Chief Investment Strategist, The Freeport Society
Welcome to the first edition of our Freeport Navigator video series.
This is where I’ll conduct “fireside chats” with some of the smartest investors I know so that you can hear straight from the horse’s mouth the best ways to protect and grow your wealth in this Age of Chaos.
Just as Freeport Navigator essays are free for you to read, enjoy, and benefit from… these videos are also available to you at no cost.
Be sure to look out for them and make the most of the great investment advice they’ll contain.
Today, I was able to pin down one of the most successful investors of the past 40 years – and my Freeport Society friend – Louis Navellier. He’s one of the pioneers of quantitative investing… and has beaten the S&P 500 by a factor of 3-to-1 over the last 17 years!
He and I speak often… and I speak of him often.
Back in November, we recorded a video in which we discussed the strong likelihood that a Shadow Candidate would reveal himself in August at the Democratic National Conference, replacing Joe Biden as the party’s presidential candidate.
That sounded insane in November. Today it appears obvious and imminent.
And now we have a new wrinkle. Black Swan events like the assassination attempt on Donald Trump often have reverberation effects that aren’t obvious at the time. Now, as I’ve discussed this week, it’s looking ever more likely that we’ll have Trump in the White House again for the next four years.
So the big question now is: What now?
And the next big question is: How do we profit from this?
Louis and I tackle these questions in today’s video.
Click on the image below to watch now.
During this chat, Louis explains the real reason President Biden is fighting calls for him to step down, what the deep state could have in store for Trump if (when?) he takes the White House, and even an investment to consider making right now.
In other Freeport Society news… on Wednesday, we published the latest edition of The Freeport Investor, in which I review our investment thesis and current model portfolio in light of the assassination attempt. The good news is that we’re in a great position for this accelerated chaos. To prepare your portfolio in a similar way, you can gain access via this link.
Before I sign off for the weekend, I ask two things of you.
Firstly, your feedback and input is not only valuable, it’s important to me. So, let us know if you enjoyed today’s video with Louis. And if there’s anything you’d like me to talk about with future video guests or write about in our regular Freeport Navigators, let me know. Email me at [email protected].
Secondly, in tomorrow’s weekend Freeport Navigator, Louis will tell you about the “Flash Trend” that alerted him to Nvidia (NVDA) before its epic run… and how you can spot such Flash Trends yourself. Don’t miss that.
To life, liberty, and the pursuit of wealth.
Transcript
Charles Sizemore: Hi. Charles Sizemore here, Chief Investment Strategist of The Freeport Society. And today we are bringing you a special video edition of The Freeport Navigator. Our very special guest today is Mr. Louis Navellier. Louis, welcome.
Louis Navellier: It’s great to be here.
Charles Sizemore: For anybody that doesn’t know Louis Navellier, first off, I don’t know where you’ve been for the last 40 years. Louis is one of Wall Street’s great minds, one of the pioneers of quantitative investing. And your track record, if I have the number right, you’ve beaten the S&P 500 by a factor of three to one over the last, what, 17 years? Did I get that right?
Louis Navellier: Yeah. That’s how Hulbert rated us with Growth Investor. It used to be called Blue Chip Growth back then, and then Hulbert stopped rating letters.
Charles Sizemore: Well, the key to any race is to quit while you’re ahead, right?
Louis Navellier: Yeah. Well, this is our best year in 25 years, so we’re doing fine. We’re keeping the performance up.
Charles Sizemore: Good deal. Good to hear. So you and I actually recorded a video back in November where you made a rather bold claim that everyone thought was nuts when you made it. Then all of a sudden it seemed a lot more realistic about a month ago.
You made the claim that Joe Biden would be replaced as the Democrats candidate and that we would have a shadow candidate take his place and that it would throw the election into all kinds of chaos, and then the likely outcome would be that this shadow candidate would win and lead us on a path of Californication.
That seemed extraordinarily likely up until this past weekend when, of course, the attempted assassination of presidential candidate and former president Donald Trump changed the calculus there.
So you tell me what you think, but I’m reading this as with this surge of sympathy and whatnot… I mean, a lot of people are really seeing Donald Trump as human for the first time after he had this brush with death. All of a sudden he seems more like a person, right? So I guess, first question would be, what do you handicap the election odds at right now? How do you see this playing out?
Louis Navellier: Well, the election was over when he got shot. I mean, that photo was iconic with his fist and the American flag in the background, him shouting fight. That’s the same thing as George Bush with the bullhorn 9/11 rebel. It’s an iconic thing. It was spontaneous, and he had the Teamsters president to speak at the Republican convention, said nice things about him and his VP, J.D. Vance, and they have a growing coalition.
You’re going to have a low turnout on the Democratic side because they are demoralized.
I think the issue with Biden is his family. When your race is over, you can often take the campaign funds and set up foundations, and of course, those foundations can take care of your family. And I actually know that from, one of my friends is Biden’s neighbor in Wilmington. And when Beau was dying (his son), he ran for governor even though he was going to be dead soon because of the cancer, and he got a few million dollars and he took that money to set up a foundation to take care of the family.
So the reason Biden wants to stay in this race is money.
Now, there are these very big powerful political families in America like the Pritzker family, Jay Pritzker, the governor of Illinois. Penny Pritzker was the Commerce secretary. The Pritzker’s picked Gavin Newsom a long time ago, and they have other Gavin’s around the country.
Essentially Gavin’s just a young Joe Biden you can grab and put him into place and he’ll do whatever you want. So that would still be the plan, but somebody’s going to have to give Joe some money for him to quit, and whether it’s a hundred, $200 million, I have no idea.
Obviously you can see everybody’s trying to cut off his money now. James Carville, one of the Walmart heirs, there’s just an outcry to stop giving the guy money. Even Clooney, he raised a bunch of money for him, and all Clooney’s friends had to give a million dollars, and three weeks later, Clooney turns on them, so now George Clooney probably needs some friends. That was an expensive meal in there. So that could still happen.
Now of course, what’s happened is right after the shooting, Elon Musk endorsed Trump and then set up a pact for at least $45 million, a donation in it to support Trump.
And then because J.D. Vance worked for Peter Thiel and some other Silicon Valley juggernauts between Musk and J.D. Vance, the Silicon Valley’s now turning, so it’s getting to be very interesting.
But it’s going to be probably low turnout on the Democratic side, high turnout on the Republican side, and so that means there’s going to be a lot of key Senate and the congressional races that might go red.
The one that baffles me right now is Garvey running for Senate in California against Peter Schiff, and Peter Schiff’s starting to get very alarmed. Now, Peter Schiff is the biggest mama’s boy crybaby out there, and I don’t know why anyone would ever vote for him because he’s just so annoying.
Charles Sizemore: I asked that question about most of the people in Washington, and the only conclusion I reach is they vote for them because there was just nobody else that wanted the job.
Louis Navellier: Yeah. And then, of course, there is a deep state out there that employs a lot of people, and Biden’s about to ask stuff to neuter the Supreme Court because the Supreme Court had a decision on Chevron the other day that really does throw a wrench in the work of all the laws because the laws they pass are vague and they leave them up to the regulatory agencies to interpret. And the Supreme Court says, “No, you don’t do it that way,” you know what I mean?
Charles Sizemore: No, it was even worse than that. The regulatory agency had the discretion to interpret it, and they were given de facto, like their word is the law, right? And so if you’re on the other end of that, if you’re running a business and they say you’re not following the rules, you didn’t have a lot of recourse to the courts because the courts would just defer to the agency, so the turnover of that is really interesting. That court decision actually changes the government more than any election can or would, or could ever do.
Louis Navellier: And that’s part of the divide we have in the country. My wife went to Berkeley Law School, I get all their emails and things, about three a week. And they brag how they can go get a court decision, use that to make law and go out and fine people for 20 or 30 years, and they admit that it might get overturned when it gets to the federal courts, but yeah, we have a divide.
When Trump got in, California paid the former attorney general under Obama $25,000 a month just to file opposition lawsuits against everything that they did.
Charles Sizemore: That’s good work if you can get it.
Louis Navellier: Yeah. Well, I mean lawsuits he filed, but he was basically objecting to everything. So there is a deep divide in the country, but Trump’s obviously trying to make it less of a divide. A lot of this is competence.
And do we want to pay for the endless wars? And the wars are getting to be very, very tough because we are having issues right now in the Gulf because they hit another oil tank. Houthis hit another oil tanker, and one of our destroyers, USS Mason fought back some anti-ship missiles, which they hadn’t seen before. So somebody’s giving very expensive missiles to the Houthis. You know what I mean?
But when we shoot down a missile or a sea drone, those are often a lot cheaper than our countermeasures.
And the Ukraine War proved that you could swarm an M1 tank with drones and screw it up, and I’m not sure why we have M1 tanks in that fight because they need an army behind them. It’s a turbine tank.
Charles Sizemore:
You bring up a really interesting point because non-state actors, or even just rogue states, whatever you want to call them, they can build an effective force on the cheap with drones… outspend this on a Navy or something. That’s impossible. There’s not enough money in the world to outspend us on that, but they don’t necessarily need to if you can buy a drone army on the cheap.
Louis Navellier: Correct. The Oculus guy who built Oculus is now in the defense business and he’s trying to put up all these systems. You have a drone controlling the other drones, and it’ll be interesting if the US Defense Department starts to go that way.
I’ve been to Virginia. I have some friends that are part of the deep state, and actually I’ll give you a little insight. So my guy was an ex Reagan guy. Very, very political, doesn’t like Trump, but wanted Tom Cotton as the VP.
And I say, “Well, how long are you going to give Trump if Cotton becomes a VP?”
He said, “Ah, we’ll let him be president for 18 months.”
So there’s a theory that the deep state can still try to take you out.
And Nixon had this huge victory, 49 states, and then he was gone in 18 months because Bob Woodward was a naval intelligence analyst, and now whether Nixon was entrapped or not is another matter, but we saw Trump fight that deep state before, and it’s going to be very interesting.
And J.D Vance is very skeptical of a lot of things in Washington, so they’ve got to decide who they’re going to work with.
Charles Sizemore: It’s going to be interesting as one of our themes in The Freeport Society is, of course, it’s an age of chaos, and we knew it was chaotic. We didn’t imagine assassinations were going to be, or attempted assassinations were going to be part of the chaos, but that’s where we are today.
Louis Navellier: Well, we didn’t imagine that the Secret Service would deny Trump’s request for added security because of the Iranian threat…
Charles Sizemore: Talk about getting pulled into wars we don’t really want to be in. If the Iranians had succeeded there, we would’ve been pulled into a war over there that we had really no… It would’ve been a completely unwanted war that we would’ve just gotten pulled into.
Louis Navellier: Yeah. There’s a lot of tit-for-tat that goes on in the Middle East. So I know they have a new president. He is supposed to be a moderate, but I don’t know what a moderate Iran is.
Charles Sizemore: A slightly sugar beard.
Louis Navellier: Yeah. That’s a very good point. But I do know they have a demographic issue and they have a lot of young people, and the ruling factions of Iran usually don’t have a majority, so they want to keep everybody fighting so they can stay in power, kind of like Macron in France, you know what I mean? Macron’s party didn’t do that good in the election, but he called the election because he’s sitting in the middle of it all, so he can still be president.
Charles Sizemore: Well, what’s funny about that is he tried to stave off a win by the far right and ended up causing a win by the far left, and he’s a moderate in the middle, and he was screwed either way. No matter how that went, it wasn’t going to go well for him.
Louis Navellier: That’s right.
Charles Sizemore: … we’re unfortunately not going to fix the world. I, for one, would rather have anybody other than the two candidates in the White House, but this is what we have and it looks like Trump’s going to be the winner for whatever that’s worth.
My question to you, how do we make money on this?
You are a quantitative investment master. You are known to pivot when the data tells you to pivot.
How are you positioning your portfolios?
What do you like in this environment?
Louis Navellier: Well, when the CPI came out, it was negative, and then we had a favorable PPI report, wholesale goods prices were negative. They’ve been negative for many months.
What happened is we had another bond rally and it triggered a big stock rotation, and just in the last six days, the Russell 2000 is over 1.5% – 1.54% actually – so that’s a little bit too much too quickly, so things are starting to come back down, but the home builders have probably been the hottest sector.
Toll Brothers is our favorite there in that sector, but mortgage rates are the lowest since March. They’re under 7% now, so everybody’s anticipating this Fed rate cut. We have this PCE Inflation report later this month. We know a lot of the components in it. They’ve softened, like the owner’s equivalent rent. So we’re hoping it’s going to be flat to negative and really shock the Fed into having an incredibly dovish FOMC statement on July 31st, and obviously we’ll get a rate cut on September 18th.
Now, if I was running the Fed, I’d cut rates on July 31st, but right now it’s all going to be based on the PCE, and until the Fed starts cutting rates, everybody wants weak economic news.
We had flat retail sales. I know if you back out oils and gas, it was a lot better, but that was a good headline that might convince the Fed to cut. We’ve had a negative ISM manufacturing and service sector. Anytime those indices fall below 50, usually recession ensues, so they better hurry up and cut rates.
Charles Sizemore: Do you think there’s a possibility that we will have a mild recession in the next 12 months?
Louis Navellier: No, it’s just two quarters. I don’t think we’ll have two quarters. I think our energy exports alone will keep us growing, and of course, Trump wants to drill, drill, drill and change all that.
The other thing is remember Biden changed what a recession is. They did technically have a recession when he got in, but then Wikipedia changed the definition.
Charles Sizemore: We did. We did have two consecutive quarters of mildly negative GDP, but they never actually… I mean, that’s the technical definition of a recession, but it never got called, which was odd.
Louis, are you suggesting that somebody in the government would move the goalpost on an economic release?
Are you suggesting they might manipulate the numbers?
Louis Navellier: Yes!
Janet Yellen is famous for her transitory comments, that the inflation was transitory obviously…
Charles Sizemore: That may go down in history as one of the quotes that aged the poorest.
Louis Navellier: Yes. Well, she’s famous for a lot of quotes. A lot of them don’t get out there. The Babylon Bee took her transitory comment, and the Babylon Bee is a spoof site.
Charles Sizemore: It is. It is pure gold. It’s like The Onion. If you need a good laugh, just spend a half hour on those sites. It won’t change anything, but you’ll feel better.
Louis Navellier: Yeah. The Yellen spoof on Babylon Bee is that Biden’s dementia is transitory. It is what it is.
But elections are good for the markets because people have hope. Obviously we want to get all this over with and move on, and grow and prosper, and there’s a lot of optimism in America.
If I was advising Biden or Gavin Newsom or whoever is going to be the Democratic nominee, I would tell them they might want to have a positive message, but as I speak to you today, his message is neutering the Supreme Court, and I’ve never seen one branch of the government fight with the other branch so publicly.
Charles Sizemore: Yeah. There’s been a lot of that lately. But no, you’re right. A more positive message tends to be what sells. Americans tend to be an optimistic lot, so pump us full of good news, man. Even if you’re lying to us, just lie to us with good news, right?
Louis Navellier: That’s correct. That’s why you have to smile and be exciting. And so you know Trump was very well liked until he got into politics, so it’s going to be very interesting. I think they’re more worried now about the House and the Senate because if you have a low turnout on the Democratic side, it would hurt.
Charles Sizemore: That’s what in particular the House, what I noticed was interesting in the betting markets. The betting markets for a while have been pricing in Republican control of the Senate, because the election is more favorable, the way the math is working out, it’s far more favorable for them in the Senate. The presidency was going back and forth, leaning Biden for a while, post debate it was leaning Trump, but that was a coin flip. The House though was leaning Democrat, and has for most of the last six months or so.
After the attempted assassination, it flipped pretty hard. The betting markets swung really hard the other direction. They’re now pricing in a sweep, so that’ll be interesting.
I may be the odd duck. I actually prefer gridlock because I figure no one’s going to screw anything up too badly, if it’s gridlocked, it’s just they’re going to butt heads. We’re likely to not get gridlock. If the election were held today, it would be a clean sweep, so I think that’s interesting.
Louis Navellier: Yeah. Of course, as soon as you’re elected president, you only have 90, 120 days before everybody attacks you.
And it’s a king of the hill game, and then you’re lame duck.
So maybe Trump would have more staying power with J.D. Vance, but people like to complain and we’ll see how it all goes.
But right now people have hope, and let’s just hope we can keep all the candidates safe. And Trump, he’s even reaching out to RFK, and RFK finally got Secret Service protection, and so he’s trying to reach out, so we’ll see what happens.
Charles Sizemore: We shall indeed. And of course, it’s our job to move with the times, follow the money, and trade along the way.
Louis Navellier: That’s right. Speaking of trading, do you want some stocks?
Charles Sizemore: I will gladly take any recommendations that you have to share.
Louis Navellier: I think at this moment as I talk to you, that probably your best buys near term are Lilly and Nova Nordisk. Those are clearly the weight loss drugs, okay?
Charles Sizemore: Sure. And by the way, I will add that no matter who wins the election, America still has an obesity problem and that’s not going away.
Louis Navellier: That says the world. It’s our processed foods, it’s our sedentary lifestyle, and my doctors always threatened to put me on those drugs, and it’s just a matter of time before they do that. But the studies are only seven years.
All I know is if you have a pancreas issue, you should never take the drugs, but so far it’s unbelievably popular, now it’s in a pill format.
Charles Sizemore: Anything that makes people skinny is going to be popular.
Louis Navellier: That’s right.
Charles Sizemore: Well, very good.
Louis, thanks for your time as always, full of good trading insights here. I’d love to have you on again soon.
Louis Navellier: And one last thing, Charles, I should add that the earnings for the S&P are coming in good, better than expected, but it’s early. The analysts were expecting 8.8% increase for the S&P earnings gain, strongest over two years. They’ve now raised that to 9.3%, so one of the reasons the market heated up with these positive analyst comments under the surface. So a lot of optimism right now.
Charles Sizemore: Indeed. All right, let’s hope the market keeps it up. And on that note…
Louis, thanks for being on the show today. I’d love to have you on again soon.
And for everyone watching, thanks for tuning in, and that’s going to wrap up today’s issue here.
To Life, to liberty, and the pursuit of wealth, this is Charles Sizemore signing off.