Zacks Reveals Most Powerful Force Impacting Stock Prices

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Jan 28, 2011, 09:00 ET

CHICAGO, Jan. 28, 2011 /PRNewswire/ -- Steve Reitmeister, Executive VP of Zacks Investment, has a top down investment approach with a focus on value and upward earnings estimate revisions. And there is nothing he enjoys more than sharing insights with fellow investors.

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He wasn't always a good investor.

Over the past 30 years he made just about every mistake imaginable. He jumped in at the peak, jumped out too late, bought falling knives, doubled down on losers, you name it, he probably did it.

By the time he joined up with Zacks Investment Research in August 1999, he had eradicated most of those bad habits. But as Len Zacks and his brother Ben, the founders of Zacks Investment Research, pointed out to him…he had a lot to learn.

What they taught him was that, indeed, earnings estimate revisions (EER) are the most powerful force impacting stock prices. And nothing captures that power more than the Zacks Rank rating system as proven by its +28% per year annual return.

The timing of this profound investment message could not have been better for him. As the stock market bubble popped in 2000 he started to apply this new investing approach. So even though the market tumbled that year he actually gained +16% in his personal account.

Each year since Steve's knowledge and passion for this approach has grown. And there is nothing he liked more than to share the wisdom of this investing strategy with others. His goal today is to spread some of that wisdom on to you so you can also enjoy great investment success in the years to come. He does that by listing…

The 3 Top Reasons to Love Earnings Estimate Revisions

1)	The Most Fundamentally Sound Metric: There are so many different websites, magazines, books, TV stations etc. dedicated to investments. The amount of information overload is so unbearable that most investors walk away horribly confused about what is truly important to achieve success. So Steve simplifies the matter for you so you can push away all that noise and nonsense in the future:

	*At the end of the day, all stock price movements can be traced back to earnings.*

	The reason for this is that when you buy shares in a company, you are actually buying a percentage ownership stake in that firm. And if you are the owner of a company, big or small, then the single most important metric to gauge success is how much earnings are generated.

	If profits go higher than expected, the share price will rise. Conversely if profits go lower than expected, the share price will come down as well. The stock market has always worked on this premise and it always will. And nothing captures the essence of this notion more than earnings estimate revisions.

2)	Applies to Every Type of Investor: Because all stock price movements can be traced back to earnings, it follows that earnings should be at the heart of every investment decision. But that is not the same as saying that earnings are the ONLY thing to consider when selecting a stock. That is just the starting point. From there, each investor can layer on other concepts such as value, growth, charts etc. to find the stocks that fit their unique approach.

	His favorite analogy for this is to say that earnings are to stock investing as flour is to baking. That's because nearly 100% of baked goods include flour in the recipe. What makes each item unique and delicious is what you add into it (sugar, flavorings, nuts, fruit, butter etc). Each way works out well, but each starts with flour to make it all come together. So you can apply other factors on top of earning and estimates to make it suit your unique investment tastes as well.

3)	It WORKS!: When you put the philosophy and analogies aside, earnings estimate revisions simply work. This is clearly proven by the market-crushing +28% average annual returns of the Zacks Rank since 1988. Through up and down markets it has provided extraordinary, life-changing results for investors. Steve can certainly testify that was true for him. So he knows it can do the same for you too.

What to Do Next?

Over the years, millions of investors have come to Zacks.com and discovered the power of earnings estimate revisions. Most have tried to use the information for free on the Zacks.com site or others like Yahoo Finance.

But there's a more effective way to take advantage of the Zacks Rank. Zacks.com has set up several private trading services that provide a handful of stocks to serve a variety of investment styles. For example, Momentum Trader, Chart Patterns Trader, Turnaround Trader, Small Caps Trader, Options Trader, Whisper Trader, and more.

Which of them fits you best? This week we are re-opening a unique program to help you find out. It's dubbed "The Great Zacks Stock Revelation" and you can enter it until Sunday, January 30. Then, for 30 days, you'll receive all the picks from all our trading services.

Here's the most exciting part: These are the best stocks from our most restricted trading services. During 2010 alone, they amazingly turned up 84 double-digit gainers. There's a bold and highly unusual guarantee, and you're not obligated to get aboard any of the strategies.

If you don't currently share Steve's beliefs in earnings estimate revisions, you may be convinced within the next 30 days.

Get details about this pilot program now.

About Steve Reitmeister and Zacks Investment Research

Steve is the Executive VP in charge of Zacks.com and all of its subscription services. His personal mission is to help investors achieve life changing investment success by harnessing the power of earnings estimate revisions. Over the years, he has developed a full array of services to help investors do just that. Discover all of these services now to find the ones that perfectly fit your investment style. Learn more about Zacks Ultimate Trader

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Len Zacks. The company continually processes stock reports issued by 3,000 analysts from 150 brokerage firms. It monitors more than 200,000 earnings estimates, looking for changes. Then, when changes are discovered, they're applied to help assign more than 4,400 stocks into five Zacks Rank categories: #1 Strong Buy, #2 Buy, #3 Hold, #4 Sell, and #5 Strong Sell. This proprietary stock-picking system continues to outperform the market by a nearly 3-to-1 margin.

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Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.