Ask any psychologist, and he or she will tell you that people tend to move in a “herd mentality” and that’s exactly what we’re seeing now with institutional investors. Now, this could be a problem if you’re invested in a value mutual fund, especially one of those small- or mid-cap value funds that did so well between 2000 and 2006, because when the herd leaves, you’ll be left with an empty feed bag!
And this is exactly what we’re starting to see. When value managers sat down with their clients in the third quarter, they not only had some grim earnings news to report, but had to break the news that the exodus from these funds left some hideous capital gains distributions behind.
You see, these mutual funds tend to be loaded with imbedded capital gains, and guess what happens when this formerly hot asset class flames out and there are share redemptions? Those capital gains all too often have to be realized when these funds hit by redemptions, so it’s very possible that you can lose money in some value funds in 2007 and 2008, but yet still have to pay taxes, since mutual funds hand out their capital gains distributions at the end of the year. Ouch! This is just what happened to some highflying growth mutual funds in 2000 that flamed out and were hit with relentless redemptions in 2000 through 2002.
The 2008 Seismic Style Shift
Now, I wouldn’t want to be the financial advisor who has to break that bit of bad news to his clients. But, luckily, I don’t have to! Our Blue Chip Growth Buy List has had an incredible run since last August, when the stock market hit its low—and when it retested that low again in November. Our average Buy List stock, however, came nowhere near retesting its low in November. In fact, our Blue Chip Growth Buy List remained an oasis amidst the market chaos and continues to hand investors 33% average annual sales growth and over 61% average annual earnings growth. We’re looking forward to the same stellar results this year starting with these top picks for January!
Top Stocks for January 2008:
Stock #1: This hot solar energy play signed contracts with two leading Chinese and Italian integration companies just last week. Though the stock was down slightly on the news, we’re up 9.1% in less than a month! Buy it below…
Stock #2: This leader in crop nutrients and animal feed lands a spot on our Top 5 list for the second straight month in a row. Why spoil a good thing? Give it time to let it grow…and that’s exactly what it’s doing! This stock handed us an incredible 84.9% since November!
Stock #3: Looking to tap into the defense and aerospace industries? Then look no further than number three on the list! This stock just announced a new seven-year maintenance contract with Dubai-based airline Emirates launching shares to a new 52-week high! We’re up 10.3% in just two months.
Looking Forward to a Prosperous New Year!
What a year! The credit crisis of 2007 accelerated the “seismic shift” out of value stocks and into growth stocks, which is exactly why the average stock on our Blue Chip Growth Buy List is more than 25% ahead of the Russell 1000 Value index! The institutional exodus from value to growth remains relentless, and it will only accelerate in 2008 as financial advisors try to save their jobs and prove to their clients that they are really good money managers. As they move their money into growth stocks, our Blue Chip Growth Buy List just keeps getting better and better. This looks to be the eighth time in the last 10 years that we’ve beaten the market. All told, the stocks on our Buy List are up more than 240% since 1998, which is nearly three times better than the rest of the market! I am more than confident that 2008 is shaping up to be a very prosperous year for us!
2007 was been a fantastic year for Blue Chip Growth subscribers, and they can’t wait to start profiting even more in 2008! So ring in the New Year right by getting the names Louis Navellier’s Top stocks in the January issue of his Blue Chip Growth Letter! Try Blue Chip Growth today—absolutely risk-free for 6 months! Don’t miss out!
