This is now the 2nd longest bull market in modern history. That means the easy money has already been made and valuations are near fully engorged. Gladly, there is not much fear of a bear market either.
When you add it all up it says the bull market is still on. Just that the pace of gains for the broader market is slowing down to around 5% per year....10% if we are lucky.
I know that doesn't get your heart racing. But compared to the unspectacular returns for cash and bonds it is a pretty fair shake.
To be clear, these modest gains are the likely outcome if you stick with most mutual funds or index investing. Gladly there are proven strategies that can help you select better stocks and handily beat the market.
Below I share with you the 4 essential ingredients for selecting the best stocks at this time. I truly believe that following these strategies can lead to doubling, even tripling, the average market return.
Ingredient #1: Value
2013 was a gangbuster year for the stock market with 32% gains for the S&P 500. All you had to do is strap yourself to the best growth stocks and the money would just roll in.
That party came to a screeching halt in 2014 as overpriced growth stocks were violently punished. Since then it pays to be much more selective.
The problem is that most investors have a set of historical standards for what they believe equates to a value stock. I am referring to certain measures of PE or Book Value or PEG etc. that typically denote an undervalued security. Unfortunately, 8+ years into a bull market you will discover that most every stock is above those water marks. And that is most certainly true in an investment landscape that has never had bond rates this low making stocks all the more attractive by comparison thus driving up valuations.
Or let me put it another way. Those looking for absolute value based on these historical measures will find no stocks in their basket. So the key is to use relative value measures to squeeze out additional gains. That is where the Zacks Value Score comes into play.
For example, our "A" rated value stocks are in the top 20% in terms of the value criteria that have been proven to lead to outperformance. Combine that with "B" rated stocks and you will be focused on the top 40% of value stocks available. These stocks should make up the bulk of your portfolio. And yes, do strongly consider selling those with D or F ratings for this important criteria as they will prove to be a drag on your portfolio.
More . . .
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Until Sunday: See Steve's Handpicked Stocks
Time is running out to look inside Zacks EVP Steve Reitmeister's personal portfolio and see where his own hard-earned dollars are invested.
With the market at all-time highs and strong economic data coming in from all fronts, now is a particularly exciting time to follow his picks. That's because he is capitalizing on a number of key trends that could beat the broader market by 2X, even 3X over.
Steve's personal portfolio is normally closed to the public, but he's opened access to new investors until Sunday, June 4.
See his trades right now >>
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Ingredient #2: Positive Estimate Revisions
You knew that I was going to say this as it is the power behind the Zacks Rank and its 25% average annual return. Let's speed up the discussion and simply say that positive estimate revisions give you an edge in every market environment. That's because these are the companies with the healthiest growth prospects, which is a beacon signaling investors towards the shares.
Ingredient #3: Increase International Exposure
For most of the past few years it paid to be US centric with one's portfolio. That is because Europe was headed in the wrong direction. Plus, you had storm clouds hanging over China.
Gladly the storm has past and these large economies, as well as Japan and Brazil, are showing clear signs of strength. So it pays to increase international exposure at this time. You can do this by picking some of the best ADRs. Or just focus on US based companies with a large global footprint.
Ingredient #4: Overweight Small Caps
Typically bull markets are times when investors are willing to be more speculative with their stock selection. Amazingly, for the better part of the last few years the script was flipped and conservative large cap stocks are the outperformers as investors avoided risk. Now those ultra-conservative names are played out and small caps should be in a position to take the lead.
Yes, these smaller stocks are generally riskier, but if you also consider the points above about value, positive estimate revisions and more international exposure, you will put the odds squarely in your favor. Also you should consider having more stocks in your portfolio, each with a smaller allocation. This form of diversification also helps mitigate risk so you can enjoy greater rewards.
Where to Find the Best Stocks Now?
The above ingredients will get you on the right track. However, in a world with over 10,000 stocks to choose from, far too many will seem to fit the bill.
That may be fine if you are a professional investor with 60-80 hours per week to focus on researching the full list. For the rest of you, it's usually better to consider a hand-selected group of these stocks that you can more easily put into your portfolio.
I spend a lot of time buried in research, searching for overlooked profit opportunities. Right now, I'm banking on a series of trades to double or even triple today's market.
These trades are so attractive that I've invested my own family's money into them. Today you have the chance to see them inside my personal portfolio, the Reitmeister Trading Alert.
This portfolio service is normally closed to new members. I've temporarily reopened access to help my readers make the most of this historic bull market. But if too many investors see these recommendations, members may not get the full benefit. That's why I will close the doors once again on Sunday, June 4 at midnight.
If you want to check it out, please be sure to click this link right away.
Look inside the Reitmeister Trading Alert >>
Best,
Steve
Steve Reitmeister has been with Zacks since 1999 and currently serves as the Executive Vice President in charge of Zacks.com and all of its portfolio services and research tools for individual investors. He is also the Editor of his Reitmeister Trading Alert.
Image: Bigstock
4 Ingredients for Beating THIS Market
This is now the 2nd longest bull market in modern history. That means the easy money has already been made and valuations are near fully engorged. Gladly, there is not much fear of a bear market either.
When you add it all up it says the bull market is still on. Just that the pace of gains for the broader market is slowing down to around 5% per year....10% if we are lucky.
I know that doesn't get your heart racing. But compared to the unspectacular returns for cash and bonds it is a pretty fair shake.
To be clear, these modest gains are the likely outcome if you stick with most mutual funds or index investing. Gladly there are proven strategies that can help you select better stocks and handily beat the market.
Below I share with you the 4 essential ingredients for selecting the best stocks at this time. I truly believe that following these strategies can lead to doubling, even tripling, the average market return.
Ingredient #1: Value
2013 was a gangbuster year for the stock market with 32% gains for the S&P 500. All you had to do is strap yourself to the best growth stocks and the money would just roll in.
That party came to a screeching halt in 2014 as overpriced growth stocks were violently punished. Since then it pays to be much more selective.
The problem is that most investors have a set of historical standards for what they believe equates to a value stock. I am referring to certain measures of PE or Book Value or PEG etc. that typically denote an undervalued security. Unfortunately, 8+ years into a bull market you will discover that most every stock is above those water marks. And that is most certainly true in an investment landscape that has never had bond rates this low making stocks all the more attractive by comparison thus driving up valuations.
Or let me put it another way. Those looking for absolute value based on these historical measures will find no stocks in their basket. So the key is to use relative value measures to squeeze out additional gains. That is where the Zacks Value Score comes into play.
For example, our "A" rated value stocks are in the top 20% in terms of the value criteria that have been proven to lead to outperformance. Combine that with "B" rated stocks and you will be focused on the top 40% of value stocks available. These stocks should make up the bulk of your portfolio. And yes, do strongly consider selling those with D or F ratings for this important criteria as they will prove to be a drag on your portfolio.
More . . .
------------------------------------------------------------------------------------------------------
Until Sunday: See Steve's Handpicked Stocks
Time is running out to look inside Zacks EVP Steve Reitmeister's personal portfolio and see where his own hard-earned dollars are invested.
With the market at all-time highs and strong economic data coming in from all fronts, now is a particularly exciting time to follow his picks. That's because he is capitalizing on a number of key trends that could beat the broader market by 2X, even 3X over.
Steve's personal portfolio is normally closed to the public, but he's opened access to new investors until Sunday, June 4.
See his trades right now >>
------------------------------------------------------------------------------------------------------
Ingredient #2: Positive Estimate Revisions
You knew that I was going to say this as it is the power behind the Zacks Rank and its 25% average annual return. Let's speed up the discussion and simply say that positive estimate revisions give you an edge in every market environment. That's because these are the companies with the healthiest growth prospects, which is a beacon signaling investors towards the shares.
Ingredient #3: Increase International Exposure
For most of the past few years it paid to be US centric with one's portfolio. That is because Europe was headed in the wrong direction. Plus, you had storm clouds hanging over China.
Gladly the storm has past and these large economies, as well as Japan and Brazil, are showing clear signs of strength. So it pays to increase international exposure at this time. You can do this by picking some of the best ADRs. Or just focus on US based companies with a large global footprint.
Ingredient #4: Overweight Small Caps
Typically bull markets are times when investors are willing to be more speculative with their stock selection. Amazingly, for the better part of the last few years the script was flipped and conservative large cap stocks are the outperformers as investors avoided risk. Now those ultra-conservative names are played out and small caps should be in a position to take the lead.
Yes, these smaller stocks are generally riskier, but if you also consider the points above about value, positive estimate revisions and more international exposure, you will put the odds squarely in your favor. Also you should consider having more stocks in your portfolio, each with a smaller allocation. This form of diversification also helps mitigate risk so you can enjoy greater rewards.
Where to Find the Best Stocks Now?
The above ingredients will get you on the right track. However, in a world with over 10,000 stocks to choose from, far too many will seem to fit the bill.
That may be fine if you are a professional investor with 60-80 hours per week to focus on researching the full list. For the rest of you, it's usually better to consider a hand-selected group of these stocks that you can more easily put into your portfolio.
I spend a lot of time buried in research, searching for overlooked profit opportunities. Right now, I'm banking on a series of trades to double or even triple today's market.
These trades are so attractive that I've invested my own family's money into them. Today you have the chance to see them inside my personal portfolio, the Reitmeister Trading Alert.
This portfolio service is normally closed to new members. I've temporarily reopened access to help my readers make the most of this historic bull market. But if too many investors see these recommendations, members may not get the full benefit. That's why I will close the doors once again on Sunday, June 4 at midnight.
If you want to check it out, please be sure to click this link right away.
Look inside the Reitmeister Trading Alert >>
Best,
Steve
Steve Reitmeister has been with Zacks since 1999 and currently serves as the Executive Vice President in charge of Zacks.com and all of its portfolio services and research tools for individual investors. He is also the Editor of his Reitmeister Trading Alert.