Zacks highlights commentary from People and Picks Member
«JohntheWizard».
For more Voice of the People, visit
http://at.zacks.com/?id=7872
Featured Post
Zacks Method for Trading more than levels the playing
field with professional investors?
As stated before, the back test is the best Indicator I
have for any Investment Strategy.
Zacks #1 Rank "Strong Buy" picks are companies with earnings
estimates that have jumped the most. These stocks have beaten the
S&P 500 nearly three times over with an average yearly gain of
+28%. If you applied The Method back in 1988, you could have
exploded a $10,000 investment into over $3 million with monthly
rebalancing equally weighted portfolios of roughly 220 stocks.
So the add runs."Equally weighting of roughly 220 stocks" is my
addition.
Exploding $10k into $3 million over 23 years implies a
compounding yearly gain of 28.14%!
Does it really work like that?
What apparently worked beautifully until December 1999
started to lessen until the onset of the credit crisis and is a
losing game already for more than four years.
When you back test these monthly changing portfolios of 220
stocks
over the past 12 years
using Research Wizard, and apply the rules of this game (Market cap
> $100 Million and Share Price >$1.5)
gives you 13.2%/year with a maximum risk of -57%. The first
half of these past 23 years this strategy must have
worked a lot better than the second part.
Since October 2007, the beginning of the credit crisis, these
monthly ZR#1 portfolios even underperformed the S&P500 Index by
-5%. Since October 2007, you would have lost -17.5% or yearly
compounded a loss of -4.5%.
In addition, comparing equally weighted portfolios where the
smaller stocks tend to dominate the results with market cap
weighted portfolios (S&P500) where the larger stocks tend to
dominate the results is like comparing apples with oranges. Large
investors need large stocks for their large sums of money.
Small investors can get away with smaller stocks with often
smaller daily dollar volumes. If you would have consistently
invested in the 40 smallest caps of ZR#1ranked stocks, you would
have made 10% since October 2007. I believe that is
one of the best back tested result
you could have gotten during these past 4 years using the
Zacks Method for small Investors and allowing for daily dollar
volumes in excess of $450,000. Real life involves slippages,
transaction costs and usually doesn't allow for compounding the
results as the stocks are too small for that.
As stated before, the back test is the best Indicator I
have for any Investment Strategy.
The most recent picks by «JohntheWizard» are:
A buy rating on
VistaPrint
(
VPRT
)
a buy rating on
Tractor Supply Co.
(
TSCO
) and
a buy rating on
Regal Entertainment
(
RGC
).
About the Zacks Community
In 2008, Zacks Investment Research launched PeopleAndPicks.com,
a stock-picking website where members of the Zacks community can
test their strategies and share ideas with other members. Each user
is scored on the accuracy of his or her picks, and top users are
rewarded with free products from Zacks. Registration is free. To
learn more about People And Picks, visit
http://at.zacks.com/?id=7870
Follow us on Twitter:
http://www.twitter.com/PeopleAndPicks
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc.,
which was formed in 1978 by Leonard Zacks. As a PhD in mathematics
Len knew he could find patterns in stock market data that would
lead to superior investment results. Amongst his many
accomplishments was the formation of his proprietary stock picking
system; the Zacks Rank, which continues to outperform the market by
nearly a 3:1 margin. The best way to unlock the profitable stock
recommendations and market insights of Zacks Investment Research is
through our free daily email newsletter; Profit from the Pros. In
short, it's your steady flow of Profitable ideas GUARANTEED to be
worth your time! Register for your free subscription to Profit From
the Pros by going to
http://at.zacks.com/?id=7867
.
REGAL ENTMNT GP (
RGC
): Free Stock Analysis Report
TRACTOR SUPPLY (
TSCO
): Free Stock Analysis Report
VISTAPRINT NV (
VPRT
): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research