How to Double Your Stock Returns
The market has been on fire this year with all of the major indexes soaring to new all-time highs, with the Dow up 20.1%, the S&P up 24.5%, and the Nasdaq up 28.7%.
And there’s still 1½ more months to go.
But none of this should come as any surprise.
Given the robust economy, and one of the best jobs markets ever, you can see why this has been a banner year so far.
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.
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.
Continued . . .
Zacks’ Long-Term Stocks with Biggest Upsides
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And the market looks poised for even bigger gains to come.
With a strong economy (this year’s annual GDP is pacing at a stronger rate than the average annual GDP of this entire 10¾ year expansion), historic unemployment (50-year low), consumer confidence near record highs (an important metric given that 70% of our GDP comes from consumer spending), household income at the highest level in 20 years, low interest rates, and corporate earnings that continue to impress, it looks like there’s a lot more upside to go.
Add in the expected signing of the phase 1 trade agreement between the U.S. and China in the next few weeks.
And the anticipated ratification of the USMCA trade deal by year’s end – a deal that’s considered even more important than the China deal, given that we export more than 5 times as much to Canada and Mexico (our two largest trading partners), than to China (our third largest trading partner), and 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?
By focusing in on which stocks should move up the most. And that means sticking with tried and true methods that work to find the best ones.
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.
Stock Picking Secrets of the Pros
One of the best ways to begin picking better stocks and doubling your returns is to see what the pros are doing.
Whether you’re a growth investor or a value investor, prefer fast-paced momentum stocks, or mature dividend-producing income stocks, there are certain rules the experts follow to maximize their gains.
This applies to large-caps and small-caps, biotech and high-tech, ETF’s, stocks under $10, and everything in between.
Regardless of which one fits your personal style of trade, just be sure you’re following proven profitable methods that work, from experts who have demonstrated their ability to beat the market.
The best part about these strategies is that all of the hard work is done for you. There’s no guesswork involved. Just follow the experts 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 -- for the rest of this year, 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.
The Easiest Way to Follow the Pros
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Thanks and good trading,
Kevin Matras serves as Executive Vice President of Zacks.com and is responsible for all of its leading products for individual investors. He invites you to access the Zacks Investor Collection.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.