9 January 2008 139 views One Comment Print This Post  Email This Post

When I was contacted to review The Little Book That Makes You Rich, I jumped on the opportunity. Come on, with a title like that how can you not read the book? The author is Louis Navellier, is an all-star growth stock picker. According to the book, his recommendations, which are published in Emerging Growth, have gained over 4806% in the last 22 years. The man knows his stuff, and that knowledge and passion shows in thebook.

This literally little book is catered specifically to growth stock investors, particularly those who like to pick individual growth stocks and would like some information about how to do that. If you’re a value stock investor or a passive index fund investor, you won’t really get much applicable information from the book. However, I still think it contains great information for any stock market investor. Navellier’s stock picking strategy consists of 8 fundamental factors that he applies to his picks and other stocks his team monitors. Every chapter of the first part of the book goes through each of these factors. They are:

1. Positive Earnings Revisions
2. Positive Earnings Surprises
3. Increasing Sales Growth
4. Expanding Operating Margins
5. Strong Cash Flow
6. Earnings Growth
7. Positive Earnings Momentum
8. High Return on Equity

These chapters provide great information regarding stock picks and shows why these factors are important in predicting future capital gains. He ranks his stock picks by letter grade on each of these factors and then gives the stock an overall letter grade. The last part of the book contains a chapter on general economic conditions and how that effects the stock market. He then closes the book with a chapter on optimism. He says that growth investors should be optimistic and disregard all the negative talk in the media. Basically he is saying that the glass is always half full, no matter what’s happening around us.

Overall, it’s a good book and it contains solid information about the factors that go into a fundamental analysis. However, the book itself won’t make you rich.

The Site

Now, you may have noticed that I kind of ran through the book review rather quickly, that’s because the exciting part is the companion website that comes with the book. Navellier’s website ranks about 5000 stocks with those eight fundamental factors and gives each stock letter grades. He refers to the site throughout the entire book, and at the end he invites you to visit. Best of all, it’s currently free. The website is www.getrichwithgrowth.com. I admit, I thought this might be one of those get rich quick stock schemes like the green light red light stock pick programs that’ll ask for $2000 for the “full version”, but I was pleasantly surprised as the site looks very professional and legitimate. I signed up and I took a look around, here is a screenshot of the main page once you log on:

You can enter your own ticker symbol or you can look at the hot list searches. The tool shows the letter grade of all the stocks they monitor, and I think its a great way to get an idea of the fundamentals of a company without doing all the homework yourself. This looks very interesting and I’ll definitely put this to good use. Additionally, I found out that Navellier also owns a company that offers personal money management for individuals with at least $100,000 to invest through Navellier.com. They also have mutual funds for those who find all this interesting, but want more of a hands off approach. If all this sounds like something you want to be a part of, I do recommend you purchase the book so you have a good understanding in the system that he uses. Purchase through Amazon.com.