How To Double Your Stock Returns In 2021

Stocks have been on a tear. Since the pandemic lows in late March last year, the Dow has surged by more than 71%, the S&P by 75%, the Nasdaq by 102%, and the small-cap Russell 2000 by more than 124%!

It’s been a record-setting move.

But the best part is that it looks like there’s a lot more upside to go.

With Q4 GDP forecast at 7.4%, which, aside from last quarter, would be the highest quarterly growth rate in 20 years, not to mention expectations for all of 2021 to grow at the fastest pace in 38 years, and near zero interest rates for the foreseeable future, stocks look poised to soar.

Then add in FDA approval of two COVID vaccines (Pfizer/BioNTech and Moderna), the UK’s approval of Oxford/AstraZeneca’s vaccine (they also just applied for FDA approval here in the states), and reports that Johnson & Johnson’s vaccine is showing promising results which means they could get approval shortly, we could be in store for an explosive rally, the likes of which we have never seen before as these vaccines mark the beginning of the end of the pandemic.

As an investor, you should be handily beating the market right now. If not, now would be a good time to reflect on what you’re doing right in the market, what you’re doing wrong, and what you'd like to do better.

This includes patting yourself on the back for your successes.

Being honest with yourself for your failures.

And setting big goals for what you'd like to accomplish this year.

Like doubling your investment returns. (That’s right, double!)


Think Big

It takes no more mental energy to work on a big goal than it does to work on a small one.

But the end results can be enormous.

Most people set their sights on small ideas because they don't yet know how they'll achieve them.

But in today's day and age, somebody has likely accomplished the very thing you've set out to do -- and left a roadmap on how to do it.

That goes for the market too.
 

The Smart Money is Getting More Bullish and So Should You

Top analysts are growing more and more bullish.

Firms like Morgan Stanley, JPMorgan Chase, and Goldman Sachs, to name a few, are upping their outlook for the economy and the market.

Morgan Stanley’s Andrew Sheets, after pointing to the economy’s expected V-shaped recovery, said to “keep the faith, trust the recovery.”

And Goldman Sachs’ David Kostin, said he expects the market to reach 4,300 this year (+11.6% from here); and 4,600 by the end of 2022 (that’s another 7.0% on top of that). All in all, that represents a 19.4% increase from where we are today.

And if you get into the right socks and industries, your gains can be far greater than that.

What’s happening now is history in the making.

And if you play it right, it could transform your portfolio.

So don’t squander this opportunity with preventable mistakes.

If you ever wished you would’ve traded the market differently in the past, now is your chance.

And making money in the market is easier than you think. You only need to do a few things right. 


Do What Works 

So how do you fully take advantage of this historic opportunity?

By implementing tried and true methods that work to find the best stocks.

This is part of the roadmap to success.

For example, did you know that stocks with a Zacks Rank #1 Strong Buy have beaten the market in 26 of the last 32 years with an average annual return of 24.7% per year? That's nearly 2.5 x the S&P. But when doing this year after year, that can add up to a lot more than just two and a half times the returns.

And did you also know that stocks in the top 50% of Zacks Ranked Industries outperform those in the bottom 50% by a factor of 2 to 1? There's a reason why they say that half of a stock's price movement can be attributed to the group that it's in. Because it's true!

Those two things will give any investor a huge probability of success and put you well on your way to achieving your goals.

But you’re not there yet, as those two items alone will only narrow down a field of 10,000 stocks to the top 100 or so. Way too many to trade at once.

So the next step is to get that list down to the best 5-10 stocks that you can buy.


Proven Profitable Strategies 

Picking the best stocks is a lot easier when there’s a proven, profitable method to do it.

And by concentrating on what has proven to work in the past, you’ll have a better idea as to what your probability of success will be now and in the future.

For example, if your strategy did nothing but lose money year after year, trade after trade, over and over again, there’s no way you'd want to use that strategy to pick stocks with. Why? Because it's proven to pick bad stocks.

On the other hand, if your strategy did great year after year, trade after trade, over and over again, you'd of course want to use that strategy to pick stocks with. Why? Because it's proven to pick winning stocks.

Of course, this won't preclude you from ever having another losing trade. But if your stock picking strategy picks winners more often than losers, you can feel confident that your next trade will have a high probability of success.

Here are a few of my favorite strategies that have regularly crushed the market year after year.
 

  • New Highs: Studies have shown that stocks making new highs have a tendency of making even higher highs. And this strategy proves it. The alignment of positive price action and strong fundamentals creates all the necessary conditions to see these stocks soar to even greater heights. Over the last 21 years (2000 thru 2020), using a 1-week rebalance, the average annual return has been 45.5% vs. the S&P’s 6.6%, which is nearly 7 x the market.
  • Small-Cap Growth: Small-caps have historically outperformed the market time and time again. Often these are newer companies in the early part of their growth cycle, which is when they grow the fastest. This strategy combines the aggressive growth of small-caps with our special blend of growth and valuation metrics for explosive returns. Over the last 21 years (2000 thru 2020), using a 1-week rebalance, the average annual return has been 51.2%, beating the market by 7.6 x the returns.


Roadmap to Success 

As you can see, there’s a clear roadmap to success to help you achieve your goal of doubling your stock returns – this year, and for years to come.

No need to reinvent the wheel. The path has already been created. Now it’s just about doing it.

And there’s never been a better time, because historic times bring historic opportunity.

So make sure you’re taking full advantage of it. 

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this ...

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