The market was on fire last year with all of the major indexes soaring to new all-time highs, with the Dow up 22.9%, the S&P up 28.9%, and the Nasdaq up 35.2%.
And 2020 is already off to a great start.
But none of this should come as any surprise.
Given the robust economy, unemployment at a 50-year low, household income at a 20-year high, and corporate earnings that continue to impress, it’s easy to see why stocks had a banner year last year.
And why stocks are expected to soar in 2020.
So as an investor, you should be handily beating the market right now. 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 this year.
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.
That goes for the market too.
More . . .
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And the market looks poised for even bigger gains to come.
In spite of last year’s record gains, stocks were held back due to uncertainty over tariffs and the U.S.-China trade deal. Same goes for the USMCA trade deal as well.
But those trade deals have now been finalized with the U.S. and China signing the Phase One deal just last week, and the Senate passing the USMCA deal just a day later.
And those 2 historic trade agreements with our top 3 trading partners are expected to usher in a wave of new growth and prosperity, as pent-up demand is unleashed, and new demand is created.
So it looks like stocks have a lot more upside to go.
Do What Works
So how do you fully take advantage of this historic opportunity?
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 25.1% 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 outperform 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 20 years (2000 thru 2019), using a 1-week rebalance, the average annual return has been 47.8% vs. the S&P’s 6.0%, which is nearly 8 x the market.
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 20 years (2000 thru 2019), using a 1-week rebalance, the average annual return has been 54.1%, which is 9 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 20 years (2000 thru 2019), using a 1-week rebalance, the average annual return has been 54.7%, beating the market by 9.2.x the returns.
The best part about these strategies (aside from the returns) is that all of the testing and hard work has already been done. There’s no guesswork involved. Just point and click and start getting into better stocks on your very next trade.
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 2020, and for years to come.
No need to reinvent the wheel. The path has already been created. Now it’s just about doing it.
And there’s never been a better time.
These are historic times for the economy, and historic times for the market.
And historic times bring historic opportunity.
So make sure you’re taking full advantage of it.
Where to Start
With stocks poised for another banner year this year, there's a simple way to add a big performance advantage for 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 of +118.0%, +175.7%, even +186.7% from 2017 through 2019.
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.
Please note: Copies of the book are limited and your opportunity to get one free ends midnight Saturday, January 25, unless we run out of books first. If you're interested, I encourage you to check this out now.
Find out more about Zacks Home Study Course >>
Thanks and good trading,
Zacks Executive VP Kevin Matras is responsible for all 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.