Zen Ratings: The Key to Stock Picking Success

The most important thing for us to focus on is how the Zen Ratings will be at the heart of our stock picking process for the Zen Investor portfolio going forward. 

The simplest reason why is best summed up in this performance chart:

IT WORKS!

Not just pointing out the best stocks...but also highlighting the worst that could so easily muck up your portfolio.

I don’t want to repeat too much of what was already made available to the WallStreetZen community. So let me repeat those key resources here:

·     Zen Ratings Education Page

·     Zen Ratings Revolution Webinar Replay >

Think of the above as a vital primer to our conversation today. I don’t think you need to look at both if you don’t have time. Just decide if you would prefer to read something or watch a presentation...then click on the right choice.

No doubt at this stage my faith in the Zen Ratings is greater than yours. That’s because I have spent the last 25 years of my career appreciating why quantitative investing leads to superior results.

Those many years of working knowledge in these systems helped me guide the outside data science firm to create the Zen Ratings.

The goal was simple.

Including everything that leads to outperformance

Exclude everything that hurts performance

I know that sounds obvious...but was actually a breath of fresh air to the firm that created the Zen Ratings. That is because most clients come in with a preconceived notion (aka bias) as to what they want in their system.

For some that may be about momentum or technical analysis. For others it may be a focus on value. etc. This myopic view typically curbs the actual results of the system.

But in the case of the Zen Ratings I wanted a well rounded review of the factors that lead to outperformance. Everything from growth to value to sentiment to momentum and more. A real 360 degree review of the merits of the stock.

Gladly the data science firm has 20 years of working knowledge to narrow the field. Meaning that over the years they have tested just about every data point you could think of in the fundamental investing world as we as technical. Literally thousands of individual factors of a stock that can be reviewed to see if telling of future stock performance.

The sad fact is that 95%+ of what they have tested has no benefit in stock picking. Many of them actually leading to poor results.

None of those factors have any part in the Zen Ratings.

This leaves 115 unique factors that each individually point to outperformance. Just having a handful of them in your favor would help you beat the market. So yes, you can appreciate why having 115 of these advantages in your corner leads to such consistent outperformance.

So I believe in quant ratings. And have used them successfully for 25 years. And then built the Zen Ratings to be the best one available to the public.

I think we accomplished that with one final cherry on top. The data science partner has spent the last 2 years working on an AI factor that was first introduced into the model.

I could give you a bunch of industry lingo and jargon to talk up what they did with AI. (And if you are interested you can read about it on the Zen Ratings education page).

Here is what matters. AI is meant to get smarter over time. In this case, to keep finding often obscure relationships that lead to stock price outperformance.

Our model had a little better than 28% return without that singular AI factor. Adding it to the mix propped up performance to +32.52% a year. Most important is that you could see in the most recent years that it was most beneficial with increasing performance.

Again, AI is supposed to get smarter over time. Indeed that is the case here and so proud to make this profitable system available to customers on WallStreetZen and at the very center of what we do with the Zen Investor.

Note that I will continue to apply different tools to help us find the best stocks. That includes the recommendations of Top Wall Street analysts, the 38 Due Diligence checks (formerly known as Zen Score), and the movement of earnings estimates from the Zacks Rank.

However, going forward the Zen Ratings really will be the alpha and omega of how we select stocks. And if the aforementioned performance chart was not enough reason then let me go one further:

I know on the surface this return seems impossible. But remember if you beat the market consistently by 3X per year...then you end up doubling more money 3X more often.

Combine that with 22 years of investing leads to an exponentially better outcome.

Meaning this chart is absolutely mathematically true. Not an overnight miracle. But a life changing result given consistent outperformance over 22 years.

On top of that I know how the performance is calculated at the consulting firm and know that it is accurate. 

On top of that I have used related models to the Zen Ratings in my personal brokerage accounts dating back to 2021 and can tell you that the reality of performance matches what they compute.   

So yes, I have greater faith in the Zen Ratings then you do at the moment. But that faith is built from real life outperformance that I know will impress you as time rolls on.

The key to success at this stage is to have realistic expectations.

This not a silver bullet or box of magic.

There will be days...weeks...months where things don’t go our way. But then comes a big reversion to the mean and it gets back on the right side of the action pulling us ahead.

Plus if the overall market goes down (like a nasty correction) then so too will most every stock go down including ours. Meaning the overall market is the tide that raises and lowers all boats.

Yet as time wears on the Zen Ratings will provide you many more winners than losers and the outperformance will be evident in your real life portfolio.

It is fair to be skeptical at this stage. But you should now have enough curiosity to appreciate it could very much be as good as advertised leading you to invest some part of your portfolio in these ideas.

The size of that investment is up to you. Just be prepared to add more as you start to enjoy superior results to maximize the benefit.

What To Do Next?

Discover the Zen Investor portfolio filled with my top stocks for the year ahead. 

And yes, each pick is harnessing the full power of the Zen Ratings model. 

If you are curious to learn more, and want to see my current top stocks, then please click the link below to get started now. 

Discover the Zen Investor & Top Stocks >

Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)

Editor of the Zen Investor

Want to get in touch? Email us at news@wallstreetzen.com.