Zacks Research Review



Carrying out research is one of those love it or hate it activities. I have to admit I love carrying out research into potential investment opportunities, trailing through pages and pages of earnings reports looking for that little golden nugget of information is half of the fun of investing for me, the other half being profits gained of course.

But not everyone’s like me. Most people’s research consists of reading the Wall Street Journal or watching CNBC to get earnings reports and market commentary. But is that really the best place? Just think, if you’re reading the paper version of the WSJ, the information you’re getting is already a day old, and that’s a lifetime in terms of trading.

Secondly, they’re not exactly known for being unbiased, do you think they’re going to give an unbiased look at a company that News Corp has a significant investment in? Is there pressure from above to run negative stories on News Corp competitors? All of these are accusations fired at the Wall Street Journal.

So where do you go for unbiased news and research, well if you’re looking for basic market data and news I’d recommend TheStreet, which provides up to date market news and commentary. But if you want someone to do the hard work for you, perhaps offer share tips as well as commentary, Zacks Premium Research is a good start.

Zacks is more than just a research company; most people in the investment community know them for their quantitative and qualitative analysis tools. Many Wall Street Brokers use Zacks Rank and Zacks Equity Research tools to help them find profitable trading opportunities.

So if Wall Street’s using them, should you? Well they’re not for everyone, for a start these tools don’t come cheap, Zacks Premium comes in at $200 for a year. For that you’ll get access to premium stock screeners, a list of Zacks Rank Strong Buys and Zacks Rank Strong Sells as well as fast-breaking buy and sell opportunities as and when they present themselves.

So this is a glorified stock picking system right? Yes, kind of, Zacks use their proprietary system to pick the best performing stocks over a 90 day period. But this isn’t some fly by night special formula that can’t be revealed. Zacks are completely open about how it works and it’s been consistently outperforming the S&P 500 since 1971.

 

 

If you’re interested in using the system I’d advise you to invest a little time in finding out how it works first. Trading blind is never a good idea and what are you going to do if they disappear some day? You should treat all stock tips with the same level of suspicion no matter where they’re from. Would you trust stock tips from someone you just met on the train? No I don’t think so and Zacks is no different. If you’re going to invest that kind of money in a system, take the time to learn how it works and why.

Who Should Use Them?

So you think Zacks might be for you, here are some things you should know before you jump in. First of all they give a lot of buy and sell signals, now that’s fine if you’re a Wall Street trader but most retail traders don’t have the funds to keep a portfolio of over 150 stocks.

Of course you don’t have to trade all the signals right? Well no you don’t, but Zacks results are based on their entire portfolio of recommendations. If you just happen to pick the best performing stocks in the bunch then you’ll not only outperform the S&P 500 but Zacks themselves. But ask yourself this, what are the chances of that happening?

No one is going to pick the top 10 best performing stocks in the list on a consistent basis, not even George Soros. Of course there’ll always be someone who tries, just make sure that someone isn’t you.

If you want to make this system work you have to invest in all the stocks that Zacks recommends. You simply buy when you get a buy signal and sell when you get a sell signal. It theory it’s like having 400 Zacks analysts looking after your portfolio for you. All you have to do is execute the trades.

But like i said this is going to require a sizable investment to make it work. This is not a strategy for anyone with less than $100,000 to invest, especially if you’re trading on margin and remember normal investment rules still apply. So never commit more than 5% of your capital to any one trade and maintain proper money management techniques at all times.

This is not my preferred method of trading, it takes most of the fun out of it for me. But if you really hate carrying out research or you just don’t have the time, Zacks Research Premium is a good choice for those of you with a sizable amount of money to invest.

My advice for anyone wanting to try it, is find out how it works first (very important); all the details are on Zacks website. Once you’re happy, invest in all the recommendations, you have to fully commit to the system for it to work. Don’t try and cherry pick, it’s been tried before and it doesn’t work. Remember this is a long term investment strategy don’t expect amazing returns overnight and finally don’t forget to maintain proper money management techniques at all times.




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