www.zacks.com/homerun Zacks Investment Research, Inc. 10 S. Riverside Plaza, Suite 1600 Chicago, Illinois 60606
Contents Introduction 2 Section 1: The Mental Aspect 3 Section 2: Getting the Most Out of Home Run Investor 4 Section 3: Follow the Leader 5 Section 4: How to Read Home Run Investor Alerts 6 Section 5: How to Read Home Run Investor Summary 7 Section 6: Virtues of Money Management 8 Section 7: Tying it All Together 9 1
Congratulations on getting started with Home Run Investor. The crack of the bat and seeing the ball sail over the outfield wall is one of most exciting moments in baseball. In the investing world, getting into a stock and seeing it climb from the very moment you put it on is just as exciting and maybe even more so. In addition to Home Runs of course, we also expect to hit plenty of singles and doubles. But they all add up to winning the game, and in this case, beating the market. Since this is a true investment service, we ll have a longer time-horizon. There will undoubtedly be some quick and fantastic gains. But our goal with this service is to find the winners and hold onto them to maximize our returns. We seek smaller-cap aggressive growth companies with Home Run potential. Since each pick is riskier, we will have a portfolio of around 30 stocks at a time to smooth out the risk and allow us to enjoy some big winners without too much downside pain. Our typical holding period will be a year or more, and we will hold stocks from the best sectors and industries. How will we do this? Through our expert use of one of the best tools in the business, the Zacks Rank. This tried and true system has beaten the market year in and year out, with an average annual return of over 25% a year. And we ll be combining that with our marketbeating top-down analysis, along with our proven growth and valuation insights for a winning approach. Congratulations once again. We re glad to have you on our team. Before you begin, please take a moment to read the rest of this guide. The pages that follow should help you get the most out of this service and increase the likelihood of your success. If at any time, you have any questions or comments, please feel free to contact us. Thanks again. And good investing. Sincerely, Brian Bolan Editor, Home Run Investor 2
Section 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. So 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, 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 25% 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 the losing picks in stride. COMPOUND YOUR RETURNS The Home Run Investor uses a system that identifies those stocks that have high growth potential while maintaining attractive valuations. Although the road to huge winners will take time, it is a steady stream of consistent gains that we are hoping to achieve. This is what we call the beauty of compounding and how it works to an investor s advantage. Albert Einstein is said to have called compound interest the eighth wonder of the world and this is a prime example. So don t get discouraged when you are only seeing smaller incremental gains on each respective trade. As time progresses, these steady gains will become our Home Runs. 3
Section 2: Getting the Most Out of Home Run Investor 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 Home Run Investor. 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 Home Run Investor. 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 Summary email will be sent around 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 typically be sent within the first hours of the trading day. Unfortunately, many Internet service providers have software programs that filter out emails you want to receive, like Zacks Home Run Investor Summaries. 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/home Run 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. 4
Section 3: Follow the Leader The process to receive our 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 summary or intra-day signal Read the email to determine appropriate action Place trades through your broker Follow the emails to determine when to sell 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. 5
Section 4: How to Read Home Run Investor Alerts This strategy will often have a trading alert during the trading day. When a Buy, Sell, or Intraday Alert is sent out, you should receive the alert within the first hours of the trading day detailing what stock or stocks are being added or sold and the rationale behind the move. It is important that you act as soon as you can. Here is an example: Signal = The type of alert. It will be a green ball for a buy alert or a red ball for a sell. Company Name = The name of the company that is being added to or sold from the Home Run Investor portfolio. Symbol = Ticker symbol of stock being added to or deleted from the portfolio. Date Added = The date on which the stock was added to the portfolio. The alert will also show the current price at which the stock is trading, as well as the market cap and industry of the recommendation. Home Run Investor Portfolio Commentary = As part of the alert, Brian will explain his rationale for the addition. You will learn his reasoning for adding or selling the stock. Intraday alerts use the average of the price at the time of the alert and the closing price that day. 6
Section 5: How to Read Home Run Investor Summary The Summary provides a wide array of details for Home Run Investor each trading day. This summary may have new signals as well as the current open portfolio with commentary. This is valuable information as 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 uses the average of the price at the open and the closing price on the day the stock is added and deleted. 7
Section 6: 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 Home Run Investor picks. Only allocate that portion of your capital that can be comfortably devoted to speculation. This portfolio will typically hold 25-30 positions. 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. EVER-PRESENT CLICHÉ RINGS TRUE 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 staying in the game and building 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. 8
Section 7: Tying it All Together It is our goal at Zacks to enhance your trading results via the Home Run Investor service. This booklet touches upon the details of the service and provides several useful tips to realize the vast potential that these stocks hold. We feel it is our job to let you know that we are here to help you get the most out of Home Run Investor. Again, let s go over some of the important points made in this booklet. 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. Any 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) Home Run@zacks.com 9