We're now more than halfway through the year so far. And it's a good time to reflect on what you're doing right in the market, what you're doing wrong, and what you'd like to do better for the rest of the year.
This includes patting yourself on the back for your successes.
Being honest with yourself for your failures.
And setting big goals for what you'd like to accomplish.
Like doubling your investment returns. (That's right, double!)
It takes no more mental energy to work on a big goal than it does to work on a small one.
But the end results can be enormous.
Most people set their sights on small ideas because they don't yet know how they'll achieve them.
But in today's day and age, somebody has likely accomplished the very thing you've set out to do -- and left a roadmap on how to do it.
And for those who may think the market has already made its move and it's too late, think again.
More . . .
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The market has been trading within a perfectly defined uptrend since Q1 of 2009, and has now formed an unmistakable uptrend channel (see chart below). The uptrend line continues to form the backbone of this bull market. And the top line of the channel gives us a clear indication of where the market is headed.
As you can see, the charts are projecting a price target of 2,600 by the end of the year, which represents a more than 5% move from where we are today, and a 16% gain for 2017.
And with the bullish backdrop in place, that means significantly larger upside potential in individual stocks where you could see gains of 25%, 50%, even 100% or more, if you know where to look.
Do What Works
So which stocks should move the most? Stick with tried and true methods that work to find the best ones.
This is part of the roadmap to success.
For example, did you know that stocks with a Zacks Rank #1 Strong Buy have beaten the market in 24 of the last 29 years with an average annual return of more than 25%? That's nearly three times the S&P. But when doing this year after year, that can add up to a lot more than just three times the returns.
And did you also know that stocks in the top 50% of Zacks Ranked Industries outperforms those in the bottom 50% by a factor of 2 to 1? There's a reason why they say that half of a stock's price movement can be attributed to the group that it's in. Because it's true!
Those two things will give any investor a huge probability of success and put you well on your way to achieving your goals.
But you're not there yet, as those two items alone will only narrow down a field of 10,000 stocks to the top 100 or so. Way too many to trade at once.
So the next step is to get that list down to the best 5-10 stocks that you can buy.
Proven Profitable Strategies
Picking the best stocks is a lot easier when there's a proven, profitable method to do it.
And by concentrating on what has proven to work in the past, you'll have a better idea as to what your probability of success will be now and in the future.
For example, if your strategy did nothing but lose money year after year, trade after trade, over and over again, there's no way you'd want to use that strategy to pick stocks with. Why? Because it's proven to pick bad stocks.
On the other hand, if your strategy did great year after year, trade after trade, over and over again, you'd of course want to use that strategy to pick stocks with. Why? Because it's proven to pick winning stocks.
Of course, this won't preclude you from ever having another losing trade. On the contrary, even the best strategies 'only' have win ratios of 60%, 70%, or even 80% -- not 100%. But if your stock picking strategy picks winners far more often than losers, you can feel confident that your next trade will have a high probability of success.
Here are a few of my favorite strategies that crushed the market last year and are doing the same again this year.
Filtered Zacks Rank 5: This strategy leverages the Zacks Rank #1 Strong Buys, and adds two time-tested filters to narrow the list of stocks down to five high probability picks each week. Over the last 17 years (2000 thru 2016), using a 1-week rebalance, the average annual return has been 55.6% vs. the S&Ps 4.2%. It was up 70.7% in 2016. And so far this year (thru 7/28/17), this strategy is already up 34.1% (nearly 3 x the market).
New Highs: Studies have shown that stocks making new highs have a tendency of making even higher highs. And this strategy proves it. The alignment of positive price action and strong fundamentals creates all the necessary conditions to see these stocks soar to even greater heights. Over the last 17 years (2000 thru 2016), using a 1-week rebalance, the average annual return has been 52.5%. It was up 95.5% in 2016. And so far this year (thru 7/28/17), it's already up 34.4% (nearly 3 x the market's returns).
Small-Cap Growth: Small-caps have historically outperformed the market time and time again. Often these are newer companies in the early part of their growth cycle, which is when they grow the fastest. This strategy combines the aggressive growth of small-caps with our special blend of growth and valuation metrics for explosive returns. Over the last 17 years (2000 thru 2016), using a 1-week rebalance, the average annual return has been 61.0%. After beating the market again in 2016, it's already up this year (thru 7/28/17), a whopping 64.4% (more than 5.5 x the market).
The best part about these strategies (aside from the returns) is that all of the testing has already been done. There's no guesswork involved. Just point and click and get your list of the best stocks for the week.
Roadmap to Success
As you can see, there's a clear roadmap to success to help you achieve your goal of doubling your stock returns for the rest of 2017.
No need to reinvent the wheel. The path has already been created. Now it's just about doing it. And once you decide to do something, it's amazing how often those decisions come true.
And just like anything, it only requires a few simple steps to get the ball rolling.
Where to Start
Yes, you can substantially beat the already-booming market. And there's a very simple way to begin: Try our Research Wizard stock-picking tool for 2 weeks free.
Choose from over 50 built-in, proven, market-multiplying strategies that fit your trading style. Over the past 17 years, the overall performance of our Top 10 strategies has been almost unbelievable. Every single one substantially beat the S&P 500, and as a group their average yearly gain was nearly 10X better.
How have they done lately?
From 2016 through Q2 2017, our strategies have made impressive gains:
• Value Method 1: +182.1%
• New Highs: +156.0%
• Filtered Zacks Rank 5: +121.9%
Here's the best part. You can see the latest stock recommendations from these and other strategies today.
Or, if you're more of a do-it-yourself kind of trader, you can use the Research Wizard to create and test your own stock-picking screens. It's easy to do.
As an extra bonus, you'll also get a free copy of Zacks' Top 10 Strategies revealing the formulas behind stock screens I mentioned above. Seeing what makes these strategies successful can help you create your own winning screens.
Plus, if you start your free trial no later than midnight Sunday, August 6, you can download our Top 5 Valuation Secrets (also free). This Special Report shows how to quickly spot the best stocks for making money.
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Thanks and good trading,
Zacks VP Kevin Matras is our chart patterns and stock screening expert. He also developed many of Zacks' most powerful market-beating strategies that come with the Research Wizard.