The Little Book That Makes You Rich
10/01/2007 12:00 am EST
It may be ‘little’, but Louis Navellier’s book contains a wealth of information which will benefit investors who are looking to expand their knowledge of stock analysis, plus improve their results.
In this book, Mr. Navellier shares the strategy he has honed in more than 27 years of investing, telling readers that his investments in vital, growing companies have managed to beat the market nearly four-to-one.
His formula is quantitatively-based—one-part fundamentals and two-parts high quantitative marks—and it answers the crucial question of fundamental analysis (is the stock worth buying) while addressing the more important query—is it worth buying now?
Navellier’s premise is simple—forget the ‘stories’—a favorite mode of analysis by Wall Street—and one that he remarks, ‘has left legions of investors on the sidelines’, often licking their wounds from the Wall Street hype. Instead, he posits, the numbers are the story.
He tells readers the strategy is simple, although not labor-free. He picks winning stocks by focusing on the numbers, removing human emotions and learning to ignore most of the plethora of extraneous information that the media besieges us with daily—both factors which often trigger subjective—not objective decision-making.
Rather than just laundry listing his parameters, Navellier comprehensively explains his eight fundamental variables, which include:
• Positive earnings revisions
• Positive earnings surprises
• Increasing sales growth
• Expanding operating margins
• Strong cash flow
• Earnings growth
• Positive earnings momentum
• High return on equity
Additionally, he provides tips for combining these factors to arrive at his basic overall fundamental weighting, which is then tweaked from time to time, according to economic and market cycles.
That’s part one of Navellier’s equation. Then, to further sharpen their opportunities for success, he shows investors how to use risk/reward measurements, such as beta, alpha, standard deviation, and buying pressure, to determine when to buy and also—when to sell.
To help readers get started, Navellier invites them to see the results of his analysis—his proprietary stock rating system of almost 5,000 stocks—featured on the Web site, www.getrichwithgrowth.com.
Navellier closes his book with tips on how to blend your stock selections into a viable, successful portfolio and how to manage that portfolio over time. He also shares his more aggressive strategy for investors ready and willing to seek the next level of investing, what he calls his ‘quantum leap’.
This is an easy read, yet chock-full of excellent information, all succinctly packed into a ‘little’ tome that you won’t want to miss.