Building a Winning Portfolio for 2014

Building a Winning Portfolio for 2014

By: Sheraz Mian

December 28, 2013

Stocks have done exceptionally well this year, with total returns for the S&P 500 index close to +30%. But many investors didn’t enjoy
such strong returns in their own portfolios.

Why is that?

The simple answer is that they were in the wrong stocks because most investors typically invest without a clear roadmap. The rising tide of a broad rally, like the one we experienced in 2013, will produce plenty of green arrows in most portfolios. But that is not enough to come out ahead of the market, which should be the goal of every investor.

Navigating an uncertain investment environment without a clear plan of action is doomed to fail. And unfortunately 2014 is shaping up as one of those uncertain years. Thus now is exactly the time to make those decisions to put your portfolio on a sound footing for the year ahead. I hope the ideas in the this article help you do just that.

This May Not Be For You

If you are someone who has a consistent stock selection system that helped you come ahead of the market in 2013, then you probably don ‘t need our advice. Feel free to stop reading at this stage.

With the rest of you, I would like to share the investment process that we rely on here at Zacks, which makes use of 6 different factors to build a winning portfolio. Each one of these factors individually will help you pick good stocks. But putting all of them together gives you a significant edge over others in stock market investing.

This process lies at the heart of our Zacks’ Top 10 Stocks for 2014 service, which is about to be made available. This stock-selection process is called the Zacks Method for Investing.

A random selection of good stocks, without an overarching outlook for the market, will not give you the desired results. The portfolio is essentially the execution of your outlook for the market. For the Top 10 Stocks for 2014, we started with the market outlook that I shared with you two weeks back and then used these factors to build the portfolio.

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