Monday, October 13, 2008

Louis Navellier and Proper Timing

Original post date: August 22nd 2008
Removed copyright content and reposted

You should have received the latest issue of Navellier's "What's Working on Wall Street Now‏" too.
When I read it I couldn't believe it. Here is the piece where Mr. Navellier was writing about timing.

How Proper Timing Brings Big Profits
In this week’s issue of What’s Working on Wall Street Now, I want to discuss one of the most important lessons for investors. Namely, proper timing in selecting stocks.
Most investors don’t realize how important this is—or worse, don’t know how to do it! I’m not talking about market timing, of course, just about investing during a stock’s “sweet spot” to maximize your profits. There’s nothing worse than buying too late or selling too early!
The simple fact is that the prices at the times you decide to buy and sell determine how much money you make. When investors get a chance to talk to me, they give me a company and ask whether or not it’s “good.” I respond that could be a very good company, but it may not be a very good investment. There’s a big difference depending on where the company is in its profit cycle.
My team and I we break down the profit cycle and focus on the best opportunities right NOW. Our goal is not only to steer investors into the right stocks, but also at the right time. I’ll give a perfect example: In September 2004, I told my Emerging Growth subscribers to load up on shares of Holly Corp. (HOC), the Texas-based oil and gas company. At the time, the stock was going for $23.80 a share.
Our timing truly could not have been better, and the stock took off as soon as we bought it. By mid-2006 it was going for $80 a share! We had more than tripled our money—and now subscribers were begging with me—no, pleading with me to sell Holly. But I said no!
Why? The timing wasn’t right. I could see that this stock was still in its “sweet spot.”
Holly then announced a 2-for-1 stock split and the shares rallied to $80 again! We were now sitting on an even bigger profit! Last August, however, I noticed there was rising volatility in Holly’s shares. Each day’s swing seemed to be getting larger and larger. This is often a sign that hedge funds are about to dump the stock, and I knew it was time for my Emerging Growth subscribers to sell. All told, we made over 460% in HOC—and that’s not including dividends! I’m actually still getting thank you letters about Holly a year after the sale.

Does Mr. Navellier only have a case from 2004 to report as an example of proper timing?

How would he judge the timing for GRMN, MTL, CSIQ, BHP, SMS, CROX, MDR, JAKK, GEOY, ELN and many others?

But let's see in details the perfect timing for HOC.

First of all: 460% is very good, and there is no need to include 73 cents of dividends. So the sentence and that’s not including dividends! makes no sense.
Second: Mr. Navellier told his subscribers to sell on his September 2007 issue of Emerging Growth (the newsletter PDF file was created on August 31st). So the sell price was not more than $66 and not $80 (just for sake of precision).
Third: here is what Mr. navellier was writing the 3 previous months.
  • June 2007: price $71.19 - buy below $76
  • July 2007: price $74.19 - buy below $80
  • August 2007: price $59.69 - buy below $64
Why didn't he write that between June and August 2007 timing was not proper?

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