening.
4. Throw in corporate profits up 28.5% in the past year—the fastest year-over-year growth in 22 years and you’re going to see the market not just bounce up from this sell-off but ultimately see the DOW blast through 12,000 and beyond.
That's why I urge you to add to your positions while prices are depressed! Mark my words--30 days from now when new economic figures are released you are going to see the market bounce even higher. And the new positions you add today could easily make you 50% richer in the next 90 days.
Your Best Move Now
By simply embracing these opportunities now, you could easily double, triple, or even quadruple your wealth in the years ahead. Please hear me when I tell you, do NOT miss this opportunity. As the editor of the Blue Chip Growth Letter, it's my job—no, make that my passion—to connect the dots to the stocks that are most likely to profit.
Now, my critique written in July 2006…
The previous ad was from Louis Navellier, a well-known investment newsletter writer. These guys are really good at convincing you that they are right aren't they?
Like so many during the last great bull market, he became big, but not because he was good but because everything was doing well!
But like all of the others, he did not warn investors to get out before the bust.
The point is that all of these guys writing financial newsletters are like Wall Street—they look for reasons to convince you why you should buy into the market while avoiding the risks and denying the realities. If you would like to take advantage of what Mr. Navellier feels is a great economy, maybe you should buy his newsletter.
I can tell you this—he is absolutely wrong. The long-term trend is down for the market and even if it were to surge to 12,000 by this time next year, I have no doubt it will head back down again.
The following is an email I sent him to see what his response would be.
Dear Mr. Navellier,
With all due respects, we appear to differ in our view of the economy and market. In my opinion, the economy is in bad shape. We have not recovered from the recession that was reported to have ended in November 2001. Accordingly, we are in a secular bear market and have been since 2001.
My forecast (since 2004) is that this bear market will last throughout 2012, and perhaps beyond, with average annual returns of 1-3% for the market. However, precious metals, energy, and other industries will continue to outperform. Already, my forecasts for bull markets in precious metals (originally issued in 2001-2002, with a pullout in 2004 and a reentry in fall of 2005) and oil (over 2 years ago), REITS and basic materials (in 2002) have materialized.
The market rose only because the somewhat possible 50 BP hike did not occur. In my opinion, the 50BP hike did not occur ONLY due to the satisfaction of the Fed from the market sell off in May. Otherwise if the market was at 11,500 prior to the Fed meeting, we would have most certainly seen a 50BP hike. Any surges in the market are trading opportunities only.
Washington wants to cut taxes as its only way to continue to stimulate the economy now that credit is no longer an option. With short-term rates soaring in the past 2 years, consumers using their homes as ATMS, and the repricing of over $2 trillion of ARMs coming soon, we are headed for even more trouble.
There has been absolutely no net job growth, wage growth, household savings is running at 1% at best on trailing 12-month basis and is not much better over the past trailing 36-months.
Both Washington and Wall Street have denied the major impacts of inflation for two years now, amidst soaring energy and healthcare costs. And no level of interest rate hikes will serve to control this type of inflation. And it is going to get much worse. We are headed for a recession by 2007, which will trigger rising long-term rates.
By 2008, the real estate bubble correction will be in full force and will lead to record foreclosures, high inflation, and could result in a "Financial Enron" if Fannie Mae or Freddie Mac fail (which is a very good possibility). The MBS and ABS markets will definitely suffer and already the credit risk is tremendous. This alone could lead to a major sell off in the capital markets.
Corporate earnings have been high due to cost-cutting, outsourcing, and low analyst estimates. Meanwhile there has been very little corporate investment domestically. Almost all investment has been for overseas facilities. What does that imply about America’s economy?
Consumer spending will continue to dwindle since there is no more source of credit/money and no job growth. This will most likely become a critical issue beginning in 2012, just after the first wave of baby boomers have reached full retirement benefit age and when I expect the peak oil production to have commenced.
It is always a good exercise to read what other experience investors have to say about the market and economy even if you disagree because it allows us to reconsider if we have accounted for all of the risks adequately….END.
I have yet to have received a response from Mr. Navellier.
You see, these guys are in the business of making money; not for you; for themselves. They always have marketing pieces designed to sell you their services. All of these guys are the same. And they are more wrong than they are right.
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