The market is off to its best start in over 30 years! And what a start it’s been.
Already, the Dow is up 11.05%, the S&P is up 12.84%, the Russell 2000 Small-Cap Index is up 15.89%, and the Nasdaq is up 16.19%.
While trade tensions with China weighed on stocks last year, growing optimism over trade talks this year continues to fuel the market.
And once a deal finally is done, the very thing that has weighed the market down will be lifted and stocks are expected to soar.
But savvy traders aren’t waiting for the official announcement (if and when it happens), they have been swooping in and picking up stocks at deeply discounted valuations, and prices not seen in many months or even years!
Add in a robust economy and the best jobs market ever, and you can see why 2019 is expected to be a banner year.
And even though the year has just begun, it’s off to an auspicious start.
So as an investor, you should be handily beating the market right now. And planning on crushing it this year. If not, now would be 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.
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 that goes for the market.
Continued . . .
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There’s also a phenomenal set of stats as a backdrop to suggest big gains are indeed on the way.
Since 1946 (over the last 72 years), there have been 18 midterm election cycles -- and in the year after the midterms, the market has been up in every single one of them. EVERY SINGLE ONE! And the average annual return is 17%!
Interestingly, the second year of a presidency is usually the worst. And 2018 was definitely the worst. But the third year of a presidency is usually the best year. And that’s 2019.
With a perfect 100% track record of post-midterm gains, there’s a huge probability for a positive year this year, with expectations running high for something much, much bigger.
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 26 of the last 31 years with an average annual return of 25% per year? That's nearly 2.5 x the S&P. But when doing this year after year, that can add up to a lot more than just two and a half 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. But if your stock picking strategy picks winners 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 have regularly crushed the market year after year.
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 19 years (2000 thru 2018), using a 1-week rebalance, the average annual return has been 48.8% vs. the S&P’s 4.8%, which is 10.2 x the market.
Filtered Zacks Rank5: 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 19 years (2000 thru 2018), using a 1-week rebalance, the average annual return has been 54.3%, which is 11.3 x the market.
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 19 years (2000 thru 2018), using a 1-week rebalance, the average annual return has been 56.2%, beating the market by more than 11.7.x the returns.
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 in 2019.
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
The first move toward big potential gains is the easiest. And it doesn’t cost a cent.
Try our Research Wizard stock-picking tool for the next 2 weeks free.
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Since 2000, the Top 10 strategies inside the Research Wizard have soared past the S&P 500's average of +4.8% per year. These 10 average more than +40% per year.
Recently, during 2017-2018 our top strategies more than doubled the market. One of them compounded to +98.3%.
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Or, if you prefer, you can use the Research Wizard to create and test your own stock-picking screens. It's easy to do. And you can start outperforming the market on your very next trade.
One more thing: If you start your free trial no later than midnight Sunday, March 17, 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 Executive VP Kevin Matras is responsible for all our trading and investing service. He also developed many of Zacks' most powerful market-beating strategies that come with the Research Wizard.