Bloomberg reports:

Citigroup Inc., the biggest U.S. bank, said third-quarter profit fell 60 percent because of $5.9 billion of credit and trading losses on loans and mortgage-backed securities.

The bank will write down $1.4 billion before taxes on leveraged financing commitments when it reports final figures in two weeks, New York-based Citigroup said today in a statement. It lost $1.3 billion on subprime assets and about $600 million in fixed-income trading, while higher loan-loss reserves contributed to $2.6 billion in credit costs in the consumer-banking business.

This will help accelerate the shift out of value stocks and into growth. All the bad earnings news in recent days, such as Lennar, UBS and now Citigroup, have been value stocks.

According to my research team, 79% of the stocks in S&P 500 are classified as value. However, only 49% of the market cap is classified as value. So if portfolio managers stick with value, it will sink their portfolios relative to the S&P 500.

I'm often asked how well the economy is doing. Nowadays, it depends on who you ask. If you talk with a banker or homebuilder, then you'll probably get a negative answer. But if you talk with a farmer or a manufacturer who has a strong foreign business, then you'll probably get a very positive answer. The different views are a result of the weak dollar which is helping fuel an export boom.

There are also divergent views on economy from business and consumers. Consumer spending is still quite healthy, but spending by businesses is starting to look shaky.

The Commerce Department recently reported that real consumer spending increased by 0.6% in August, which was the fastest growth in two years. The spending party was helped by a 2.8% jump in vehicle sales as automakers went all out to move cars and trucks off their lots. So far, retailers have reported surprisingly strong back-to-school sales. For the third quarter, the economy probably grew about 2%. But retail sales were strong if September, the number could be as high as 3%.

Spending by businesses, however, is a very different story. The problem is that businesses appear to have been spooked by the credit crisis. Businesses recently curtailed their hiring plans which caused the first monthly contraction in payrolls in four years. Also, orders for durable goods plunged 4.9% in August.

On Friday the government will release its jobs report for September. This will give us our first glimpse of how much hiring the business sector did last month. Meanwhile, the Fed is carefully monitoring the situation and will likely cut interest rates either 25 basis points or 50 basis points at its next two meetings on October 30-31 and December 11.

One of my favorite stocks, Research In Motion (RIMM), is soaring this morning on outstanding earnings news. The stock is already up over 12% today.

For the company's fiscal second quarter, earnings-per-share doubled to 50 cents and sales more than doubled to $1.37 billion. MarketWatch notes:

Analysts were expecting earnings of 50 cents a share on revenue of $1.36 billion, according to consensus forecasts from Thomson Financial.

The company said about 1.45 million subscribers were added during the quarter. More than 3 million devices were shipped during the period.

Analyst Jeffrey Fan, of UBS, said that there was "little that disappointed," in RIM's report, and raised his price target on the stock to $125 a share from $120.

Fan added that the upcoming release of the BlackBerry Unite software -- a free program that allows up to five people to share remotely share multimedia files and calendars -- could drive RIM's market penetration into the consumer sector.

In a conference call, company officers highlighted strong sales of RIM's line of Pearl smart phones as well as the BlackBerry Curve. Both are devices that the company has targeted to the so-called "prosumer" market, meaning high-end consumers not typically picked up by RIM's strong corporate business.

"This outperformance was driven by a strong product cycle perp as well as the diversification of our user base across multiple geographies and multiple market segments," CEO Jim Balsillie said during the call.

According to Balsillie, more than 30% of the company's subscriber base now comes from outside the corporate environment.

In my Blue Chip Growth service, I rate Research In Motion a strong buy for aggressive investors up to $97 a share.

Google (GOOG) just broke $600. In three years, the shares are up five-fold.

In my Emerging Growth service, I rate Google a buy up to $637 a share.

Last month, I discussed how some mathematicians tried to make a quick buck on Wall
Street with their fancy computer models. Now I want to tell you about another recent failed scheme--this time involving the S&P 500.

There's a group of structured managers on Wall Street known as "trackers." They sound like something out of a hi-tech movie. These trackers take an index like the S&P 500, and remix it using fancy mathematical models in an attempt to squeeze out more gains.

But when the trackers replicated the stocks held in the S&P 500, they didn't use the normal S&P 500 index that's weighted by market value. Instead, they equally weighted each stock in the index. This strategy worked wonders after the tech bubble burst when many trackers were able to remix the S&P 500 and dramatically outperform it. That is, until August.

The problem is that the equal-weighted index was heavily weighted with value stocks. When the markets sold off, traders dumped value stocks, and the equal weighting strategies took a hit. Ever since August 16, the equally weighted S&P 500 has badly lagged the regular S&P 500.

Now, everyone in money management is re-shuffling their portfolios so they don't fall behind the S&P 500. The exodus out of value is relentless. Key components of the value indices are under siege, particularly financials. Citigroup (C), Merrill Lynch (MER), UBS (UBS) and Washington Mutual (WM) have all warned about their earnings, which will accelerate the selling pressure in the interest-rate-sensitive value stocks.

I'm confident that growth stocks will dramatically outperform value stocks for the next 12 to 18 months. However, the growth parade has the potential to march much longer. For example, based on the Russell 1000 Value versus Russell 1000 Growth indices, value stocks outperformed growth stocks for seven straight years from 2000 through 2006. Before that, growth was on a six-year winning streak from 1994 through 1999.

This is a great time to get a look at my favorite small-cap growth stocks in my Emerging Growth service. I just posted the latest issue for subscribers. I have five new stocks to add to our Buy List.

According to Thomson Financial, this could be the first negative quarter for earnings growth since 2002:

The third-quarter earnings growth rate is currently at 0.1%, and that's without factoring in the profit warnings from Chevron Corp. (CVX), Valero Energy (VLO) and others, he said.

However, Butters said that upwards revisions from other companies on Wednesday could keep the growth rate positive. Should year-on-year comparisons turn negative, it would be the first quarter of negative growth since the first quarter of 2002, Butters said.

For the overall earnings season, "companies still tend to beat earnings estimates by 3% on average," the analyst said. "We should still come out with third-quarter earnings growth in the low single digits."

There are some bombs going off this earnings season, but I'm expecting to avoid these problem spots. If anything, as the stock market gets more selective, we usually get even stronger. Traditionally, we've done very well in narrow stock market environments.

Big news today! I'm very happy to announce the release of my new book, The Little Book That Makes You Rich: A Proven Market-Beating Formula for Growth Investing. This is the latest in John Wiley & Sons' "Little Book, Big Profits" series.

Now, for the first time, I've described in complete detail my strategy that's been able to beat the market year after year for over 20 years. Don't worry, I've made the book as fun and easy-to-use as possible. I promise there are no equations or weird Wall Street jargon. Just a powerful, proven formula to help you find today's market-beating growth stocks.

The reviews are in, and we're a hit!

The New York Times writes:

In short, he has done the seemingly oxymoronic, and done it well: He has written a book on growth investing that ends up being conservative in its approach.

The Financial Times calls The Little Book That Makes You Rich:

...as clear an intellectual justification for growth investing as you will find. The formula at its heart makes eminent sense.

BusinessWeek published an extended excerpt from the book.

From the title of this book, The Little Book That Makes You Rich, you may have guessed the book is literally a compact size and just 185 pages. But make no mistake, it's packed with information that all investors will find valuable.

The heart of the Navellier system is to ignore your emotions. I know that's sometimes hard to do, but it's crucial in becoming a successful investor. When you're investing, you aren't investing in feelings or hunches. Instead, stocks represent real businesses. That's why I focus on the fundamentals of being a strong business.

Over 20 years of investing, I've refined my system to include eight key fundamental variables. For me to find a stock I like, it has to rate near the top in all of these variables.

The eight variables are:

1. Positive Earnings Revisions. This is a particularly important variable this time of year. I like to see stocks that have had their earnings estimates increased by Wall Street analysts. This usually tips us off to a stock that's about to "beat earnings."

2. Positive Earnings Surprises. Speaking of beating earnings, I also look to see if a stock has been able to beat its earnings estimates and by how much. This is an important number to watch because it often tells me about a stock that Wall Street doesn't "get."

3. Increasing Sales. I also like to see a company that can grow its sales over time. Why? Because it's one number that's hard to fake. My background is in accounting, and I've always made sure to steer away from companies that use questionable accounting practices. Sales growth is a solid indicator.

4. Expanding Operating Margins. This simply tells me if earnings are growing faster than sales. A company that's able to expand its operating margins is usually a company that has a dominant position in its industry. This company can raise prices without seeing a drop-off in sales. That's a nice place to be.

5. Free Cash Flow. This tells me how much money a company has left over after paying for the costs of its business. Having a strong cash flow is important because it allows a company to invest more resources in growing its business.

6. Earnings Growth. This is the heart of all good financial analysis and I rely on it as well. As long as any company is able to grow its earnings consistently, its stock will do well.

7. Positive Earnings Momentum. It's not enough for me to see earnings growth, but I also want to see the rate of growth increase as well. These "momentum" stocks are hard to spot. That's why my team of analysts and I scan over 5,000 stocks every week.

8. Return on Equity. This is the gold standard. ROE tells me how efficiently a company is managing its resources. I can't interview every senior manager, so I like to think of ROE as a report card for management.

If a stock rates near the top on all eight variables, then congratulations! It has passed the first test in the Navellier system.

You heard right. That's only the first hurdle.

Now I know the stock has superior fundamentals. But there's more--and this is where the Navellier system sets itself apart from other stock-rating systems.

A stock not only must be fundamentally superior, but it also needs to be quantitatively strong, as well. By quantitatively strong, I mean that the stock needs to be low risk relative to its potential. You'll find that controlling for risk is one of my most important goals in my system. I explain this in more detail in Chapter 11 of the book.

Once I've selected a stock that's fundamentally superior and quantitatively strong, then it's finally ready for one of my model portfolios. Assembling a portfolio, however, is a critical task that most investors never think about. This is another aspect that separates my system from others. I don't just pick a bunch of stocks and toss them together. Instead, I place great emphasis on the contents of each portfolio.

This means I like to pair stocks that zig with other stocks that zag. The goal is to create an overall portfolio that's stable. The Navellier system is not only designed to make you eat well, but we want you to sleep well too!

That's the Navellier system in a nutshell. The book goes into much greater depth, and I show you dozens of examples of how we've been able to spot outstanding stocks before the Wall Street crowd.

Plus once you read this Little Book cover-to-cover, you'll discover that I've done the unprecedented. I'm giving readers of this Little Book free access to my stock-rating system, PortfolioGrader Pro. I update my ratings every single week, so you'll always know my current opinion on nearly any given stock.

I'm already receiving emails from folks who have read the book. Their kind words and reviews of how the message in this Little Book has opened their eyes to the power of growth investing are gratifying beyond words.

I hope you'll buy the book and begin your own journey to becoming a market-beating growth investor!

Here's a fascinating market stat. According to Ned Davis Research, if you invested $10,000 in the S&P 500 from May 1 to October 31 every year from 1950 to 2006, you'd now have $9,160. Meaning, you would have lost money.

If over the same time, you had investing from November 1 to April 30, you'd now have $387,989. All of the market's gain has come during those six months.

In our Global Growth service, our shipping stocks have been particularly profitable lately. The shipping stocks are rising far faster than the volume of global trade alone would indicate. One other reason for their recent rise is their increasing exposure to key stock market indices that institutional investors follow religiously. For example, TBS International (TBSI) was recently added to eight different Russell indices. The stock has soared as institutional investors who must track these indices are forced to buy the stock.

Earlier this year, the Russell indexers caused some controversy when they added foreign-chartered companies, namely Bermuda based reinsurance companies, to its domestic stock market indices. The fact that Russell left the U.S. to build its domestic indices was viewed as a very aggressive and surprising development. Officially, Russell says that companies that are determined to be "Benefit-Driven Incorporations" (or BDIs) are eligible for inclusion in the Russell U.S. indices.

I suspect Russell will next add Excel Maritime Carriers (EXM). Already, Russell has added TBS International and reinsurance companies headquartered in Bermuda, so I suspect that it is just a matter of time (specifically June 30, 2008, when Russell posts its annual index rebalancing).

In the interim, you can bet that an institutional money manager who is forced to track a Russell index will more than likely load up on TBS International, since it is the only hot shipping stock in the Russell indices. In other words, since TBS International is the first shipper to be added to the Russell indices, it will likely continue to benefit from wave after wave of institutional buying pressure.

Frankly, I do not like to play guessing games about the behavior of index funds, but if you wonder why our Global Growth Buy List is outperforming almost all the international mutual funds and managed accounts lately, it may be because many institutional managers have one hand tied behind their back and are limited to just a few shipping stocks, like TBS International. But I like all our shipping stocks since global trade is in a long-term bull market that will not end soon.

We're losing her! The stock market is...disappearing.

The issuance of new stock is at a 50-year low. Thanks to private-equity buyouts, mergers and acquisitions, and corporate stock buybacks, over one trillion dollars of stock float has disappeared this year.

Frankly, this is great news for growth investors. I love watching the stock market melt away because fewer stocks mean bigger profits for me and especially members of my Blue Chip Growth service. This is the fourth year in a row that the stock market has shrunk, and it will be the eighth time in the last 10 years that our Blue Chip Growth Buy List has beaten the market. Let's just say that that's not a coincidence.

In 10 years, our Buy List is up 240% which is three times better than the overall market. How have we been so successful? Easy--we've been able to spot the areas where the buyouts, mergers and stock buybacks have been the strongest.

I'll give you a perfect example. Baxter International (BAX), one of my favorite stocks on my Blue Chip Growth Buy List, reported blowout earnings yesterday. The Street was expecting 66 cents a share, Baxter gave them 70 cents. The company also raised its full-year outlook for the third straight quarter.

At yesterday's open, there was a buying panic, and shares of BAX exploded 10% higher. Not bad for a morning's work! Best of all, this is just the beginning. We have 14 more Blue Chip Growth stocks scheduled to report next week.(If you want to get in on the action, you can get more details on how to join Blue Chip Growth at this link.)

My strategy is to find companies on the receiving end of Wall Street's buying frenzy. I recently laid out this approach in my new book, The Little Book That Makes You Rich. I like to think of my strategy as being both low-risk and fast-growth, and if that sounds like a contradiction, you're not alone. This is what The New York Times said:

In short, he has done the seemingly oxymoronic, and done it well: He has written a book on growth investing that ends up being conservative in its approach.

Keeping your risk level low is my top priority. Whether you're in the market or not, your first step should be to log on to my PortfolioGrader Pro stock-rating tool. This tool gives you Buy-Hold-Sell advice on over 5,000 stocks. So before you make a market move, visit PortfolioGrader Pro and see how your portfolio-or any single stock-stacks up. (Don't forget to check out the Top 3 rated stocks by sectors. National Oilwell Varco (NOV) is an A-rated oil stock and also one of my top Blue Chip Growth stocks.)

Now back to the incredible shrinking market, I have to let you in on the secret behind all these stock buybacks. The secret lies within three little letters, I-R-S. Yep, these buybacks are part of Corporate America's plan to avoid taxes and pay itself more through dividends instead of salaries. Dividends, of course, are taxed up to 15% on the federal level, while income is taxed up to 35%.

The result is that a familiar pattern has emerged. First, companies implement a stock buy-back program, which increases management's ownership. Then, the company boosts the quarterly dividend.

Here's the kicker. No one complains because when management pays itself through dividends, they're enriching shareholders as well. The new 15% rate on dividends is basically a win-win for everyone.

Recently, some of the biggest stock buybacks in history have been implemented. Chevron (CHV) approved a $15 billion buyback, and Procter & Gamble (PG) announced one for up to $30 billion. Wall Street has tons of money sitting around and fewer places to put it. This is why I expect 2008 to be our best year ever at Blue Chip Growth.

But I have to urge you not to be a spectator. Consider two facts: First, the Federal Reserve meets in two weeks. Personally, I think they'll cut interest rates by 0.25%. Last time, I was one of the few on Wall Street who correctly predicted a 0.5% cut, and that's when the market soared over 330 points. The same thing could happen again.

The other reason to get in the market now is that this is the seasonally strong time of year. Since 1950, an investment of $10,000 in the market from November 1 to April 30 would have turned into almost $400,000. But for the other six months of the year, that $10,000 would have shrunk down to just $9,160. Think about that for a moment. All of the market's gains have come during the six months immediately following Halloween.

I'm currently working on the November issue of Blue Chip Growth, and I'm laying out our strategy for the next six months. In this issue, I'm selling two stocks and adding four exciting new buys. In fact, one of our new buys just saw its profits rise by 220%. I also have a detailed report about the seismic shift out of value stocks. Basically, stocks that you think are safe and secure may not be.

Follow this link to get one year of Blue Chip Growth for $149, or two years at $249 (an even better deal). I've been a professional investor for 30 years, and I stand behind my work 100%, so if you don't like our low-risk fast-growth strategy, you can cancel at any time for any reason within the first six months for a full refund.

I hope you'll join us today.

After the bell, Apple (AAPL) reported earnings of $1.01 a share which is a huge increase over the 62 cents a share they made last year. The Street was looking 85 cents a share. This was just an outstanding quarter.

Apple Inc. fourth-quarter profit jumped 67 percent, topping analysts' estimates, after it sold more Macintosh computers, iPhone handsets and new iPods.

Apple's forecast for sales and profit this quarter also beat predictions, sending the shares up 5.6 percent in extended trading. Annual sales increased to $24 billion, exceeding $20 billion for the first time in the company's 31-year history.

The company sold a record 2.16 million Macs during the back- to-school shopping season and shipped 10.2 million iPod media players after Chief Executive Officer Steve Jobs released updated models. Apple sold 1.12 million iPhones, topping Jobs's July forecast of 730,000 units, helped by a $200 price cut last month.

"They knocked the cover off the ball," Roger Kay, an analyst at Endpoint Technologies in Wayland, Massachusetts, said in an interview. "More than 2 million Macs, sold lots and lots of iPods, and the phones have done better than expected."

In my Blue Chip Growth service, shares of Apple are up more than 535% since I first recommended them less than three years ago. I currently rate AAPL a strong buy up to $183.

Last week, oil hit a record $90 a barrel. It's hard to believe that just five years ago, a barrel of oil cost $25! Rising demand from emerging economies, the increasing threat of terrorism and growing political instability in oil producing nations--especially Iraq and Venezuela--have caused oil's price to skyrocket. We're not too far from $100 per barrel of oil, but before you start digging up the backyard for your share of the supply, I have a few better ways for you to profit.

The problem with oil is that most of it is found in politically unstable nations, which makes it difficult for U.S. oil companies to conduct their operations. For instance, Chevron's trying to boost production at one of its fields in Kazakhstan but has been tied up in conflict with the Russian government, who'd rather give preference to Russian companies, or at the very least receive a bigger slice of the pipeline's profits. Even if the government allowed Chevron to increase its production, there are problems transporting oil from that region. Since Kazakhstan's railway system is outdated, it often ends up costing more in taxes to move the oil than to extract it!

Russia apparently also wants to control all of the oil transported around the Caspian Sea, which is why President Vladimir Putin recently met with Iran's controversial president, Mahmoud Ahmadinejad. Russia and Iran border the Caspian Sea, and the region surrounding it is believed to contain the world's third-largest energy reserves. In fact, ever since the collapse of the Soviet Union in 1991, oil companies have been tripping over themselves to get a share of this supply. Unfortunately, Putin believes that Russia, Iran and the three other neighboring countries should not allow foreign oil companies to further develop their oil pipeline projects in the region.

Russia and Iran aren't the only countries doling out an oil hangover. When it comes to proven reserves, the largest is in Saudi Arabia, with Iraq coming in at number two. So when the Turkish prime minister asked his Parliament for permission to pursue Kurdish rebels into neighboring Iraq this week, world markets grew tense, and oil prices shot up $7 a barrel. In one week!

Because of our insatiable appetite for oil, any threat of supply disruption will make prices soar. While that spells a growing headache at the pump, it is actually helping the margins of oil companies. My Blue Chip Growth Buy List continues to benefit from both oil refiners and the companies that service them. Tesoro (TSO) is a different kind of refiner--it dominates Southern California, which has its own unique fuel standards. California gas is always going to be more expensive because of this, and that's why Tesoro is seeing a healthy profit. It has been exceptionally strong recently and should be seeing some nice gains very soon.

My favorite oil service plays include Schlumberger (SLB) and Cameron International (CAM) which are up 11% and 43.4%, respectively, in less than two months. National Oilwell Varco (NOV) is up 44.1% in the same period, and Transocean (RIG) has handed us 14.9% gains as well.

Here I am talking with Greg Morcroft of MarketWatch.

This is the high tide of earnings season, and I have to confess how excited I am. Ten of my Emerging Growth stocks reported earnings today including one of my favorites, Transcend Services (TRCR). As I've come to expect, their earnings report was outstanding--profits jumped more than fivefold and the stock popped 20%.

Now that's what Emerging Growth investing is all about.

Earnings season is basically Judgment Day for every stock. Trust me, corporate executives like to talk a good game during the quarter, but now is when companies have to show the goods. Or in many cases, explain the bads.

Earnings season is all about finding stock "poppers" like Transcend. These are stocks that vault up 10%, 20%, 30% or more on the day of their earnings announcement, and often continue to rally as institutional investors scramble to buy more shares. Apple (AAPL), another Emerging Growth favorite, just reported stellar earnings and the stock is up 20% for the month.

Let me explain what stock poppers are and how I go about finding them in my Emerging Growth service.

As a general rule of thumb, a stock's price/earnings multiple should be the same as its earnings growth rate. So if a stock is projected to have earnings of $2 a share and it's growing at 10% a year, the share price should be around $20 a share.

I have nothing against a stock like that. It's perfectly fine and most investors are satisfied with owning it, but at the end of the day it's not for me.

At Emerging Growth, we've able to beat the market by over three-to-one--not for a year or two--but for over two decades. Since 1985, my Emerging Growth Buy List is up over 5,500%, and the reason we've been so successful is because we haven't settled on nice little 10% growers.

Instead, my system locks-in stock poppers. So let's say that when our little 10% grower reports earnings, it's not $2.00 a share. No, they beat the Street and report earnings of $2.04 a share. Well, that changes everything!

The stock's valuation changes on two levels. This is very important to understand but it's how poppers...pop. The shares don't just become worth 10 times $2.04, or $20.40, a share. Remember the growth rate has changed as well, so they're worth a higher multiple times a higher earnings base.

What we're talking about is a new growth rate of 12%, so it's 12 times the revised earnings of $2.04. The stock is now fully valued at $24.48 a share. In theory, the stock immediately adjusts, or pops, from $20 to $24.48. That's a 22.4% pop. Many times, this happens in a few minutes, or even seconds. Traders will panic and swarm over the shares hoping not to be the last on board. It's like tossing a Christmas goose into a pool full of piranhas. (Or a pool full of traders!)

I've seen this happen countless times, and it's how successful investors are able to beat the averages. Once you understand how a seemingly small earnings surprise can translate into a huge share gain, you see the importance of our Emerging Growth strategy. In fact, tracking earnings surprises is one of the foundations of how we beat the market.

In my new book, The Little Book That Makes You Rich: A Proven Market-Beating Formula for Growth Investing, I describe in full detail how my team and I go about finding stock poppers. In addition to earnings surprises, we look at factors like earnings revisions, sales growth, expanding operating margin and free cash flow. All of these variables come down to earnings season and finding a stock with good news to report.

The next likely contender to reach stock popper status is Manitowoc (MTW). Based in Manitowoc, Wisconsin, the company is a major crane operator and the growing world economy has made their business hot. The company reports next Wednesday, and Wall Street expects earnings of 63 cents a share.

I won't make an earnings prediction, but I will say I wouldn't at all be surprised to see MTW easily top 63 cents a share. Consider that during last year's third quarter, the company demolished Wall Street's estimate. The Street was expecting 37 cents a share; Manitowoc delivered 41 cents a share. The stock soared 13% that day and it continued to climb another 9% before the end of the year. I currently rate Manitowoc a strong buy for all types of investors up to $52 a share.

According to Bloomberg, China has more companies than the United States in the list of the top 10 largest companies in the word. This morning, China Life (LFC) passed AT&T (T) in market value.

The five Chinese companies in the top 10 are China Life, PetroChina, China Mobile, Industrial and Commercial Bank of China and China Petroleum and Chemical.

Thanks to China, my Global Growth service has been especially strong lately. Last week, our Global Growth stocks rose another 5.98%, on average. In comparison, the S&P 500 rose 2.31% last week. Our top three stocks had a slow week, up 2.46%, but our 11 China stocks rose an average 7.38%, and we added two new China stocks this week. Last week, 14 of our 36 stocks gained 9% or more.

In the last 10 week, my Global Growth Buy List is up 49.87% compared with 6.31% for the S&P 500. My top three stocks are up 126.81%.

Peter Brimelow at MarketWatch highlights our research:

Wall Street rebounds, and no one is happier than Louis Navellier.

Last Monday morning, I was writing about the previous week's stock slaughter, which badly shook some letter editors. See Oct. 22 column

But last week's solid gains have calmed them down. You know how they are.

Navellier publishes two letters monitored by the Hulbert Financial Digest: Emerging Growth, longer-established and small-cap focused, and Blue Chip Growth Letter. It should be noted that he's been optimistic throughout this difficult month. In fact, he's been a staunch supporter of this bull market throughout earlier stumbles. See June 19, 2006 column

His recent rationale: rate cuts. He writes: "The bottom line is, when the Fed cuts rates, investors get happy. And when the Fed makes consecutive rate cuts, the market soars. Obviously, both business and consumer confidence rises as interest rates fall. A rate cut will help our banking sector, keep consumer spending strong and further shore up the housing market. It's simply necessary for our economy."

Peter also blurbed my book, The Little Book That Makes You Rich, which he calls "a real contribution to investment literature."

Happy Halloween! Today's a big day. The Fed's interest rate decision will come later this afternoon.

We also had great economic news. The government reported that the economy grew by 3.9% in the third quarter. That's the fastest growth rate in six quarters.

MarketWatch notes:

Despite rising worries about commodity prices, the GDP price index, the broadest measure of price changes in the economy, rose just 0.8% annualized, matching a nine-year low. Inflation hasn't been lower since John F. Kennedy's administration.

Also, USA Today has a fascinating take on third-quarter earnings season:

The big question: Was the third quarter as bad as it initially seems for U.S. companies, or are housing-related problems masking what was otherwise a respectable three months?

Now that 307, or 61% of S&P 500 companies, have reported, the headline numbers are far from encouraging. Earnings have contracted 5.3% from a year ago, S&P says, the worst performance since the fourth quarter of 2001.

Thomson Financial, which measures results differently, says earnings are down 0.9% and that 22% of companies have missed estimates. That is only slightly worse than the average of 19% missing in the past eight quarters, Thomson says.

But if earnings from home-builder and financial companies are backed out, the S&P 500 earnings would have risen 13.1%, according to data from Nick Raich of National City. Eight of the 10 sectors posted 8% or greater earnings growth; five were in the double digits.

Finally, Google (GOOG) has broken $700 a share. The stock went public at $85 just three years ago!