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Stocks have been struggling lately, with the S&P 500 index losing over a fifth of its value and the Tech-heavy Nasdaq Composite down more than a third in 2022. But many investors actually did worse in their own portfolios. Why is that? The simple answer is that they were in the wrong stocks because most investors typically invest without a clear roadmap. The rising tide of a broad rally will produce plenty of green arrows in most portfolios. But most investors fail to come out ahead of the market even in such favorable conditions, as challenges become magnified during periods of uncertainty like those we have been dealing with lately. The goal of every investor should be to do better than the market. As we look ahead to the investment environment in the New Year, we can reasonably expect many of the outgoing year's successful strategies to still remain valid, at least through the first few months. But we will need to be flexible and agile as the New Year will also bring its share of challenges that will require a different approach. Thus, now is exactly the time to make those decisions to put your portfolio on a sound footing for the year ahead. I hope the ideas in this note will help you do just that. This May Not Be For You If you are someone who has a consistent stock-selection system that helped you come out ahead of the market in 2022 and preceding years, then you probably don't need our advice. Feel free to stop reading at this stage. For the rest of you, I would like to share the investment process that we rely on here at Zacks, which makes use of 5 different factors to build a winning portfolio. Each one of these factors individually will help you pick good stocks. But putting all of them together gives you a significant edge over others in stock market investing. This process lies at the heart of our Zacks Top 10 Stocks which continues to produce consistently strong returns year after year. The portfolio beat the market by more than 2 percentage points in 2022, the third year in a row of the Top 10 portfolio outperforming the S&P 500 index.¹ Since its inception in 2012, the portfolio has maintained an annual average return of +21.5%, handily outperforming the S&P 500 index's +12.1% return over that time period. And now, Zacks Top 10 Stocks for 2023 is about to be made available. A random selection of good stocks, without an overarching outlook for the market, will not give you the desired results. The portfolio is essentially the execution of your outlook for the market. With Top 10 Stocks for 2023, we started with the market outlook and then used these factors to build the portfolio. More . . . | ||||||||
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| The 5 Elements of the Zacks Method for Investing 1) Valuation - There is plenty of empirical evidence showing that stocks with low valuations will outperform the market over the long haul. As simple as it sounds, it is never easy to find objectively 'cheap' stocks even after the type of market we have recently witnessed. We look for companies that are trading at reasonable Price-to-Earnings [P/E] and Price-to-Book [P/B] multiples relative to their peers and their own history. We say 'reasonable' instead of 'low' because many 'low' multiples are simply 'value traps' and the analysis has to be done in the context of prevailing and expected interest rates. 2) Management Effectiveness - It is very important to get a sense for how effective the company's management is in utilizing the resources available to them. This can be done a number of different ways, but our research shows that Return on Equity [ROE] does a good job of capturing this attribute. So we seek out companies generating ROEs that are superior to their industry peers. 3) Recent Analyst Upgrades - Our research also clearly shows that stocks that have recently received a recommendation upgrade from brokerage analysts will continue to outpace the market. Most of that benefit is felt in the short run. However, quite often a stock that receives one upgrade is likely to get more in the future, which keeps pushing the stock higher. 4) Best Industries - Even the best-looking stock will underperform the market if it's in an out-of-favor industry. That is why we overweigh stocks from the best industries and sectors. And there is no better guide to choosing the right groups than the Zacks Industry Rank, which focuses on the earnings estimate revisions for all the stocks in the industry. 5) Timeliness - There is no better timeliness indicator than the Zacks Rank, which has produced annual returns of +24.48% since 1988 for Zacks Rank #1 (Strong Buy) stocks. We look for stocks with a Zacks Rank of 1 and 2, but will consider Zacks Rank #3 stocks if they show the potential for upgrade. These signals tell us that now is a good time to get into the stock. Zacks has long been known for harnessing the power of earnings estimate revisions to foretell stock prices. No surprise then that the last two factors make use of this powerful driver. Where to Find This Lucrative Information? The first three of these elements are free and widely available from Zacks.com and other investment websites. If you just concentrated on these elements, you would be much better off than you are now. The last two elements are proprietary to Zacks Investment Research and only available through our premium subscription services. Adding these two elements to the free ones above will put an almost unfair advantage in your hands. The best way to tap into all 5 elements right now is through our diverse, long-term portfolio, Zacks Top 10 Stocks for 2023. I hand-selected these stocks to outperform the market and produce strong returns in good times and bad. Since 2012 when I started managing this service, the Top 10 portfolios tripled the S&P 500. While the market gained +270.2%, Zacks Top 10 Stocks skyrocketed +835.6%.¹ Here's a quick preview of three of the new picks I've lined up:
Overall, the portfolio is diversified with 7 more stocks from a variety of industries. You're invited to be among the first investors to see Zacks Top 10 Stocks for 2023 when the portfolio is released at 11:00 a.m. ET on Tuesday, January 3. And please remember, the best way to tap into this long-term investing opportunity is to get in on the ground floor. These picks are time sensitive and the sooner you invest, the more you figure to gain. The New Year brings a host of challenges and opportunities for the investing public. But rest assured that the stocks we have picked for 2023 fully take into account what lies ahead. Get access to Zacks Top 10 Stocks for 2023 now » Happy Investing,
Sheraz Mian is the Director of Research. He determines which valuable data to use in finding winning stocks and funds. He is a contributor for Zacks Equity Research and Earnings Analysis, and is also the Editor of Zacks Top 10 Stocks. | ||||||||
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| ¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. This free resource is being sent by Zacks.com. 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". https://www.zacks.com/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 December 5, 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 https://www.zacks.com/performance_disclosure for information about the performance numbers displayed above. Zacks Emails Zacks Investment Research |
2022年12月31日星期六
Building a Successful Portfolio for 2023
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