Investing
With Zacks
The Zacks Performance Rank
is based upon a proprietary stock selection model developed by Zacks Investment
Research in 1979. The ranking predicts which stocks will outperform or underperform
the market averages during the next three months. The 1 to 5 ranking (1=Best
Expected Performance and 5=Worst expected Performance) is updated weekly,
and is derived entirely from a multi-factor model which analyzes the momentum
of analysts' estimate revisions.
The Zacks Performance Rank has been used in the stock selection process
at investment management firms with assets under management totaling billions
of dollars since its inception in 1979. The returns based on the Zacks Performance
Rank have been stellar, with the Zacks Rank #1 stocks outperforming the S&P 500
in every year since 1980, with the exception of 1984. During the 17 years, 1980-1996,
the Zacks Rank #1 stocks provided an average annual return of 36.37% vs. 16.59%
for the S&P 500.
At the other end of the scale, the Zacks Rank #5 companies have considerably under-performed
the S&P 500 over the same period, with an average annual return of 2.68%. However,
in 1988, 1991 and 1992, the Rank #5 stocks actually outperformed the S&P 500.
Returns on the Zacks Performance Ranking stock lists are based on equal
weighted position with the portfolio rebalanced monthly. Returns include dividends
and exclude transaction costs. The S&P 500 returns are capitalization weighted
and include dividends.
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