Age Not An Obstacle To Adviser's Success

``Distrust interested advice.''

- Aesop, circa 6th c. B.C.

Business columnists must exercise caution. If they write favorably of a subject, it looks like an endorsement. If they write in a less-than-favorable tone, it looks like a hatchet job.

What follows is neither an endorsement nor an ax murder. It is a look at one person who has gotten fairly well-known in the investment game. His advice may work for some. It may be inappropriate for others. Down the road, he may have enormous success, or he may stink, or he may fall somewhere in between. Each should decide based on analysis independent of a know-nothing columnist still looking for his first two nickels to rub together.

One thing is irrefutable: He is young.

When Louis - pronounced Looey - Navellier said he was 32 years old, the white-haired woman across the table literally gasped. She immediately turned to her neighbor and, in hushed tones, repeated what she'd just heard.

You could imagine the thought: Shouldn't investment advisers all be middle-aged or older, graying a bit at the temples and with decades of experience under their belts?

Couple that youth with a name like Louis Navellier and images of riverboat gamblers with secret Swiss bank accounts seem more probable than that of a respected stock picker/money manager.

Top it off with the fact Navellier chose Incline Village, Nev., almost equidistant between two of the world's great gaming cities - Reno and South Lake Tahoe - for his operations center.

Yet, when Navellier speaks about what he does, nothing but an aura of professionalism fills the air. This occasion, last week, was at the Metropolitan Grill, a swank Seattle eatery ideal for lulling folks into an investment frame of mind.

Navellier came to Seattle at the behest of two Shearson Lehman Hutton brokers, Kelly Gunderson and Stephen Fairfax. They work in Shearson's Federal Way office.

What Navellier and the two brokers have tapped is a rising tide of investment capital among individuals: two incomes, controlling their own retirement monies, who may be tired of mismanaging their own money or displeased with taking broker suggestions that cost them both commissions and capital gains.

Navellier is one of scores who stepped in to manage those funds. Some managers won't touch a sum less than $1 million. A tiny fraction will go below $100,000.

In Navellier's case, the minimum is $100,000. Why he has become notable is, in a word, success. Three weeks ago, his sketch appeared in The Wall Street Journal because over five years his newsletter, Louis Navellier's MPT Review, was ranked No. 1 nationally with a gain of 331 percent.

His approach is not conventional. When he puts his own spin on things, he generates more than average rotation.

The preponderance of money managers looks at such fundamentals as industry outlook and individual corporate prospects within the industry to select stocks they believe have the best chance of success.

Navellier's outlook is different from the start. Rapidly rising profits are the key. He looks for higher potential gains from riskier, smaller stocks.

Believing that smaller stocks have beneficially smaller followings, Navellier looks at about 3,000 over-the-counter issues. From them, he culls 300 stocks whose profits are expanding.

That's all done by computer - the technical side. Then he begins a more fundamental look, assessing a company's rank within its industry, how wide the profit margins are, what the

profits momentum is, where the price-to-earnings ratio stands.

Microsoft and Nike have been Navellier favorites of the past. Of Microsoft he noted that if a computer were IBM or IBM-compatible, and Microsoft's DOS operating system weren't around, the computer would be just an expensive paperweight.

A current favorite is Quality Food Centers.

``QFC is not recognized as a growth stock,'' Navellier said, ``but it is an example of a very well-run company with good growth.''

The culling yields different numbers of stocks at different times. In the hotter market a month ago, Navellier had only about 70 stocks. But the cooling off has enhanced prospects: about 105 stocks meet his qualifications.

So how does an account work? If you do not have $1 million in net worth, or if you are investing pension funds, you will pay Navellier a flat fee each year of 1 percent of assets if you buy his conservative program (now at 72 percent in conservative stocks, 20 percent in bonds and 8 percent in money market), or 2 percent of assets each year in the more popular aggressive program, now invested 96 percent in the kinds of companies explained above.

If you are investing straight money and you have a net worth of $1 million or more, you can adopt an incentive system that few other than Navellier seem to offer. If you don't make money, neither does he. Once into profits, his take is 10 percent a year.

No matter the method of paying, there is another charge. The account is arranged through the Shearson brokers. Navellier's style is trade-intensive, meaning it would cost a lot to do all the trades in normal retail fashion. So you set up the account through Shearson, and the annual cost runs about 1.85 percent. That's for Shearson, not Navellier, and would occur whether you have profits or losses.

Navellier was the offspring of a Bay Area family in the construction industry. He developed a keen sense of numbers at Cal State-Hayward, and sprinted out with a degree at age 20. He said he was impressed by statistical work at Stanford, UCLA and the University of Washington. He also was swayed by the work at Wells Fargo Bank before it elected to start index funds.

By his mid-20s, he had the investment newsletter going, and money started to come in. He now manages $100 million, with an intent to shut off the faucet at $300 million. More than that, he said, would swamp his system.

Client profits have been running 30 percent a year in the past 5 1/2 years, Navellier said. The over-the-counter industrial stocks have gained about 12 percent in that span.

His age has not been a barricade to success, he said.

Noting his Seattle surroundings, he added, ``Bill Gates is older than me.''

Gates remains a tad richer, too.

The Dow Jones industrial average of 30 blue-chip stocks was drubbed for the fifth straight week. The Dow closed at 2,644.80, off 71.78 points for the week and down 355 in the past month.

The Murphey Favre Northwest 50, 50 stocks weighted by their regional economic impact, took its knocks as well, falling points to .

The U.S. Treasury's 30-year bellwether bond fell $15 per $1,000 of face value to close at $980, said Bob McCorkle, Seattle Northwest Securities vice president. That pushed the yield to 8.94.

On portfolios: Here are percentage gains since the start of the year for two sets of stocks:

Readers' Portfolio (10 NW stocks preferred by readers) - Alaska Air -14.5 percent, Boeing +22.5, Costco +6.7, Intermec

-57.8, McCaw Cellular -49.0, Microsoft +38.5, Nike +41.8, Nordstrom -31.5, QFC +14.0, Safeco

-21.0. Average: -5.0 percent. What $1,000 invested in those stocks would be today: $950.

Readers' Non-Portfolio (10 NW stocks that didn't get a single reader's vote) - Bohemia -63.5 percent, Carver -23.8, First Mutual Savings Bank -19.5, Industrial Funding -63.4, Jay Jacobs +16.3, Louisiana Pacific -26.9, Oregon Steel Mills +40.2, Pegasus Gold

-6.5, West One -4.4, VWR +14.3. Average: -13.7 percent. What $1,000 invested in those stocks would be today: $863.