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Zacks In The News

BROKERAGE FIRMS' STOCK RECOMMENDATIONS STILL PROVE PROFITABLE

Chicago, IL- September  25, 2006 – As the S&P 500 posted a slim 2.71% return in the first half of this year, many of the stock recommendations that are used for model portfolios from  top brokerage firm research departments continued to be more profitable. "This can be an important thing for investors to consider when selecting a brokerage firm to work with," says Adam Cohen, Senior Vice President of Quantitative Research.  "The leading brokerage firms employ analysts who produce recommendations for hundreds of stocks, which can not all be bought for a client portfolio. These brokerage firms then create model portfolios from all of the stocks each brokerage firm is following. These can be used as a starting point in the stock selection process to meet a specific client's risk & return needs.  The process to create these lists range from a bottom up quantitative methodology, to a top down fundamental process.  All of these characteristics should be taken into consideration by the investor." says Cohen.   

Zacks regularly ranks the best of the best of brokerage model portfolios in its Broker Model Portfolio Survey. The latest results for the first half of 2006 show Morgan Keegan in first place, with a 21.15% return. Citigroup placed second, with a 7.60% return. Goldman Sachs was third with 5.63%.

The top 12 ranked brokerages for the first half of 2006(12/31/05 to 6/30/06) are as follows…      

Rank

Brokerage Firm

Total Return     

1

Morgan Keegan

21.15%

2

Citigroup

7.60%

3

Goldman Sachs

5.63%

4

Credit Suisse

5.42%

5

Charles Schwab

4.21%

6

Edward Jones

3.11%

7

A.G. Edwards

3.05%

8

Merrill Lynch

2.85%

9

Bear Stearns

1.98%

10

Morgan Stanley

0.69%

11

Raymond James

-1.48%

12

Bank of America

-7.65%

Looking further out, Charles Schwab placed first in both the 3 and 5 year performance categories, with a 68.56% and 74.03% return respectively. Goldman Sachs was second in the 3-year category with a 68.47% return and Citigroup was third with 59.03%. Merrill Lynch came in first with the best 7 year performance, with a 54.86% return.
 
Zacks complete 2Q, year-to-date, three, five and seven year rankings are available to the media upon request. Zacks calculates the performance of the brokerage "model portfolios" it tracks, on an equal-weighted basis. Total return performance figures include stock price changes, dividends and hypothetical trading commissions of 1% for each addition and deletion to the model portfolios.  

The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poor's. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index. 

Zacks Investment Research, Inc., developed the concept of the EPS Surprise and created the first quantitative model to predict stock prices based on patterns, estimate revisions and surprises, called the Zacks Rank.