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It is staring you right in the face. One of the biggest things standing in the way of investment success has nothing to do with smarts, the ability to crunch numbers, processing complex economic data, or any other complicated subjects that might take years of schooling or professional experience to master. The best part is that almost anyone should be able to make the simple changes needed to start making more money in the market nearly overnight. Leave Your Emotions at the Door The last three years, from the initial Covid-19 crash to right now, serve as a perfect example of why investors need to block out the noise and become unemotional money makers. Pandemics, recessions, geopolitical fears, scary headlines, and tons of other forces always play their roles in equity markets on a daily, weekly, monthly, and even yearly basis. But the best investors and money managers know that a few key factors determine stock prices over the long haul, and they take advantage of every chance they get to buy stocks at a discount by ignoring the distractions. Investors who understand the resiliency and health of the U.S. economy and stock market over the long term are unfazed by short-term uncertainties and fears and continually make decisive, repeatable moves that help them become extremely successful. For example, the initial Covid-19 market collapse in 2020 likely led many investors to panic sell at prices that would soon prove to be the lows. Think of all these same investors who then stayed on the sidelines as stocks roared back to set new records by the end of that summer before going on another roughly 15-month run, posting new highs along the way. It is proven that many investors are most excited to buy stocks when they are peaking in the short term. Meanwhile, tons of those same investors are extremely nervous to buy stocks at levels that will—in retrospect—mark the start of the next huge run. Reports also find that missing the market's 10 best days over the past 20 years (which often occur near the worst days) would have cut your returns roughly in half. These simple truths are why investors must avoid making emotional decisions at every turn. Thankfully, it is far easier to become a dispassionate, consistent winner on Wall Street than many might think. Algorithms Over Anger & Enthusiasm Most investors should try to avoid market timing and stay constantly exposed to stocks. The reason is simple enough: even the most elite investors in the world cannot precisely time stocks and the broader market over and over again. Those who are able to time the market with an acceptable, money-making rate of success, year in and year out, in bull and bear markets, utilize nearly everything in their toolboxes apart from emotions. Today, quantitative and computer-driven strategies are often the most important tools for successful investors and funds. These models help crunch the numbers, interpret historical data, and backtest, while blocking out all the constant noise. At the opposite end of the spectrum, many retail investors who attempt to play the market-timing game on their own have been proven to consistently buy at or near the peaks and then sell close to the market's eventual bottom. Behavioral economics is now a field of its own. Experts in the area can provide insights into why humans constantly make choices that negatively impact their own financial well-being. Of course, most people don't need someone with a Ph.D. to tell them we can be our own worst enemies in investing. The goal moving forward isn't to do more of the same while being calm and Zen. Instead, investors looking to achieve more success should emulate quantitative investing strategies that don't have egos or bad days and never get caught up in the heat of the moment. Continued . . . | ||||
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| How Long Should You Stay in the Market? Every investor's goal is somewhat similar: consistently make money over one's lifetime Clearly, there will be lean years and down times because even Wall Street legends go through slumps. And it is hard to consistently pick winners, especially during downturns like we saw throughout much of 2022. Yet even during last year's market drop, many stocks outperformed and shined. There is also little doubt that many investors who were afraid to jump back into the market amid the pandemic boom, having been burned the last time around, eventually bought stocks just as things were getting overheated and the economic picture was starting to change near the end of 2021. Many of these same investors might have finally capitulated and sold again near the end of 2022 or early 2023, which is when the current comeback began. The S&P 500 has climbed roughly 10% in 2023, while the tech-heavy Nasdaq has surged about 21% higher. Both indexes also still trade well below their record highs. With that in mind, be very suspicious of anyone telling you now is exactly the time to sell or buy. What's been proven to be a winning long-term strategy is time in the market, not timing the market. And computers don't need off days or performance bonuses to help boost your returns for decades to come. Confidence in Every Trade Wall Street has long been dominated by computerized and algorithmic trading strategies. Big investment firms and top traders utilize complicated models full of various inputs. They also verify that their strategies work consistently during bull markets and extended downturns. Past performance is no guarantee of future success. But why would anyone want to invest with a fund or stock picking strategy that has already consistently lost investors' money over an extended period? At the same time, it's obvious why traders utilize strategies that have continuously proven their worth by helping make them money throughout the years. Today, the average investor can implement a similar computerized-focused, backtested playbook to win like the Wall Street superstars. There are, of course, no sure things. And even the best investors and the top-ranked algorithmic models 'only' have win ratios of 60%, 70%, or even 80%. Despite that, Wall Street titans who utilize algorithmic-style strategies remain confident when executing the next trade, and so can you. Where to Begin? Starting today you can apply our ready-made, proven approach that incorporates the best Zacks Rank stocks, the top Zacks Ranked Industries, and a special combination of various Growth, Value, and Momentum style inputs that have shown extreme profit potential. We call this secret formulation the Zacks Black Box Trader. Recently, it closed gains of +42.9%, +20.1% and +21.3% in as little as a week.¹ Let me assure you that there's not a trace of human bias in this computer driven and operated strategy. Just a straightforward, quantitative model that has beaten the market. Black Box applies the best time-tested analysis to every stock that comes through. And it automatically does this each and every time so you don't have to. Every week, you'll be signaled which stocks to buy (and which to sell) with the highest probability of success. Remarkably, whether you're a seasoned trader or brand new to the markets, it only takes a total of 5-10 minutes trading each week to enjoy the gains. Don't miss this chance to get into our latest auto-selected Black Box stocks. They'll be released this coming Tuesday so you can be among the first to see them. Bonus until midnight Sunday, May 28: Look into Black Box Trader now and you may also download our Special Report Bank Failures: How to Protect Yourself & Profit. It gives you a better understanding of the factors behind the so-called "banking crisis" and recommends 8 tickers that could see significant gains in the coming months. Don't delay. Look Inside Zacks' Black Box and Download Our Free Special Report Right Now » Thanks and good trading,
Ben is a Zacks Rank expert, noted for applying the algorithms and strategies that help individual investors achieve success. He manages the market-beating Black Box Trader. | ||||
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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 May 15, 2023. 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 |
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