Thursday, October 2, 2008

Louis Navellier and GIGM - It's a TIGER!

I am sure you also got Mr. Louis Navellier's messages promoting Emerging Growth, one of his newsletters hosted by InvestorPlace, available for less than $1.000 per year.

I got many. One of them arrived in my mailbox on November 9th 2007 with some not-to-lose opportunities. One of them, or better, Number One was Gigamedia (GIGM) that day trading at around $18.94.

Here is the extract of Mr. Navellier's promo:

Grab Gigamedia, the Taiwan game developer, but grab it with both hands, because it’s a tiger! Up 109% in 10 weeks. Plus, while the market was cratering, Gigamedia stormed ahead 32%! You’ve gotta love that. It sits right at the crossroads of 4 hot sectors: China, consumer spending, tech and the Internet 2.0. We’re looking at 25% - 30% growth per year, giving it a multiple of 12 times 2008 earnings. AND it has a PE to Growth (PEG) ratio that is one-fourth most U.S. consumer stocks. In short, it’s a SCREAMING bargain. Is Gigamedia’s big run over? Emphatically not! Just this week it popped another 15% and the reason is simple: analysts are climbing over each other to issue upgrades! Is this our next 109% gainer in 10 weeks? On today’s Emerging Growth Buy List Gigamedia is the best candidate. But before you invest follow my Buy Below instructions to the letter, please.

I find it always useful to have a look at the charts...

GIGM gained close to 150% from less than $10 in August 2007 to almost 25$ at the end of october 2007. Technical analysis teaches that steep trends do not last long.

Technical analysis also teaches narrow trends tent to be short in time.

Technical analysis also teaches about supports and resistances. When a support is broken the trend is likely to be finished.

What would you have expected to happen after a short, narrow, steep trend like this? Would you answer Emphatically not! to the question Is Gigamedia’s big run over? Would you think it is the best candidate to gain another 109% in 10 weeks? Or maybe to take a rest?

Here is what happened after the day Mr. Navellier was saying "it’s a SCREAMING bargain":

On August 5th 2008 GIGM closed at $11.94. If you bought it at $18.94 when Mr. Navellier spammed you, your loss would have been of around 37%.

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