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Bear of the Day: Zacks Investment Research

 

Zacks Investment Research provides stock commentary, ratings and investment ideas mainly to the retail investor base. I would presume that they have a smaller institutional following as well but that the retail focus represents their core offering. Personally I have no need for Zacks as I have a Bloomberg terminal, but even in the absence of that I would stick to Google or Yahoo Finance. I rarely see anything from Zacks of value. In fact I cannot ever recall anything from Zacks that I have ever benefited from. Most of it seems to be targeted at getting you to sign-up to their newsletter franchises to expand their margins.  Their upgrade and downgrade ratings are purely a reflection of earnings outcomes and follow the general trend on Wall St i.e. wait until a company reports earnings, if good and upward revisions to future earnings guidance = Zacks upgrade, poor results and downward revisions to future guidance = Zacks downgrade. If you want to weasel your way out of making a call = Zacks neutral. As you can see you don’t need to pay a subscription for this amazing insight.

Furthermore, Zacks also seem to have an overwhelming number of ratings which are neutral. What does that mean? There are a number of stocks where an investor would want to remain neutral or not to have a position, but Zacks takes that to another level. Just take a look at some of their marketing material. When I clicked Zacks Top 10 stocks for 2011 this is what I got: 

You know the look, it looks like one of those penny stock scams in the way it is structured and presented. It seems unbelievable that the yellow box says:“Most investors are still skeptical about today’s market. But thousands of Zacks members don’t care. They know that often the best market action is not to fight the tide but to exploit it”. This investment thesis is likely to lead to a spectacular tragedy.  

And here we are please “Subscribe to Zacks Top 10 now and get these stock picks immediately”. To reinforce this further in postscript, “P.S. Again, I strongly encourage you to subscribe to this service today.”Avoid Zacks, most of their material is freely available elsewhere.