BRIEFING BOOK

Data Information Knowledge WISDOM

LOUIS NAVELLIER
Location: Forbes, New York, New York

About Louis Navellier ........................................................................ 2

Debriefing Navellier ......................................................................... 3

Navellier in Forbes

"QualityTrumps Junk,” 03/05/10………..……………………… 8

"Invest Globally," 11/19/07 ……………………..………………. 11
“Apple Still Juicy For Navellier," 02/22/06 ………………..…… 14
"Louis Navellier: King Of The Quants,” 03/05/02……………… 15

The Navellier Interview ………………………………………………….. 17

 ABOUT LOUIS NAVELLIER
Intelligent Investing with Steve Forbes

Louis Navellier is CEO of Navellier & Associates, a Reno,

Nevada-based firm that manages institutional portfolios.

Navellier is the editor of four stock advisory newsletters

including Emerging Growth, Quantum Growth, Blue Chip
Growth and Global Growth.

He has a three-step, bottoms-up stock picking process that

utilizes quantitative analysis, fundamental analysis and
securities optimization.

Navellier has a bachelor's in business administration and an MBA in finance from

California State University.

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 DEBRIEFING NAVELLIER
Intelligent Investing with Steve Forbes

Interview conducted by Alexandra Zendrian

March 8, 2010

Forbes: You recently wrote about a flight toward quality. (See "Quality Trumps Junk").
When did the quality rally start? And is this typical to go through a period of investors
purchasing junk and then head toward quality companies?

Louis Navellier: It is typical. If you go back to 2001, the market had two violent short
covering rallies then, although I know the market didn't officially get going until March of
2003. When the statue actually fell in Baghdad it was kind of a big relief rally. Usually when
a market has a down draft it has these short squeezes. And what happened on
September 1 is Fannie and Freddie were down 15% that day. The average financial was
down five. Financial stocks had rallied about 130% from the lows. A lot of them had
improving outlook. A lot of their strength was just balance sheet adjustments from making
their loan portfolios a little higher. But the day on September 1 when Fannie and Freddie
fell 15%; financial fell five. A lot of people on CNBC and stuff were nervous because here
comes September to October, which are seasonally weak months, and everybody was
scared. Then we went up that day.

We started to go up a lot on down days. That was the switch out of junk and toward
quality. And then of course we just had a good earnings season. I like to point out that
this last earnings season I like to have a phrase from Buzz Lightyear that we just went "to
infinity and beyond" because in the fourth quarter of 2009, earnings were positive and in
the fourth quarter of 2008, they were negative.

So technically when you take a positive or a negative earnings that are up an infinite
amount, then earnings are about to decelerate on S&P operating to 63.5% annual pace in
the first quarter. And then they go to 33.2 in the second and 24.9 in the third.

When we wrap all this up, it'll be probably the best earnings of my lifetime. It is being
exasperated or exaggerated by easy over year comparisons, but there is legitimate
economic recovery underway. Just inventory rebuilding alone and the improving business
in Asia and some other countries, the global businesses is basically kind of going to count
for at least 3% GDP growth and of consumer spending. It'll help.

How should retail investors look at those earnings reports you mentioned that are
certainly "beyond" but off of low lows?

Well, I think that there are a couple things that have happened on a retail front. I think
we've had so many good earnings that I think they're starting to take hold. You know, you
can't poo poo all of them.

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And so we have these poster stocks out there like the Apples of the world that obviously
have an incredible business underway. And with the iPad and stuff and the iPhone. I think
what really is fueling Apple is -- other than they manage their new product launches pretty
well -- is that not too long ago 40% of their sales were international. Now the latest quarter
it was 60% international. And we saw a lot of evidence of that about five weeks ago.
Coke came out and says, "I'm sorry, folks. Our sales were down, you know, in the U.S.
But somehow earnings went up 55% because our international sales are booming. And the
dollar's weaker every year, so we've got these windfall profits from getting paid in, you
know, Brazilian real and Australian dollars and then South Korean won."

So everybody kind of figured out that, gee, the multinationals are really prospering from a
stronger economic recovery outside the United States in Asia, Latin America and other
places. And they get this currency tailwind underneath them.

By the way, Coke's not one of our stocks, but I think there's just this big move in the U.S.
multi-nationals helped. And I think that's helping a lot because we can't stop the economic
recovery. It's happening. And I know the countries that have some poor demographics or
some housing issues that are lagging.

The economic recovery's underway. I think it was just realization of that. The other thing
is all the macro figures are subsiding and we started this year with China doing an abrupt
halt in the lending lasting the days of January.

And they're just trying to tap the brakes, because they lent so much in January and they
got their own little housing problem over there or a bubble. They were scared of the
Obama administration going after the banks and he wants his money back, even though
he was repaid. I guess he wants the GM and Chrysler money back. But that kind of died
after he congratulated Jamie Dimon and Lloyd Blankfein on their bonuses. And then there
were fears that they were going trying to re-impose some of the things from Glass-
Steagall, which I don't think is a bad idea. But that died too because Congress is pretty
dysfunctional plus Volker I think messed it up when he went for the Senate banking
committee. There were fears of the sovereign debt crisis. That's over now because
Greece actually implemented the cuts. And their bonds were over-subscribed three to
one. That was a big deal. Now we'll see if they'll implement cuts in New Jersey or
California or Britain and some of these other countries that have looming fiscal issues. I
just think it was cloudy and the clouds have gone away. The sun's shining and it's all
about earnings, earnings, earnings.

I've been doing this 30 years and I've learned over time to wait my turn. And I think the
final thing is helping is a lot of people bought bonds last year because yields were
incredibly high a year ago and in the aftermath of the credit crisis and a lot of leveraged
hedge funds and fixed income being forced to dump their bonds.

And you had an incredible bond rally last year. And a lot of people are 40-plus percent.
Some bond funds were over 50% last year. But if you look at your average bond fund this
year it's getting bumpy. And what that means is that your principal's at risk. And yields

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don't go straight down anymore. And so what's happening is I think a lot of people are
starting to rotate out of bonds in the stocks.

Is this the right timing for rotating out of stocks and into bonds?

Yes. I sell these intermediate bond portfolios for people that can't go to stocks. And we're
still getting close to 6% on DDD corporates with mature investment phase. We have a
four-in-one coming out soon and I do that with another fund company. But the confidence
is definitely brewing because you can buy these big multi-nationals in the States that are
operating around the globe and the easy way to profit for them is to go to Latin America
and China and the dollar's still weaker every year. The Euro crisis seems to be over
briefly. And it looks like the dollar's losing some ground here.

How would you suggest a retail investor invest in this quality rally?

First of all people are a lot happier this year than they were last year. I think a lot of it is
the big bond rally. And we congratulate them on that and we just tell them to check with
their advisor; maybe you want to go more intermediate because there's some risk on the
long end.

And of course we have stuff to sell, but I don't sell it. I just kind of encourage them to go to
their advisor and the advisor sell. On the stock front we make a pretty bold statement.
Other than we just went to infinity and beyond on earnings. And what we tell people is it is
too late to get in the market. If they want to buy the low price, low quality junk. We're still
in the first part of the quality rally. There's another piece from Annette Davis that shows
that the junk always leads the way first and it flames out and you go to quality. And so we
were preaching that before it actually happened. So we feel pretty good about it.

I have this online stock rating service that's free in the public domain. And so we tell
everybody to go back, get a free portfolio checkup from their advisor. And once you gain a
portfolio it's updated every week automatically. So the reason we do that is we're trying to
get people to get off their butt and reallocate things. And they might have gotten lucky with
some low price, low quality stuff last year, but it's time to kind of grow up and go to quality.
And so that's what we're telling everybody to do. Go get a checkup. And definitely
optimism is rising. I'll be in California-- I'm in Florida right now, but I'll be in California this
week. And then I notice somehow when I'm in Long Island or California for Florida people
can be a little grumpy. And I just tell them that it's better than Texas or Tennessee or
Alabama or some other place. But it's coming.

What are some quality stocks that you're looking at now?

On the blue chip side it would be obviously Apple, Ford. Ford has benefitted immensely
from the GM stuff. One of my clients is this multi-state car dealer. And he's been telling
me that the GM and Chrysler customers are going and buying Ford partially because
they're mad that they took the government money. And then also they're benefitting from
the Toyota thing. But it goes larger or small cars Ford can make money while GM only

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makes money in the big cars. So Apple. Ford is one. Priceline is another. Colgate-
Palmolive's another. We got big things like Con Agra showing up.

Is there anything that all these companies have in common?

Yeah. What I do is I have this database online. And you can go to NavellierGrowth.com
or Navellier.com is the management company, it's called Portfolio Grader. And then on
Navellier.com it's called Stock Grader. It's the same database. And basically we have a
quantitative ranking and a fundamental ranking. Now quantitatively we rank things on
something called alpha over standard deviation, which is the return independent of the
market divided by volatility. Usually to get a high ranking you need some buying pressure.

And that makes the alpha bigger. And because we figure out how much return came from
the market. How much came from things in correlate with the market, which is the buying
pressure. And usually if there's more buying pressure the volatility drops. So anyway, to
make a long story short, that's our proprietary quantitative ranking, which is alpha over
deviation.

Then what happened is we want to figure out what is the fundamental force causing the
alpha. And my management company is like a think tank. We test some works on Wall
Street. And right now it's things like sales growth, large expansion, earnings stability,
earnings momentum, cash flow and return on equity. And so we rank the stocks on all
those criteria. And our overall grade is based on the quant plus the fundamentals. And A
stocks are strong buys. B stocks are buys. C's are holds. D's are dogs and F's are dogs
with fleas.

And then we have separate quant and fundamental rankings and-- but our fundamental
screens are really on fire now and I'm happy because these are the best the models have
looked since late 2006. What we did is test how fast the models decay. And you want
them to decay in an orderly, predictable manner. Kind of like nuclear waste. They have
this little half life. And what it is is the last time the model looked this good was late 2006
and we had a blowout 2007 when we were up over 30. But we just felt really good. And it
just-- we didn't do anything. The market just came our way.

Speaking of that, it seems like retail investors are typically seen as having poor
timing in the market. How do you describe to them how they need to wait for the
market to come to them?

I think the advisors have been actually more bullish than people on Wall Street. I mean the
people have been more bullish than a lot of the advisors on Wall Street. I think the
average person just wanted to know what in the hell happened. Okay? And so we tell
them lots of stories. And I think what happened is people don't fully understand the
financial crisis. And I think one of the untold stories is that there was a lot of money in
leveraged debt. And like you'd leverage munis seven to nine times. You'd leverage
corporates 15 to one. There were the hedge funds that were doing the carry trades where
you borrow in the U.S. or Japan a low rate and then you go to Brazil. Brazil, Australia,

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New Zealand. And you play these spread games. So a lot of people were doing arbitrage
and weren't investing. And I see a lot of damage around here. I mean talk about all the
Bernie damage. I mean but there were a lot of people here just got wiped out in his
leveraged hedge funds. Those were being sold in retail channels. And so I think what
happened is in the last four months of 2008 they literally it was estimated as a trillion
dollars these leveraged debt funds were liquidated, that they dumped about nine trillion
bonds. And the muni crunch is over six weeks. The corporate crunch is over four weeks.
Four months. I'm sorry. And so we just tell them that 2008 was a liquidity return in the
bond market. And now liquidity's returned to the stock market. We tell them that last year
the stock market went up with hardly any flow of funds. Companies were doing bond
offerings and buying their own stock back. And it's the economy's slowly fixing itself.

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 NAVELLIER IN FORBES
Intelligent Investing with Steve Forbes

Quality Trumps Junk

Louis Navellier, 03.05.10, 07:50 PM EST
Since last March, stocks with lousy fundamentals were the star performers. Finally that's
changing.

After the major indexes slid about 4% in January and failed to make up all that lost ground in a volatile
February, many investors are getting awfully nervous. I believe wholeheartedly that the bull market is in
fact charging on--and that it's here to stay.

How can I make such a claim? Simple: Investors must remember that this is a market of stocks--not just
a stock market. The reality is that the bare indexes have masked a major turning point for the market,
with a rotation from "junk stocks" into higher-quality stocks with dramatic upside potential.

In a nutshell, just because the stock market is down from recovery highs doesn't mean that good stocks
are down. It just means the cream has risen to the top while the froth has settled to the bottom of the
glass.

Investors' worries about the global economy and sovereign debt have punished stocks over the last few
weeks, and not without cause. Reports persist that Moody's and Standard & Poor's could downgrade
Greece's debt to junk status, and the E.U.'s promises to backstop the Mediterranean nation against
default have not eased concerns. On top of that, the latest job numbers released last week showed
jobless claims reached their highest levels since November, renewing concerns about the weak state of
the labor market. Coupled with a consumer confidence report that was the worst in 10 months, this
news was not good for Wall Street.

However, there is no doubt that the economy is much more stable than at this time last year. The rate of
job loss is at or near the bottom, and a recent survey of 56 economists in The Wall Street Journal
predicts about 1.4 million new jobs will be created in 2010. So while things are still tough out there,
they're not tough for everyone.

So which companies are suffering? Well, it should come as no surprise to learn that the big losers are
some high-profile stocks and that these corporations are holding back the major indexes. And frankly,
these "junk stocks" deserve to take a tumble if the rally is going be based on real numbers and real
economic opportunity instead of investment fads that treat Wall Street like a casino.

Look at American International Group, which rose 245% in the month of August alone on massive
volume. That's despite being technically bankrupt and bleeding red ink! Since Dec. 31 the stock has

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given up about 11%. No matter how you slice it, that's a good thing since it proves the market is moving
toward the proper valuation for this stock.

Fannie Mae and Freddie Mac saw similar gains last summer with +233% and +269% runs in August,
respectively. Fannie is down 16% YTD, and Freddie 17%. Bad for the aggressive traders who gambled
on these federal-sponsored stocks, but very good for the market.

If you want to see how "junk stocks" like these have warped the market, check out my research across
the entire market. I've placed stocks into five different slices based on their fundamentals, with the best
stocks under my system in the first group (or quintile) and the fundamentally bankrupt stocks in the last.
(These are the same slices I take of the market to rank stocks A through F in my Portfolio Grader stock
ranking tool.)

As you can see, at the dawn of the bull market back in March 2009 there was a dramatic rally among
low-price and low-quality stocks as traders hoped for a big kill. That was despite the fact that these
companies were projecting very bleak outlooks for the rest of the year.

I have to admit, riding this wave of optimism was awfully fun as stocks raced up from April to December.
But now these inferior stocks are stagnating or falling. And with them, the optimism is drying up and
holding back the broader market.

So what does this mean for investors like you and me? Well, first it means that we shouldn't throw the
baby out with the bath water. This kind of divergence is normal in the early stages of a bull market and
not a reason to panic. Secondly, investors should see the recent contraction as an incredible
opportunity to buy into high-quality stocks with great fundamentals.

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After all, companies with growing sales and earnings deserve to succeed--and I promise you, they will.
Historically, at the beginning of a bull market the higher-quality material takes off like a second-stage
rocket, rising in a strong and steady arc.

While many market analysts fret over the fading fortunes of yesterday's favorites, they're missing the
opportunity to rotate into these high-quality stocks. Don't make the same mistake. Though it may not
feel like it, the current turmoil in the market is a good thing for investors savvy enough to act.

Louis Navellier is one of Wall Street's renowned growth investors. Investing for over 28 years, he has
earned a national reputation as a savvy stock picker and portfolio manager. The New York Times called
him "an icon among growth stock investors."

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Book Excerpt
Invest Globally
Louis Navellier 11.19.07, 2:15 PM ET

An excerpt from The Little Book That Makes You Rich by Louis Navellier ($20, Wiley & Sons, 2007)

Over the past several years, we have noticed an interesting occurrence in our portfolios. The American
Depository Receipts of foreign companies have begun popping up frequently. ADRs were specifically
created to enable U.S. investors to easily buy and sell foreign stocks. There are several reasons why I like
ADRs. Recent studies show foreign companies that list on U.S. exchanges are more highly valued than
comparable foreign companies that don't list. Also, ADRs allow us an easy way to invest our portfolio into
foreign securities, therefore tapping into these growing capital markets, without the complications of currency
exchange and other rules.

As ADRs began appearing much too often on our buy list--and too disproportionately to be mere chance--we
determined that international stocks were worth investigating further. We also found that our quantitative
tools worked especially well on non-U.S. stocks. In fact, our analysis worked all around the globe, in both
stabilized nations and fast-growing emerging markets.

As we began to delve deeper into non-U.S. issues, we found a lot of things to like about the idea of investing
globally. Although the United States is one of the most innovative nations in the world, it's not the only one.
New products, new ideas and new technologies are being discovered and developed all around the world.

In addition, as free trade booms, the world becomes a smaller place. A whole new world of consumer
markets has opened, increasing demand for cellphones and computers, automobiles, homes and all kinds of
consumer goods and services. Banks, retailers, cement companies and even life insurance companies have
sprung up all around the planet, and their burgeoning new markets of hungry consumers allow them to grow
much faster than their U.S. counterparts.

We also discovered, to my surprise, that 10 of the world's largest companies are located outside the United
States. They may do a significant portion of their business in the United States, but home is on another
shore. According to Forbes magazine, the largest construction, auto, business equipment and food
companies are all non-U.S. companies.

To our delight, we also found that one of the biggest hurdles to global investing for folks who, like us, rely on
extensive examination of quantitative and fundamental data, has fallen by the wayside over the last decade.
Until recently, information on day-to-day non-U.S. stock prices was difficult to obtain, to say nothing of the
near impossibility of accessing accurate corporate financial information.

The Internet really has opened the world to almost anyone with an Internet connection, and now we can get
accurate information from Hong Kong, Japan, Russia, Brazil or any of the world's exchanges and markets
with just a few clicks of a mouse. Once we had the data, we could crunch it--and crunch it we did. As ranked
by our quantitative grades, the top 10% of our global stock picks absolutely creamed the performance of the
S&P 500. The top 5% doubled that return again. Clearly we were onto something that worked.

There are strong underlying reasons for the success of global growth investing. First, there is a sort of "value
bias" among most global investors, leaving growth stocks less examined and researched. As a result, when
the investment community finally discovers one of these gems, it tends to rocket in price. Usually our
methods have already gotten us into the stock before this happens, and we get to go along for the ride. We
search for global stocks using the same eight tried-and-true fundamental variables and quantitative
measurements that we use on U.S. stocks--and it works amazingly well, uncovering even better buying
opportunities.

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Part of the reason for the strong performance of non-U.S. stocks is that money has been pouring into
international investments. It is not that money is necessarily flowing away from the United States, it is just
flowing to other places much faster. International funds have been collecting far more dollars than U.S.
funds, and the strong money flow has created buying pressure in good stocks, which gives us alpha, exactly
what we are looking for. According to the Investment Company Institute, there is now almost as much money
in international stock funds as there is in U.S.-only funds. In fact, non-U.S. funds have outsold domestic U.S.
investment mutual funds by almost 4 to 1 between 2003 and 2006. The strong flows into non-U.S. markets
and stocks is a relatively new phenomenon that shows little sign of abating, especially given that many non-
U.S. stocks are riding a free currency tailwind from a weak U.S. dollar.
Exchange-traded funds are another important new development in the fund world. Traded on exchanges and
offering substantial liquidity and cost advantages over traditional funds, ETFs are a fast-growing source of
investment cash. The international segment also dominates this area, with much more cash flowing into
international ETFs than into U.S. indexes.

There are several reasons for this cash-flow change. One of the more obvious is that investors like to
diversify their holdings. Most financial advisers today suggest their clients have some exposure to non-U.S.
assets. In a smaller, more accessible world, it makes sense for investors to go wherever opportunity
presents itself.

Another significant reason for the money flow into non-U.S. markets and stocks is the Sarbanes-Oxley Act.
Sarbanes-Oxley has led to a reduction in the number of international companies that want to list in the United
States in the form of an ADR share. The media have reported extensively on the issue. With fewer ADR
shares available and more money pouring into international stocks than ever before, the remaining ADR
shares have soared in recent years.

Ironically, Sarbanes-Oxley has effectively helped to reduce the number of ADR shares and artificially
boosted the remaining ADR stocks. Sarbanes-Oxley tightened the reporting standards for companies listed
in the United States and compelled chief executives to sign and personally vouch for their accounting reports
and releases. Many non-U.S. companies have not been interested in being this exposed to the U.S. legal
system. They are well aware that the United States is the world's most litigious society and they simply have
no interest in being exposed to it. As a result, many have left U.S. markets--and many that might have listed
their shares in the United States no longer bother.

Both Hong Kong and Shanghai did more IPOs than the U.S. markets did in 2006, even though the New York
Stock Exchange led the world in new IPOs just five years ago, before Sarbanes-Oxley was passed. As the
pool of international ADRs has shrunk in the United States, the money has followed the new names to
exchanges in London, Hong Kong and Shanghai.

Because of the recent compelling reasons to invest globally, we have made a strong push in that direction.
Rather than attempt to set up accounts at exchanges and brokerages all over the world, however, I tend to
favor ADRs, since they are a convenient way for U.S. investors to invest in international companies--an
otherwise complicated process. It is especially good to know that ADRs are traded in accordance with U.S.
market regulations, so any dividend payments, as well as any corporate action notification, will be timely.

ADRs are also convenient because they're quoted and traded in U.S. dollars on the U.S. securities markets:
NYSE, AMEX, and even Nasdaq. Each ADR is backed up by a specific number or fraction of shares in the
foreign company. The relationship between the number of ADRs and the number of foreign shares is often
referred to as the ADR ratio. I find that using this way of investing allows me to avoid worries over the
different regulations and currency fluctuations of various markets around the globe.

There are close to 300 ADRs in our universe, and I find that around 25 to 30 of them, at any given time, are
strong growth opportunities. We diversify, of course, with a tendency to lean toward the larger countries and
companies. We like the fact that many of these stocks are very conservative and often have large
government ownership, which helps increase the feel-good and sleep-well factor of global investing.

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We also sprinkle money across some of the emerging markets, as they can be like rocket ships when they
perform well. We keep that portion small, so we can benefit nicely when they blast off, but not get hurt when
they fall back to earth. They are volatile, and we try to make that volatility work for us and not against us. We
also make it a point to avoid countries we see as anti-capitalist in their foreign and financial policies.
Venezuela under Hugo Chavez comes to mind as a prime example of a place we will not invest, for this
reason.

Why do we invest globally? Because it increases the number of opportunities available to us and because it
works. The value bias of most international investors and the continuing enormous flows of cash toward non-
U.S. markets combine to offer an incredible opportunity to growth investors. The information needed to
analyze and invest in these markets is as available as is information on our favorite U.S. stocks. It's a whole
new world out there, and we think we should be a part of it and take advantage of all the growth opportunities
ahead around the world. Billions of people will need new homes, roads, and infrastructures in the next 50
years. Billions of new consumers will want all the fancy goods and toys that western consumers have long
taken for granted. There are huge new marketplaces out there--and as growth investors, we can benefit as
they develop.

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Adviser Q&A
Apple Still Juicy For Navellier
John Dobosz, 02.22.06, 11:10 AM ET

NEW YORK -

When the bulls are running on Wall Street, it's a good bet that Louis Navellier leads the pack by a
few steps. The president of Reno, Nev.-based Navellier & Associates and editor of Louis Navellier's
Emerging Growth newsletter is a big fan of high relative strength stocks that outpace the overall
market as it advances.

Naturally, Navellier has been invested in the market leaders of the past year, including Apple
Computer, Google and a smattering of energy and steel stocks. Sticking with the leading stocks
had a beneficial effect on Navellier's Emerging Growth model portfolio, which gained 17.8% in
2005, according to the Hulbert Financial Digest.

Over the long haul, Navellier's picks have been rewarding to those who have the stomach to ride out
exceptionally punishing performance during bear markets. Navellier has the top 20-year
performance record of all 32 newsletters tracked by Hulbert. It should be noted, however, that from
1986 to 1987, Navellier and Jim Collins partnered to produce OTC Insight, but following their split
in mid-1987, Hulbert treats the pre-August 1987 performance as Navellier's and subsequent
performance as Collins'. For his part, OTC Insight under Collins has an annualized 15-year
performance of 17.1%.

Recently, we spoke with Navellier about his outlook for the market and the U.S. Federal Reserve's
campaign to raise short-term rates, along with some of the stocks he's buying now.

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Louis Navellier: King Of The Quants
Missy Sullivan, 03.05.02, 3:12 PM ET

Louis Navellier would fume when economics professors at Berkeley relentlessly preached the idea of
efficient markets. Smart guys saying dumb things. He says he started his newsletter MPT Review to prove
them wrong--to demonstrate that the market was, in fact, beatable. Navellier has more than made his point.
Currently rated by Hulbert Financial Digest as the top performing newsletter over the last 15 years, MPT
Review has posted annualized gains of 16.1%, compared with the Wilshire 5000's 12% over the same
period. Employing Harry Markowitz's Nobel prize-winning Modern Portfolio Theory, Navellier and his band of
Ph.D.-toting "quants" use computer models to construct diversified portfolios that balance risk against
expected returns. Navellier and Associates also publishes the Blue Chip Growth letter and manages some
$5 billion in assets.

Forbes: Give us a quick refresher on the Modern Portfolio Theory. How do you balance opportunity
against risk?

Navellier: We call it the zigzag theory. You want to find something that zigs and something that zags and
blend them together to get a better combined performance. The most extreme example from my portfolios
right now is a home-building stock like NVR Inc. mixed in with a tech stock like Nvidia, a graphics-chip
company that manufactures the chip used in Microsoft's Xbox. NVR was up nicely last month and Nvidia
was down, slumping after a healthy pre-holiday rush. When you mix the two, it's safer than when they're by
themselves.

So you're prepared to accept a smaller overall gain in order to spread the risks?

That's very important, because we're in these things called oscillating markets, where what's hot now wasn't
so hot last quarter. And what was rallying then is pretty pathetic right now. A good example is a stock called
QLogic, which is not in our newsletter portfolios precisely because of its volatility. QLogic was down 70.08%
in the first quarter of 2001, making it the third worst stock in the S&P 500. In Q2, it jumped 186.4%,
becoming the top stock in the S&P. In Q3, it dropped 70.5% (seventh worst). And in Q4, it shot up 134.3 (fifth
best).

That's what we call oscillating markets. Utilities, financials, pharmaceuticals--all dogs at the end of last year--
are coming on strong again. Since we try and take a fairly buy-and-hold approach to our newsletter portfolios
and don't sell at every whipsaw, we want to have a mix of stocks that will perform at both ends of the
oscillation.

So if oscillating markets jack up the risk factor, where do you see risk being concentrated right now?

Risk is out of control. I've never seen it this high. I really have to blame squeezing bid/ask spreads for that,
which squeeze a lot of liquidity out of the market and cause it to be more volatile. But there's another thing
going on, which is that the safe place in the market is wherever the money is going. Large-caps were safe in
1996, '97, '98. Everybody was buying index funds and Nifty Fifty funds. As long as money was pouring in, it
was great.

But you know what? Money doesn't go there right now. We've already calculated that mid-cap is safer than
large-cap right now. And micro is looking awfully safe all of a sudden because there are very low P/E ratios
down there. One of our big challenges with the newsletter is that everyone thinks big stocks are safe. That's
not true at all. They're only safe if the money is flowing there. The tail of the S&P 500 is much safer than the
top end right now.

Your screening tools first rank stocks by risk/reward, then analyze a bunch of fundamental variables.
Of the five you isolate--ROE (return on equity), forecasted earnings growth, analyst revisions,
reinvestment rate and forward standardization earnings--which do you go to first?

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We take all the reward/risk data and run it through an optimization model. And we ask the computer, What's
the best formula for picking stocks? And it will come back and say it wants x% GARP (growth at reasonable
price), y% historical growth, z% cash flow, whatever. Right now we're in a GARP and cash flow market. This
is the seventh time in 22 years I've had a GARP bias. But that is not always the case. I think 18 months ago
it was earnings momentum, earnings surprises, profit-margin expansion, sales growth.

We've gotten very automated over time. Our system rates dozens of criteria before finally scoring the stocks.
A perfect stock would rank 100, but I've never found a 100.

So how far are we into the cycle on this current GARP model?

My guess is that we're probably in the fourth or fifth inning of this GARP cycle. The last time GARP kicked in,
it was from mid-1996 to mid-1998--two years. This GARP model kicked in February of last year, although
cash flow has been longer than that, and cash flow is important now because no matter how you cook the
books, you can never fix cash flow. I think GARP will dominate as long as there is an earnings visibility
problem. Of course, earnings visibility will one day improve, and people will start to pay a premium for
growth. Then GARP will start to be less effective. When earnings visibility improves, our system tends to lock
in a more consistent growth. Then we can get into the momentum markets, like we were in '91, '95 and '98.

You've been characterized by some critics as a permabull. You paid for that last year, with a 24.2%
loss. Wouldn't you have been better off being partly in cash?

Sure, I've held cash and I've shorted--but not in my newsletter, which is meant as more of a buy-and-hold
product, with slower turnover. We have built pockets of cash under management, not a lot. A lot for us would
be 20%. We have a tendency under management to build pockets of cash post-earnings season and invest it
pre-earnings season because, like right now, there won't be any earnings news till mid-April.

To what do you attribute your losses last year?

The thing that can devastate me and my stocks is when money flows out of the market and goes to the
sidelines. That's what happened to the market in the last 18 months. We had outflows in November 2000,
when we couldn't pick a president. The market had massive redemptions in February and March of last year.
Then we had all the stock-option selling in Silicon Valley. And, of course, the massive redemptions in
September after the terrorist attack.

I'm very guilty of getting bullish about my stocks. If I get caught in a liquidity draft, I'm toast. The good news is
that we're starting to get some money back in now, and it's accelerated in January and February, with some
of the good news we've been hearing. We know there's over $4 trillion on the sidelines, built up from all the
Fed easing and all the housing refinancing. We just need a catalyst to get the money in the market.
Obviously Enron wasn't the catalyst.

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 THE NAVELLIER INTERVIEW
Intelligent Investing with Steve Forbes

Fundamental Quant

Steve Forbes: Louis, good to have you with us.

Louis Navellier: It's great to be here.

Forbes: So how would you describe your investing approach? Earnings momentum,
you're not an efficient market guy, quant? How would you quickly describe it?

Navellier: Well, I'm actually a fundamental quant. What we do is we test what works on
Wall Street. And sometimes it is earnings momentum and sometimes it's earnings
surprises. Sometimes it's price to sales cash flow and then we put together our stock
selection models.

And what we do is we design them for every asset category. So large cap might be a little
different than small cap and domestic might be a little different than international. And
then we grade the stocks in that model, and we tweak the model at the end of each
quarterly earnings season.

Forbes: Now you, describe your portfolio grader. You mentioned with different classes
you have different grading. So what guides you in all of this?

Navellier: We test. We test what works on Wall Street.

Forbes: Is the past always a prelude to the future?

Navellier: Correct. It's kind of like driving through the rear view mirror. But we test
everything on a one and a three year cycle. And you want to stress test a model and the
three year test usually does that because you have a growth and value bias. You have
different interest rate environments. You've got up and down months. So we test on three
year but we wait on the last year.

Forbes: And the portfolio grader, it's open to anyone?

Navellier: Absolutely. It's free in the public domain.

Forbes: So what would they buy your services?

Navellier: Well, because there's 4,000 plus stocks out there and sometimes it gets a little
confusing. And we like them to start with portfolio grader, but if they'd like to see how I use
the system and pick stocks, we offer that as well.

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Forbes: Grades go through A through F?

Navellier: A through F.

Forbes: No grade inflation?

Navellier: No, no, no, no. And there's not that many A stocks out there, you know. Our
last bit of testing we've done in recent months, the market's getting more narrow here,
more fundamentally focused. And earnings are very good right now, but we expect them
to decelerate here soon. And then that usually creates a much more narrow market
environment.

Forbes: Now, in terms of your style, you are fully invested.

Navellier: Pretty much so, yes.

Forbes: And you've had some good long-term records on your two newsletters, but
staying fully invested has given you some bumpy rides from time to time.

Navellier: Sure. And what we do is we live quarter to quarter for the stocks. We really
believe in the earnings. We're very proud that often we do well in the down market. But,
you know, there are some markets where they just lose liquidity like 2001, 2008. And
then, you know, they do throw the baby out with the bath water in those environments.

Earnings Went To Infinity

Forbes: Now, in terms of earnings momentum, you have a picture in your office of Buzz
Lightyear.

Navellier: Yes. Yes.

Forbes: Tell us why.

Navellier: Well, what's happening to the market right now is when we compare the fourth
quarter of 2009 to fourth quarter of 2008, earnings were up literally an infinite amount
because we compared positive over negative earnings. So we have Buzz and we just say
that earnings just went to infinity and beyond. And then they're going to start to decelerate
first quarter. It's supposed to be up 63.5, and then it goes to 33.2 and 24.9. So these are
S&P operating earnings. Now, the earnings have been exaggerated by a series of actors.
One is easy year-over-year comparisons. Another is there is a legitimate recovery under
way. A lot of our GDP growth is inventory rebuilding, but there's some signs of consumer
spending starting to improve. It's not ideal, but it's getting better. But the other thing that's
exaggerating the earnings is the dollar was weak year over year. And the multinationals
that operate in Asia or Latin America, when they get paid in these foreign currencies, they
were getting sometimes 30% more than they anticipated because the dollar got weak year-
over-year.

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Forbes: What does that say about the quality of those earnings?

Navellier: Well, it means the earnings are fleeting. Okay? And we have to be careful.
There are good, dominant companies out there like an Apple that have a great niche and
keep rolling out their products. But I think really the key right now in the stock market is to
make sure that the companies operate in Asia or Latin America so they prosper from a
stronger economic recovery over there. Apple's probably the best case study because
40% of their sales used to be domestic. Excuse me. Forty percent used to be
international. Now 60% of their sales are international. I think the other thing that
happened on Wall Street is Coke came out with its earnings not too long ago.

And Coke is not one of my stocks, but they said that their sales were down in the U.S.
And you find that with Dr. Pepper and other companies like that. But then they said, "But
our earnings are up 55 [percent] because our international business was booming." So
Wall Street really seems to want to lock in on some of these big multinationals now as a
conservative way to play the international boom. And I think some of the chaos in Europe
also caused some short-term money to come to the States. So people are very
comfortable with the weak dollar right now and it looks like the dollar will remain weak
mostly because of our fiscal situation.

The Junk Rally

Forbes: Now you've described this rally as going from in essence junk to quality. Can
you describe that?

Navellier: That's correct, and that happens at the end of every bear market.

Forbes: Why does junk come back first? Because it's hit the hardest?

Navellier: Well, I'm just conditioned that way, but I can take you back to 2001. There
were two violent short covering rallies in 2009. There were two violent short covering
rallies from March 10th to several days later, and then from August 3rd to August 31st.
And we had a lot of crap lead the way like Fannie and Freddie, which are by the way
worthless. The stocks are worthless. We can't default on their debt because I guess
China bought a lot. That's how bear markets end. And Ned Davis has done some great
research showing this, how when we emerge out of a bear market, it's usually low quality
stocks lead the way first in two violent updrafts, and then they flame out and we go to
quality.

Forbes: REITs I guess would be another example.

Navellier: Yes and we're following textbook here. September 1st was a wonderful day for
us because that day Fannie and Freddie were down 15%. They had just been spectacular
in August.

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Forbes: We're talking pennies here, right?

Navellier: What's that?

Forbes: We're talking pennies, here.

Navellier: Yes, that's correct. That's correct. Then the average financial was down five
on September 1st. And then everybody got nervous because September, October are
sometimes tough months, but we went up that day. And that's when the quality shift
started. Then we had with the European crisis, all the sovereign debt crisis, we seem to
have another wave here. And then finally, we've just had so many earnings come out that
it's starting to overpower the system. And then finally, a lot of the macro fears seem to be
subsiding.

Finding Quality

Forbes: So in terms of junk to quality you mentioned Apple. What other quality? Not
AIG.

Navellier: No. AIG is doing better because they're breaking themselves into little pieces
and selling it, but it's not one of our stocks at all. We tend not to buy financials. They tend
not to be growth stocks. And a lot of the financials were balance sheet adjustments. But as
far as stocks we like, we like something like a CREE, which is in the LED lighting business
in North Carolina. There's another one in Europe called Aixtron. That's AIXG. They're
another LED lighting company. LED lighting, of course, is in all the vehicles now and it's in
boats. You can buy an LED light bulb for $25 if you wanted.

But there's a big push on that, so that's a great niche that should run for a while. There's a
lot of companies that profit from a weak dollar. We expect a pretty good ag business this
year. Corn prices aren't going up quite a bit, but the fertilizer stocks are heating up.

Forbes: So is that why you like ConAgra?

Navellier: Well, ConAgra's more of a food stock. But ConAgra is going to benefit from
that. You know, I think what it all boils down to, when the dollar gets weak, it starts to fix
the United States. And the weak dollar drives energy prices higher, which helps our
energy states. It drives crop prices higher unless we just have a blowout growing season.
So it helps much of the Midwest.

The Boeings, the Deeres, the Caterpillars, Ford all benefit immensely from a weak dollar.
Then, of course, we have the multi-nationals where 40% of the S&P earnings come from
big multi-nationals. So it's ironic that our fiscal irresponsibility that might hurt the dollar is
going to help our economy recover a little faster.

Forbes: Sounds like the 1970s though.

- 20 -
Navellier: Yes, and there's a lot of comparisons to that and a lot of people are very
scared coming out of that. But I remember the '70s very well and that was just a great
period for stock picking, especially the late '70s.

Forbes: Rotten time for the market though overall.

Navellier: Yes. Yeah. But the good stock pickers did good in the late '70s. And I have
fond memories of '78, '79 and 1980. But it was really tough coming out '73, '74. It was
really tough. And then you've got to deal with all the, the weak dollar causes a lot of
inflation on the wholesale level, which we've seen. We don't see it on the consumer level
because 40% of the CPI is owner's equivalent rant, which are hotel costs, apartment costs,
and housing costs.

Forbes: Does that make it a junk CPI?

Navellier: The CPI is highly questionable, but there's definitely inflation brewing on the
wholesale level and that's why businesses are scrambling to rebuild their inventories. You
know, the inventory to sales ratio is now at the lowest level since 1992. And now your raw
component costs are going up, whether it's gold or copper or whatever materials go into
your components. So everybody's just struggling to rebuild their inventories in this
environment.

Forbes: Brings back things like FIFO, LIFO days again?

Navellier: Yes, yes. I wouldn't be opposed to that. You know, our mark to market
accounting was a bit of a mess, and I think it's not important in something like an insurance
company that buys debt that doesn't plan to sell it. I think that doesn't make any sense.

Bonds In Ninth Inning

Forbes: Now in terms of talking about inflation and the weak dollar -- bonds. Bonds did
very well for a while. You would advise to get out of them now? They'll go shorter and
shorter?

Navellier: They're in their ninth inning. They're in their ninth inning. And so when I give a
talk, which I do quite a bit, we tell everybody bonds were spectacular last year. That's
evidence that liquidity's returning to the markets. But it's in the ninth inning. Might go 11
or 12 innings, but it's best for most people to go to the intermediate part of the curve and
usually about four years out.

Our management company does, I'm not the bond guy, but we do the BBB corporates four
years out and then we also are doing international bonds too. Mostly resource rich
countries like Australia, Brazil, things like that.

Forbes: Do you think countries like Indonesia, Brazil, they're sovereign debt's better than
ours?

- 21 -
Navellier: Believe it or not Brazil is. I'm not quite an expert in Indonesia because I haven't
bought any bonds there. But there's no doubt that a lot of these countries have a lot of
good things going for them.

I mean, when you look around the world, you want a growing middle class and you want
powerful demographics. And Brazil just stands out. And what's so fascinating about Brazil,
other than their having these trade wars with us in the U.S. lately, they're having a lot of
fun with us at the WTO, is Lula da Silva, who's their president, won't be the president much
longer, is a socialist. But he's always had these right-wing economic ministers. That's just
an interesting country. It's kind of like if Howard Dean was the president, but then he had
Dick Cheney behind the scenes. You know, it's interesting how they do it down there. But
they definitely have a great growing middle class and a lot of powerful demographic forces.
There's a lot of young people.

Forbes: Now you pointed out U.S. Treasuries didn't do very well last year.

Navellier: They were the worst performing sovereign debt in the world. The last bit I saw
in December of '09, I think we lost $55 billion in foreign capital, $35 billion was China. That
wasn't the only month. I know in May we lost foreign capital mostly from the Middle East.
In January of 2009, we lost a lot more from China. So Mr. Geithner has to run around and
beg and grovel for money. It's pretty demeaning for the poor guy. But, you know.

Forbes: It might keep him from doing other things.

Navellier: Yes, that's true, like his taxes. But I think we've reached the breaking point. I
think we're lucky that the breaking point's going off in Greece, or Portugal or Spain before
it goes off here. Or maybe it'll be California, New Jersey. But, you know, the Wall Street
Journal did a great Op-ed piece. They said if they want to balance the budgets today, they
have to tax everybody above $75,000 at 100%. So we have to borrow. The deficits are
structural. And there wasn't enough people to buy our bonds, so our Fed printed $2.1
billion and had to do all that quantitative easing that they're trying to unwind right now. So
it's going to be fascinating to see what's going to happen.

Forbes: So as you look around and feed into your model, U.S. recovery but based like the
'70s on a weak dollar and just the bounce back from the severity of the fall we took in 2008
or 2009.

Navellier: It's a natural rebound. It's a natural recovery. Inventory rebuilding alone is 3%
of GDP growth this year. Then whatever consumer spending we get on top of it. You
know, they were strong enough --

Retail Offers Hope

Forbes: You see some good signs on retail?

- 22 -
Navellier: Well, there's hope. I don't trust some of the government statistics because in
December they said retail sales fell, but internet sales were up 15.5. They don't always
measure everything properly. But basically it's pretty strong across the board. You know,
consumers have been out at bars and restaurants pretty consistently and spending more
money here. And then, you know, they're doing it on clothes and electronic items.
Consumer spending is pretty strong across the board right now. So that gives me hope.

I'd like to see personal income get up a little bit more. So it looks like a U-shaped recovery
where we just slowly crawl out of the hole. I think a lot of people have hope. I mean, you
know, obviously the chaos in Washington gives a lot of people hope, you know.

Bullish On Asia

Forbes: And the global outlook? You're bullish on Asia.

Navellier: I'm very bullish on Asia. China just had a better stimulus package than we did.
You know, they gave everybody a coupon in the mail that said, "Spend money by this
date." Then they followed up with aggressive bank lending. They're definitely trying to tap
the breaks now because they got a housing bubble forming. But, you know, the
Communist Party stays in power by keeping people happy. Okay? And so, they're trying
to have all that prosperity, that centrally planned economy.

And so, I think China is the horse that's kind of leading the world right now. And then that
lifted Australia, it lifted Brazil. And it's what we call the velocity of money still has to
improve. It's still very low. That's how fast money changes hands. But Asia and Latin
America are great places now.

Buy Multinationals

Forbes: Now global investing. How should the retail investor engage in that?

Navellier: The safest way to do global investing is the multinationals.

Forbes: Multinationals.

Navellier: Yeah. That's Colgate-Palmolive.

Forbes: So you don't have to worry about things like accounting procedures and
transparency and the like.

Navellier: Yeah.

Forbes: But you mentioned Colgate. What are some of your other favorite stocks? You
mentioned Apple.

- 23 -
Navellier: Colgate, Apple. We like a lot of commodity stocks. Something like a Freeport-
McMoRan, which is in the copper business.

Forbes: So you're bullish on gold.

Navellier: We have BH built in some others. We have a physical shortage of gold right
now because the way they mine it, the quality of the ore has gone down, and so they're
just not cranking out the physical amount of gold they want to. Barrick stopped hedging,
okay, because they're worried about the physical shortage. And then, you know, all the
sovereign debt things I think it might firm up. And gold's also important industrial metal.
You know, like, if you pull back the cockpit of an airplane and most of that stuff is coated
with gold you don't want that to corrode, you know. So there's industrial demand. We
won't ever physically run out of gold because there's so much of it. But it takes a long time
to start a mine, you know.

All the environmental permits. Cyanide is apparently not welcome in some communities.
But in Nevada we joke that the state's going to be flat when they're done gold mining, but
it'll take about a million years.

Forbes: Now, looking at the U.S., we've got the traditional momentum this year plus the
weak dollar. What about things like the tax increases coming in 2011?

Navellier: Well, that's why everybody's scared of a W. And --

Forbes: Are you?

Navellier: Well, I can't see that far. I'll be very honest with you. Obviously we expect a
big change in Congress. What they'll do is another matter. If they let those tax increases
kick in, it actually hurts the poor folks more than the rich folks because the bracket jumps
from 10 to 15, which is a bigger percentage jump than from 35 to 39.6. So it's a little
unclear where the brackets would be, you know. Obviously in President Obama's budget,
he had the tax increase in there. But obviously Congress hasn't ratified it yet. I guess
they've got their hands full with other things. So I'm going to worry about it after the
election, okay, and then we'll see what happens. But there's a lot of fears for W, but
there's a lot of hope out there because there's a lot of political changes out in the wind.

Forbes: So you think there's hope on capital gains and dividends, the taxes there?

Navellier: I believe President Obama proposed, which again Congress has to ratify
everything he does. I believe we're only going from 15 to 20, which I can actually
stomach. Okay? I think the main thing is to have a big differential between ordinary
income and capital gains. If they let dividends or capital gains go to the short-term rates it
would be devastating. So hopefully they'll keep their word and won't go beyond 20. But,
you know, I think they're in a pickle. We can't physically balance the budget with income
taxes. So it's going to be fascinating to see how this unfolds.

- 24 -
SarBox Repeal?

Forbes: What's it going to take to get the IPO market back in the U.S.? Brazil has more
IPOs than we do.

Navellier: Yes. And I know in my large cap universe, I've got more foreign stocks than
domestic stocks. And, of course, a lot of domestics I have are foreign. I think you just
need everybody to get excited the stock market. Now everybody was excited about bond
market last year. And companies were issuing bonds like crazy and a lot of them are
buying their stock back. Okay? In fact, the stock market recovered last year without a lot
of money coming into it.

Forbes: Is that another reason why you're bullish, that so much cash is on the sidelines?

Navellier: Sure. Oh yeah. It's still higher than it was in March of 2003 or 1990 or '82, and
you just need the impetus for the cash to come in. And you just need people to get excited
about companies and their earnings, whether it's Apple's new products, or LED lighting, or,
you know, just the weak dollar, or higher ag or energy prices. Whatever gets people
excited. But I think it's going to be okay. You know, the longer I look, the fuzzier it gets,
but I think it looks pretty darn good through this year. And then next year we'll have to see
what happens with the tax increases.

Forbes: Assuming we get a change in Congress in November, do you think there's a

possibility of amending things like Sarbanes Oxley or some of the other barriers to mid-
size companies?

Navellier: I certainly hope so. I certainly hope so. Sarbanes Oxley, I don't have that big
of a problem with it, but I have a problem if it impedes capital and just kind of ruins the
party. So I'd like to see them repeal Glass-Steagall or reinstate Glass-Steagall even more.
I think that was a lot of our problems.

Forbes: Now you're bullish on Apple still?

Navellier: Very much so.

Forbes: When the iPad comes, is there the bandwidth out there to handle it?

Navellier: Not initially, but we'll see. But I think what the iPad's all about is if you've ever
met a kid with an iPhone, they have about 70 games on their iPhone. And I know they
have better eyesight than most people, but they might want to play their games on
something bigger. Disney's writing applications for it. If you go into a retail store, you'll see
they have a tablet they use to track inventory. It's about a $2,000 device. They can run an
application for that and get an iTablet instead.

So the iTablet's success is all the applications will be written for it and it's priced fairly
competitively. But, it basically is going to be a Wi-Fi device versus a 3G or 4G device.

- 25 -
Forbes: Great. Louis, thank you.

Navellier: It's an honor.

- 26 -