Read This Before Your Next Trade

[Zacks | Our Research. Your Success.] WeekendWisdom Tactics that Work in Good Markets and Bad [Kevin Matras - Editor] Read This Before Your Next Trade By: Kevin Matras April 23, 2022 --------------------------------------------------------------- Stocks got off to a rough start this year. Quite frankly, it’s still kind of rough out there. But the market continues to trade above their correction lows, even after Friday’s decline. The correction, which came so early in the year, caught many by surprise, especially after such a spectacular finish last year. And the worrisome headlines over inflation and the war on Ukraine only exacerbated the volatility. But pullbacks and corrections are common occurrences in every bull market (pullbacks happen on average of 3-4 times per year, and corrections happen on average of once a year), before surging to new highs. But now that we’ve seemingly gotten this correction out of the way (if not, then close to it), it looks like an ideal time to get ready for the next leg up. With forecasts for another year of robust economic growth, it looks like there's a lot more upside to go. And it's easy to see why. Even with interest rates on the rise (we've essentially started from zero), by year's end, according to the Fed, we'll only be at 1.9%. That's high enough to help combat inflation, but still low enough to continue fostering sustainable growth. When the Fed raises rates again in less than 2 weeks (the expectation is for 50 basis points (possibly 75) on May 4th), investors should cheer the news. Because the biggest threat to the economy right now is runaway inflation. And by tamping that down, it only serves to benefit the economy, not harm it. In fact, Fed Chair Jerome Powell said the economy should "flourish in the face of less accommodative monetary policy." That's because the underlying fundamentals of the economy are strong, incomes are strong, consumer demand is strong, the labor market is strong, and corporate earnings are strong. And that's why stocks look poised to eventually breakout to new highs once again. Of course, dips are never fun when they are happening. But given the above, they offer great buying opportunities at even lower valuations. So, you need to make sure you're taking full advantage of it. And not squandering this opportunity with preventable mistakes. 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 . . . [Saturday Deadline: Claim Your Free Copy of Finding #1 Stocks]( One single idea changed Kevin Matras' life as an investor, enabling him to tap into the greatest force driving stock prices. In Finding $1 Stocks, Kevin reveals his top stock-picking secrets and strategies based on this powerful concept. In 2021 - while the market climbed +28.8% - these strategies actually produced gains up to +48.2%, +67.6%, and even +95.3%.¹ You can take full advantage of them without attending a single class or seminar, in a lot less time than you think. Opportunity ends Saturday, April 23. [Get your free book now »]( 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 that 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 stocks with a Zacks Rank #1 Strong Buy have beaten the market in 28 of the last 34 years, with an average annual return of 25% per year? That's nearly 2.5 x the returns of the S&P with an 82% annual win ratio. And when doing this year after year, that can add up to a lot more than just two and a half 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 to narrow that list down to 5 high probability stocks per week. Over the last 22 years (2000 thru 2021), using a 1-week rebalance, it's produced an average annual return of 51.2%, which is 6.8 x the market. 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 pick stocks with is helping you or hurting you? If not, you should. Beat The Market On Your Next Trade With stocks poised for another historic move, 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 actually produced gains up to +48.2%, +67.6% and even +95.3% in 2021.¹ 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. Please note: Copies of the book are limited and your opportunity to get one free ends midnight Saturday, April 23, 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, [Kevin Matras - signature] Kevin 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. This free resource is being sent by . We look for investment resources and inform you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms of Service". Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research is not a licensed securities dealer, broker or US investment adviser or investment bank. The Zacks #1 Rank Performance covers the period beginning on January 1, 1988 through February 28, 2022. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank #1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit for information about the performance numbers displayed above. 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