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Whether you’re currently bullish on the market (stocks are up sharply since last October’s key upside reversal)...

...or bearish (the major indexes still closed lower last year)...

...or just plain wary given all of the volatility (inflation, interest rate hikes, and the current banking ‘crisis,’ are just a few of the things roiling the market)...’s now more important than ever to make sure you’re doing everything you can to get the most out of your trades.

Regardless of which camp you put yourself in, there will be distinct winners and losers as we move forward.

Personally, I put myself in the bullish camp. In spite of inflation still being too high, it has come down quite a bit from its peak last year. The latest CPI report showed core inflation at 5.5%, which is down from last year’s high of 6.5%. The latest PPI showed core inflation at 4.4% vs. last year’s high of 8.2%. And the latest PCE report showed the core rate at 4.7% vs. last year’s high of 5.3%.

As for the recent banking ‘crisis,’ it definitely spooked the market last week. But unlike past banking crises (the S&L crisis of the late 80’s, or the sub-prime mortgage crisis in 2008), Silicon Valley Bank didn’t overly invest in risky assets. To the contrary, they invested in arguably the safest investments on the planet – U.S. Treasuries.

Their issue was one of liquidity. They didn’t adequately plan for what they would do when interest rates went up and business slowed. And they found themselves in a cash crunch when depositors needed funds, which forced them to sell their long-dated Treasuries at a sizeable loss. Had they been able to hold them until maturity, they would have had zero losses and only gains. Big banks are in excellent shape. And there appears to be little risk of widespread contagion.

When it comes to interest rates, we may still have another one or two more hikes to go. Although, given recent developments, some are expecting the Fed to pause at the next FOMC meeting. Either way, we are closer to the end of this rate hike cycle than not. And that’s bullish for stocks.

Additionally, the market’s seasonals look great this year. For one, the 4-year Presidential Cycle shows that year 3 (that’s 2023), is the best year of all 4 years. Since 1950, stocks have always gone up in the year after midterms, with an average 12-month forward return of 18.6%. So we are literally still at the beginning of one of the most bullish periods for the market.

Moreover, history shows a high probability of outsized gains following a down year for the market. The S&P was down by -19.4% last year. It was the first down year since 2018, and the worst down year since 2008, when it closed lower by -38.5%. As for 2009, it was up 23.5%. And there’s plenty of reason to believe we could see something like that again this year.

But again, regardless of which camp you put yourself in (bullish, bearish, or somewhere in-between), there will be distinct winners and losers as we move forward.

So before you make your next trade, please read this first to learn how to put the probabilities of success in your favor.

Knowledge Is Power

We’ve all heard the old adage; knowledge is power.

It’s a great saying because it’s true.

And that saying couldn’t be truer than when it comes to investing.

Take a look at your last big loser for example. After analyzing what went wrong, you soon discover some piece of information that, ‘had you known beforehand, you never would have gotten into it in the first place.’

I’m not talking about things that are unknowable, like inside information or surprise announcements that can catch even the most professional of professionals off guard.

I’m talking about things that you could have known about or should have known about before you got in.

Did You Know?...

• Did you know that roughly half of a stock's price movement can be attributed to the group that it’s in?

• Did you also know that oftentimes a mediocre stock in a top performing group will outperform a ‘great’ stock in a poor performing group?

• And did you know that the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1?

• And did you also know that the top 10% of industries outperformed the most?

More . . .


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Was your last loser in one of the top industries or in one of the bottom industries?

If it was in one of the bottom industries, you should have known to not take a chance on something with a reduced probability of success.

That’s what is meant by knowledge is power. Knowable things that you need to know.

That’s not to say that stocks in crummy industries won’t go up -- they do. And that’s not to say that stocks in good industries won’t go down -- because they do too.

But more stocks go up in the top industries, and more stocks go down in the bottom industries.

And since there are over 10,000 stocks out there to pick and choose from, why settle for one with a reduced chance of making any money?

Did You Know?...

• Did you know that stocks with ‘just’ double-digit growth rates typically outperform stocks with triple-digit growth rates?

• Did you also know that stocks with crazy high growth rates test nearly as poorly as those with the lowest growth rates?

Did your last loser have a spectacular growth rate?

If so, and it got crushed, would you have picked it if you knew that stocks with the highest growth rates have spotty track records?

It seems logical to think that the companies with the highest growth rates would do the best. But it doesn’t always turn out to be the case.

One explanation for this is that sky high growth rates are unsustainable. And the moment a more normal (albeit still good) growth rate emerges, the stock gets a dose of reality as well.

For example, a company earning 1 cent a share that is now expected to earn 6 cents, has a 500% growth rate. But, if it receives a downward estimate revision to 5 cents, that’s a significant drop. Even though it still has a 400% growth rate, the estimates were just reduced by -16.7% and the price is likely to follow.

If you’ve ever wondered how a stock with a triple-digit growth rate could possibly go down -- that’s how.

Instead, I have found that comparing a stock to the median growth rate for its industry is the best way to find solid outperformers with a lesser chance to disappoint. And focusing on companies with growth rates above the median, but less than 50%, has produced some of the best results.

Did You Know?...

• Did you know that stocks receiving broker rating upgrades have historically outperformed those with no rating change by more than 1.5 times? And did you know they outperformed stocks receiving downgrades by more than 10 x as much? The next time one of your stocks is upgraded or downgraded, be sure to remember these statistics so you know how the odds stack up and whether they’re for you or against you.

• Did you know that stocks with a Price to Sales ratio of less than 1 have produced significantly superior results over companies with a Price to Sales ratio greater than 1? And did you know that those with a Price to Sales ratio of greater than 4 have typically been shown to lose money? That doesn’t mean that all stocks with a P/S ratio of less than one will go up and those over four will go down, but you can greatly increase your odds of success by following these valuations.

• Did you know that the Zacks Rank is one of the best rating systems out there? And did you know that since 1988, the Zacks Rank #1 Strong Buy stocks have beaten the market in 29 of the last 35 years, with an average annual return of over 24% per year? That’s more than 2 x the returns of the S&P, with an 82% annual win ratio. That includes 4 bear markets and 4 recessions. And consistently beating the market year after year can add up to a lot more than just two times the returns.

• Did you know that two simple filters added to the Zacks Rank #1 stocks significantly increases its returns? What if you did? We have a screen that utilizes these two additional items. Over the last 23 years (2000 thru 2022), using a 1-week rebalance, it’s produced an average annual return of 49.5% per year, while only holding five stocks in its portfolio at a time. And it handily beat the market again last year. That screen is aptly called the Filtered Zacks Rank 5 screen.

Do you know how well your stock picking strategies have performed?

Whether good or bad – do you know why?

Do you know if your favorite item to look for is helping you or hurting you?

If not, you should.

Beat The Market On Your Next Trade

There’s a simple way to add a big performance advantage for your stock-picking success. It's called the Zacks Method for Trading: Home Study Course.

With this fun, interactive online program, you can master the Zacks Rank in your own home and at your own pace. You don’t have to attend a single class or seminar.

Zacks Method for Trading covers the investment ideas I just shared and guides you to better trading step by step, plus so much more.

You'll quickly see how to get the most out of the proven system that has more than doubled the market for over three decades. Discover what kind of trader you are, how to find stocks with the highest probability of success, and how to trade them so you can consistently beat the market no matter where stock prices are headed.

You’ll get the formulas behind our top-performing strategies suited for a variety of different trading styles.

The best of these strategies produced gains up to +15.6%, +38.9%, and even +39.7% in 2022 while the S&P 500 lost -18.2%.¹

The course will also help you create and test your own stock-picking strategies.

Today is the perfect time to get in. I'm giving participants free hardbound copies of my book, Finding #1 Stocks, a $49.95 value. Its 300 pages unfold virtually every trading secret I’ve learned over the last 25 years to beat the market.

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Find out more about Zacks Method for Trading: Home Study Course >>

Thanks and good trading,


Zacks Executive VP Kevin Matras is responsible for all of our trading and investing services. He developed many of our most powerful market-beating strategies and directs the Zacks Method for Trading: Home Study Course.

¹ The results listed above are not (or may not be) representative of the performance of all strategies developed by Zacks Investment Research.


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