In today’s modern world of investing, it’s nearly impossible to ignore the debate between active and passive investment management. And while the trend towards passive investing has gained significant traction in recent years, it’s important to note that there are alternative options for investors who are looking to actively manage their portfolios. One such option is Zacks Investment Research, a financial research firm that provides a range of services to individual and institutional investors. In this review we will highlight the ideologies of each side, and detail how Zacks Investment Research has helped individual stock pickers win.
What is Passive Investing?
Over the past decade, there has been a significant shift towards passive investing, which refers to investment strategies that seek to track the performance of a particular market index or benchmark, rather than actively selecting individual stocks or other assets for a portfolio.
One of the main drivers of this shift has been the rise of low-cost index funds and exchange-traded funds (ETFs), which allow investors to easily diversify their portfolios and achieve broad market exposure at a relatively low cost. These products have become increasingly popular as investors have become more aware of the high fees and underperformance of many actively managed funds.
Another factor contributing to the shift towards passive investing has been the growing body of evidence indicating that it can be difficult for active managers to consistently outperform the market. Many studies have shown that a large percentage of active fund managers fail to outperform their benchmark indices over the long term, even after accounting for fees. This has led some investors to conclude that it is more cost-effective and efficient to simply track the market rather than trying to beat it.
What is Zacks Investment Research?
While the trend towards passive investing has gained significant traction in recent years, it’s important to note that there are alternative options for investors who are looking to actively manage their portfolios. One such option is Zacks Investment Research.
Unlike many passive investment products, which seek to track the performance of a particular market index or benchmark, Zacks offers in-depth analysis and recommendations on individual stocks and other assets.
Zacks Investment Research was founded in 1978 by Len Zacks, an MIT-educated economist. The company was initially started as a small research firm that focused on providing independent, unbiased analysis and recommendations to individual investors.
Who is Len Zacks?
Len Zacks had a background in finance and economics, and was particularly interested in the role that earnings estimates played in the stock market. He developed a proprietary system for predicting stock prices based on earnings estimate revisions, which he believed to be the “most powerful force affecting stock prices.” This system became the foundation of the Zacks Rank stock-picking system, which is still used by the company today.
In the early days of the company, Zacks produced a newsletter that was mailed to subscribers and featured stock recommendations and market analysis. Over time, the company has grown and expanded its offerings to include a wide range of research products and services, as well as a suite of tools for investors.
Today, Zacks is a well-respected and established player in the financial research industry, with a long history of providing high-quality analysis and recommendations to its clients. It has expanded its research offerings to also cover mutual funds and exchange-traded funds (ETFs).
How has Zacks Rank Performed?
When you start to dive into the numbers, it becomes quite evident why Zacks Investment Research has stood the testament of time. Zacks is not shy about sharing the results of their well known “Zacks Rank” list.
Zacks Investment Research’s proprietary stock rating system, known as the Zacks Rank, has outperformed the S&P 500 index over the past 30 years. According to the company, stocks rated as Strong Buys by the Zacks Rank system have achieved an average return of 24.5% from 1988 through September 12, 2022, compared to an average return of 10.6% for the S&P 500.
This suggests that the Zacks Rank system has consistently identified high-performing stocks that have outperformed the broader market, and not by a small margin. However, it’s important to note that higher returns also often come with a greater degree of risk, and investors should consider this when making investment decisions.
In addition to stock ratings, Zacks also offers a range of other research products and services. These include in-depth reports on individual companies, industry analyses, and market commentary. The company also offers a suite of tools for investors, including a stock screener, portfolio tracker, and alerts for key events and earnings releases.
One of the major benefits of using Zacks Investment Research is the sheer amount of content available. The company produces a large volume of research and analysis on a daily basis, covering a wide range of sectors and industries. This makes it a valuable resource for investors looking to stay up-to-date on the latest market trends and news.
The company offers a range of subscription options, including Zacks Premium, Zacks Investor Collection, Zacks Ultimate, and Zacks Advantage, that provide access to different sets of investment reports and tools to meet the needs of almost all investors. And with its impressive performance of beating the market consistently over a 30 year time period, one could argue that Zacks Investment Research is an investment in itself. Click here and start leveraging the expertise of Zacks Investment Research today!
If you’re interested in other tools to assist in your investing journey be sure to check out the following: The Motley Fool, Seeking Alpha, and Morningstar (fundamental analysis focus).