www.zacks.com/Internationaltrader
Guide
Zacks Investment Research, Inc
|
111 North Canal Street, Suite 1101
|
Chicago Illinois 60606
Contents
Introduction2
Section 1: The Mental Aspect3
Section 2: Investment Philosophy & Trade Selection4
Section 3: Getting the Most Out of the International Trader7
Section 4: Follow the Leader8
Section 5: How to Read International Trader Alerts9
Section 6: How to Read International Trader Daily Summary10
Section 7: Virtues of Money Management11
Section 8: Tying it All Together12
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Introduction
Congratulations!
You have now joined the International Trader daily newsletter and trading service.
I’m John Blank, Chief Equity Strategist here at Zacks Investment Research. I’m prepared
to guide you towards the most exciting and overlooked investment opportunities in the
world.
The International Trader is not a get rich quick scheme. Any person promising “overnight
riches” is a charlatan and doesn’t respect the years it took for you to build your nest egg.
Instead, I am going to show you how to prudently apply the power of the Zacks Rank
combined with value investing and a dash of market timing in the non-U.S. space. This
blended approach will help us profit no matter what the market throws our way.
Like most investors, you are probably wary of putting money into foreign enterprises.
Many Americans believe it’s safer to restrict their trades to companies located inside the
borders of the U.S. I understand why you might feel this way. It’s certainly important to be
familiar with the companies, products, services, and concepts you’re investing in. And it’s
smart to avoid countries where the economic and political landscapes are highly unstable.
But it’s also essential to recognize the danger of putting all your investment dollars into a
single country ...even if that country is the United States of America.
Please be sure to read this guide from start to finish. In the pages that follow are important
tips that will help you get the most out of this service. The more you know, the better your
odds of success.
Again, welcome to Zacks International Trader. I look forward to sharing investment
success with you for many years to come.
John J. Blank, Ph.D.
International Trader Editor
Chief Equity Strategist,
Zacks Investment Research, Inc.
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1
The Mental Aspect
It is important to realize how much investment success is related to what goes on between
your ears. There are so many ways to get distracted and to question yourself while trading.
You must be in the right frame of mind and have reasonable expectations to achieve
success with this or any investment service. Be sure to pay attention to the tips in this
section carefully. They will get you headed in the right direction.
NOBODY IS 100% PERFECT
First of all, there will be losing picks. Perhaps 40% or more of the trades will be closed for
a loss. But if we cut them out early to minimize losses and maximize gains on winners,
then we can achieve phenomenal results.
A little known fact is that the Zacks Rank, even with its 26% annual return, is only right
56% of the time. We are extremely confident that over time we will produce substantial
returns, but it is important that you learn to take losing picks in stride.
TIMELINESS INCREASES ROI
Let me ask you a question. Would you rather make +10% or +20% on a trade? Yes it’s a
trick question. The missing piece of the puzzle is how long each trade was held.
Now let’s say that the +10% gain was made in 3 months time, which computes to a +40%
annual return. Whereas the +20% winner took 2 years to achieve and is really only good
for a 10% annual gain.
This example solidifies the power of timely stock trading that we will harness with this
service. Often, we will be holding for 3 to 6 months and look to string together a series
of +10%, +20%+ winners. From time to time, we will let winners run long enough to net
+50% to +100% gains on the trade.
DON’T CHERRY PICK
You should only subscribe to this service if you intend to fully investigate and act upon
these opportunities. The best results from this service can be obtained by following
every recommendation, with properly proportioned amounts invested in each selection.
Picking and choosing among the selections is rarely successful and is a leading cause of
dissatisfaction amongst subscribers.
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2
Investment Philosophy & Trade Selection
The International Trader will follow hand-picked trades by John J. Blank, Ph.D., Chief Equity
Strategist of Zacks Investment Research. The best way to understand his investment
philosophy and trade selection process is to first understand John’s background and
trading influences.
We asked John to share that with you below.
ON TOP OF THE WORLD
Why am I so pleased to introduce our new Zacks International Trader?
Because a non-U.S. investment service is designed to significantly enhance and protect
your portfolio. I will give you everything you need to make that happen.
As Chief Equity Strategist at Zacks, it’s my responsibility to monitor global developments,
and maintain personal connections with many of the world’s most successful investors.
Every working day, I comb through ADR stocks, ETFs, bonds, precious metals, currency
moves, and other opportunities, eliminating most of them. I also stay on top of the motion
and meaning of published indicators. My mission is to find exceptional trades that add
balance and substantial upside to your portfolio mix.
But you won’t receive a barrage of potential investments. The International Trader is
selective. At any time, only about 7 to 10 buys will be on our recommendation board.
And while the opportunities will be time-sensitive, you won’t have to turn into a day trader
to benefit from them. Our typical hold period is 3 to 6 months.
Also, I’ll alert you via email on new trades. You’ll receive plain-spoken daily briefings from
me on our recommendations, and on the major economic and political developments that
may affect them.
REASONS FOR GLOBAL EXPOSURE
VALUATION
As you well know, the U.S. economy has downs as well as ups. Think about the dotcom
and housing busts; plus all of the plain vanilla pullbacks, corrections, and recessions. Yet,
even when the U.S. market turns bearish, there are bull markets somewhere in the world
where you can build substantial wealth.
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That’s a key component to the Asset Allocation Theory of 1990 Nobel Prize winner, Harry
Markowitz. He recommended 30% of an investor’s portfolio be devoted to non-U.S. stocks.
And today is an especially good time to give your portfolio that needed international
diversity.
Here’s why…
U.S. stocks trade at a valuation premium. They’ve gone up much faster than real earnings
growth. Meanwhile, stocks in certain regions are considerably undervalued. In other
words, many international companies are trading at substantial discounts compared to
their U.S. counterparts. In fact, stocks from Europe, which is beginning an economic
recovery, looked to be undervalued by around +20% to +30% in recent times.
This offers significantly greater profit potential for your investments.
STRONG TOP-LINE GROWTH
Another powerful incentive for looking abroad is that we can find strong companies that
are similar to American counterparts and trade on U.S. exchanges.
The singular difference is that they happen to be located in economies booming several
times faster than that of the United States. For example, the economies of Israel, Russia,
Mexico, India, and China can be growing up to three times faster than the United States
domestic real GDP.
In turn, selected ADR stocks from countries like these can significantly boost your profit
potential. Especially when our buys and sells are further enhanced with the timing power
of the Zacks Rank.
In addition to expansion trends, there has been a recent explosion of contrarian and
relative-value opportunities in the world. Currency woes affecting India, Brazil, Indonesia,
and Turkey have brought even more attractive valuations into certain international markets.
So have events like the Syrian crisis.
Yes, there is certainly an abundance of opportunity today.
But you have to know exactly where to look for it. And exactly when to make your moves!
I should add that none of these recommendations are “exotic” or complicated to buy.
Each can be easily traded through any brokerage account. Each also has exceptional
profit potential.
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I AM WHO I AM
I’m a macro economist by trade. My Ph.D. is from M.I.T. I’ve studied, taught, and practiced
global economics for 25 years.
Like most people, I am a product of my environment. My background as a highly trained
MIT economist taught me to be a value investor too. Hanging out with the likes of Paul
Samuelson, Franco Modigliani, Robert Merton, and Bob Shiller will do that to you.
I have also worked under Jeff Sachs, advisor to the United Nations, and Olivier Blanchard,
Chief Economist of the IMF. They have shown me the way on the global economy, policy,
and interconnected financial markets.
Len and Ben Zacks and their team at Zacks, in particular EVP Steve Reitmeister, have
shown me how to be a timely trader by using the Zacks Rank. Add that into the 25 years
of experience in top-down advice giving.
This potent and unique mix has endowed me with the insights needed to understand bull
and bear markets in the non-U.S context.
I promise to give you my best efforts. In fact, you should expect that I have some my own
personal money in some of these picks I share with you. We are in this together. I will be
wrong plenty. But you will never see me run and hide. Instead, we will learn from every
experience and together we will enjoy great success.
Sincerely,
John J. Blank, PhD.
Editor of the International Trader
Chief Equity Strategist, Zacks Investment Research, Inc.
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3
Getting the Most Out of International Trader
It is our job to provide you with timely and profitable stock picks, but there are steps that
you can take to ensure your success with The International Trader Alert. Here are a few
things you can do to get the most out of the product.
1. Read this guide carefully
„„ This guide is your friend. It has valuable information on how to use the product
and succeed with the assistance of International Trader.
„„ It gives you step-by-step instructions on how to receive alerts and what to do
when you receive them.
„„ It has important money management tips.
2. Have a working email address
„„ This is necessary to receive trading alerts. Make sure you can access your
email in a timely fashion because acting on trades is essential to success.
„„ The Daily Summary email will be sent at 8:00 p.m. EST, which summarizes the
positions as well as what happened on Wall Street during that trading day.
„„ Intra-day trading alerts, while rare, will usually be sent out by 12:00 p.m. EST
„„ Unfortunately, many Internet service providers have software programs that
filter out emails you want to receive, like Zacks Profit from the Pros. To get
optimal delivery of our emails follow this link for quick and easy instructions.
3. Have an online trading account
„„ We are not advocating any particular company for this, but ideally lower
commissions will help you achieve a higher overall return. You will make several
trades a month, and high commissions can really eat into your profit margin,
especially if you have limited capital.
4. Access the site
„„ To access the site, go to www.zacks.com/internationaltrader and enter your
username and password. This will take you to the main page where you can
view the portfolio, any pending trades, and the commentary.
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4
Follow the Leader
With International Trader, it is better to follow than to lead. It is recommended that you
follow each and every one of the picks to achieve overall success.
The process to receive trades is very simple, yet we feel it is so important that we are
going to spell it out for you.
Here are the four steps:
„„ Receive the email with the daily summary or intra-day signal.
„„ Read the email to determine appropriate action.
„„ Place trades through your broker with the appropriate % allotted.
„„ Follow the daily summaries to determine when to sell.
Subscribers who realize the highest returns follow the recommendations, and those who
do the worst try and cherry pick which buy signals to act on and which to pass on. Follow
the signals and you’ll maximize your opportunity for success.
ACT PROMPTLY = MOST SUCCESS
And if you don’t beat the market, you can take advantage of our 100% Money Back
Guarantee.
SPEAKING OF THE GUARANTEE..........
We feel that if we are not able to live up to our word and help you beat the market then
we shouldn’t be deemed worthy enough to take your money. So in addition to the 90-day,
no hassle guarantee, there is a 100% Money Back Performance Guarantee. There are
a few conditions that have to be met first, but the bottom line is that we have to perform.
Click here for details.
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5
How to Read International Trader Alerts
From time to time, this strategy will have a trading alert during the trading day. When a
Buy Alert is sent out, you will typically receive the alert before 12:00 p.m. EST detailing
what stock is being added and the rationale behind the move. It is important that you act
as soon as you can and buy the stock yourself.
Here is an example:
Signal = The type of alert. It will be a green ball for a “buy” alert or red for a “sell”.
Company Name = The name of the company that is being added to the International
Trader portfolio.
Symbol = Ticker symbol of stock being added to or deleted from the portfolio.
Date = The date on which the stock was added to the portfolio.
Portfolio Commentary = As part of the alert, John will explain his rationale for the addition
or deletion. You will learn his reasoning for adding the stock and the current price at which
the stock is trading.
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How to Read the International Trader Daily Summary
The Daily Summary provides a wide array of details for the International Trader every
Monday to Friday. This summary has the new signals (if any) as well as the current open
portfolio with daily commentary.
This is valuable information. It conveys what our game plan is, why we are in each stock,
when to get out and why, as well as any relevant news. This is emailed to you around 8:00
p.m. EST.
In regards to the price added for the portfolio, Zacks typically uses the average of the price
at the open and the closing price on the day the stock is added.
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7
Virtues of Money Management
Money management can be the difference between realizing large gains and going broke,
even if the winning percentage is the same. How can this be? The key point is that winning
investors know to ride their winners and cut their losses quickly, and stick with a plan that
has proven to work in the past.
Here are a few rules that you can follow to further improve your returns:
First of all, don’t dump your entire portfolio into these International Trader picks. Only
allocate that portion of your capital that can be comfortably devoted to speculation. While
The International Trader portfolio is among the least speculative of the trading services, it
is still a speculative portfolio. In other words, diversify your portfolio. Do not allocate your
entire portfolio to The International Trader.
This particular portfolio might hold 7 to 10 positions depending on market conditions.
You should be able to sleep soundly and act rationally if you are only trading with your
speculative money.
Keep in mind that reinvesting profits and the power of compounding are your friends
in this portfolio. Those frequent singles add up to be a home-run in the end when the
phenomenon of compound interest works its magic.
EVER-PRESENT CLICHÉ RINGS TRUE
While the International Trader has a longer holding period relative to many trading
services portfolios at Zacks Investment Research, it is still a trading service with many
ideas coming at you per quarter.
It has been said millions of times before, but it is so important it needs to be said again:
Don’t put all your eggs in one basket. Even if you are the most brilliant investor in the
world, there will be losing trades. The key is to stay in the game and build your equity over
time in a systematic way. This can only be done when diversification is put to use.
Not that we have to remind you, but the main point is that your capital was earned through
years and years of hard work. Capital conservation sounds boring, but without it, you are
fighting a losing battle. We don’t want to see the money you have put your blood, sweat,
and tears into evaporate due to lack of discipline.
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Tying it All Together
It is our goal at Zacks to enhance your trading results via The International Trader service.
This booklet touches upon the details of the service and provides several useful tips to
realize the vast potential that The International Trader holds. We feel it is our job to let you
know that we are here to help you get the most out of International Trader Alerts.
Again, let’s go over some of the important points made in this booklet.
„„ Follow Every Single Trade
„„ Small Gains Add Up To Big Results
„„ Not Every Trade Will Be A Winner
„„ Timeliness Is Of The Essence
„„ Money Management Matters Greatly
„„ Have A Working Email Address
„„ We Are Here To Help
The last point is important as we have free customer support that should be taken
advantage of. Additional questions that you may have can be answered by just picking up
the phone and giving us a call or emailing us:
1.888.775.8348 (outside the US, 1.312.265.9309)
internationaltrader@zacks.com
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