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3 Strategies to Profit this Earnings Season - Weekend Wisdom
Strategy 1: Four Leading Indicators of Positive Earnings Surprises I figured its best to get the most obvious strategy out of the way first. The 4 leading indicators I refer to are the 4 factors of the Zacks Rank. Before you skip this section, let me share some information that you may not have known. In the mid-1970s Len Zacks took his mathematical skills to Wall Street where his job was to discover stock picking strategies that would beat the market. He had a simple theory that was the precursor to what became the Zacks Rank. Len focused his research on finding stocks that were more likely to have a positive earnings surprise and jump on the news. The journey led him to what we know as the 4 factors of the Zacks Rank. Each individually increases the odds of owning stocks that will enjoy a positive earnings surprise. However, when you combine them together inside the Zacks Rank, it becomes an almost obscene advantage for investors. More... --------------------------------------------------------------------------------- Earnings "Whisper" Access Closes Saturday Ready to make quick buy/sell moves this earnings season? A Zacks research breakthrough can tip you off to positive earnings surprises BEFORE they're reported - to turn a series of small wins into a season of big gain. Warning: High demand forced us to close this strategy to new investors last earnings season. It's open to you today, but the door must close again to you no later than Saturday, October 13. Get details right now >> ---------------------------------------------------------------------------------
Strategy 2: Stop the Bleeding This second strategy is so simple, yet so hard for most investors to do. So, I'm going to beat it into your head...for your own good of course ;-) Sell All Companies with a Negative Earnings Surprise Yes, sell it immediately. Even after it falls at the open. Even if it is for a substantial loss. Why? Better to take a 5-10% loss in the short run than a 20 to 40% loss in the long run. Keep in mind how earnings estimates are created. Both company executives and brokerage analysts are doing their best to create conservative estimates that the company should easily beat. And when they fall short of those watered down estimates, then it points to one of two serious problems:
- Industry conditions have deteriorated and thus they missed their forecasts. This problem will most likely not correct itself in the near-term, leading to further disappointment.
- Company leaders are incompetent. Meaning that they are no good at estimating their own earnings. Or that their strategies for growth are ineffective.
Strategy 3: Harness Real "Earnings Whispers" Consider the following chain of logic:
- Earnings estimates come from brokerage firm stock analysts.
- These analysts are highly motivated to create conservative estimates that can easily be beat. Why? If they have a Buy rating on a stock, and the estimates are too high, then the stock is more likely to disappoint. This would send the stock price lower and the performance on their stock ratings would be poor (leading to lower compensation).
- The closer to earnings season we get, the more accurate the information the analyst has at their disposal to put into the estimate.
Where to Find These Earnings Whisper Stocks? We can't share all the details of our proprietary whisper formula with you, but our system relies on two under-utilized signals coming from the brokerage analyst community. These two whispers are then layered on top of other time-tested elements such as the Zacks Rank and Zacks Industry Rank to find only the best stocks in the best industries to profit from each earnings season. If you would like to receive our precise whisper trading signals in the future, then we invite you to join one of our most in-demand services, Whisper Trader. But a word of caution. When we re-opened it last July, the response was so overwhelming we had to quickly close it to new investors. It's slated to close again Saturday, October 13. Don't delay. Click the link below: Learn more about the Zacks Whisper Trader Wishing you great financial success, 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 leading products for individual investors. After many long years of research he is extremely proud to share with you our historic earnings prediction breakthrough, the Zacks Whisper Trader.
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