The Little Book That Makes You Rich: A Proven Market-Beating Formula for Growth Investing by Louis Navellier

Chapter One

    Let’s Start at the End 
At the End of the Day, It’s Earnings 
That Matter.
 IN THE CLASSIC MUSICAL,  The Sound of Music , the character 
of Sister Maria (played by Julie Andrews) tells us that we 
should start at the beginning because “that is a very fine 
place to start.” In our search for profits investing in growth 
stocks, however, we shall do the opposite of the Sister’s 
advice and start our search at the end. The plain fact is that 
at the end of the day what makes for a great growth stock, 
one that can grow to 5, 10, or even 20 times your original 

 investment over time, is the  fundamentals  of the company. 
Can the company continually sell more of its products and 
services at higher and higher profits? Can it continue to 
innovate and adapt to marketplace changes and maintain a 
leadership position? In the end, what makes for a great 
growth stock is the ability of the company to continually sell 
more of its goods or services at high levels of profitability. 
One definitive factor I have found over the years is 
that change is a fact of life on Wall Street. All too often 
I hear a pundit or guru telling us of one  magic-bullet  vari-

able that is most important in picking winning stocks—
 such as price-to-earnings ratios or price-to-cash flow. Of 
course, these magic-bullet fundamentals can fall out 
of  favor quickly. The one certain thing I can tell you 
from all my years of investing research is that many fun-
damental variables have a life span, perhaps two to three 
years at most, before they stop working and the edge is 
gone. It’s kind of like the great football coach Bill Walsh 
and his dynasty football team of the 1980s, the San 
Francisco 49ers. Walsh had a clear edge with his newly 
invented West Coast offense that befuddled teams around 
the league and made the Niners all but unbeatable. How-
ever, over time, teams adapted to this innovation and the 
edge was dulled, leading the way for new teams to develop 
new game plans that led to Super Bowls. The 49ers had 
a great run, but just like on Wall Street, once the edge is 

The Little Book That Makes You Rich: A Proven Market-Beating Formula for Growth Investing by Louis Navellier