What is Investing Insights?
Investing Insights is a premium service that provides you with actionable insights from thousands of financial experts that cover the US stock market. Find out which stocks Wall Street analysts, insiders, financial bloggers, hedge fund managers and individual investors are recommending. Investing Insights is available only on our website. Canadian and UK stock markets will soon be added.
What is "Smart Score"?
What is a Smart Score?
Smart Score is a powerful system that ranks stocks on a scale of 1-10 based on 6 unique market factors. Smart Score is updated every evening after the market closes, 5 days a week.
How is Smart Score calculated?
The Smart Score is a proprietary rating system that measures stocks on a scale of 1-10. Based on extensive research and several million dollars-worth of investment, the Smart Score provides analysis derived from 6 unique datasets:
- Wall Street Analysts
- Corporate Insiders
- Financial Bloggers
- Individual Investors
- Hedge Fund Managers
- News Sentiment
The Smart Score harnesses value from each of these datasets to create a singular, powerful and easily applied score.
Is a higher score better?
The simple answer is Yes. Each notch higher on the score, which ranges from 1 to 10, indicates greater odds of outperformance. This might cause many investors to focus solely on the top, 10-rated stocks. However, it would be a mistake to not consider ownership of other attractive Outperform stocks that are also highly rated as 8s or 9s.
We therefore prefer to think of our rating system as really comprised of 3 main groups.
- Outperform = scores 8, 9 and 10; the top 21% of stocks with the strongest chances of beating the market.
- Neutral = scores 4, 5, 6 and 7; the middle 58% of stocks most likely to perform in-line with market averages.
- Underperform = scores 1, 2 and 3; the bottom 21% of stocks with historically subpar results.
Please review the performance section again to appreciate why an investor should have a strong bias towards ownership of Outperform rated stocks with an unapologetic aversion to Underperforms.
What is the key to success when using the Smart Score?
Too often investors see the great performance of the system and start assuming it will automatically, and without fail, pick non-stop winners. Unfortunately, there is no system on the planet capable of that impossible feat.
What is helpful here is to appreciate the basic math of the system. For example, the average annual return of the top Smart Score stocks is +17.3%. The keyword being "average." Some did better than average… and some did a lot worse. When you realize this you understand why it is unfair to judge the system by your experience with just a few picks when we rate over 4,000 stocks.
Another factor to consider is current market conditions. If the market goes down, then most stocks will go down as well, including our top-rated selections. The key is to focus on how well these stocks are doing relative to the broader market at the time. That is why we use the terms Outperform/Underperform instead of Buy/Sell.
Putting it altogether, the benefit of the Smart Score is on much greater display over time, with a more diversified collection of top-rated stocks.
How is Smart Score performance measured?
Performance is measured by re-balancing of the Top Smart Score Stocks on a weekly basis.
Who are the analysts?
We offer commentary from: Wall Street analysts, corporate insiders, hedge fund managers, financial bloggers, individual investors.
Still have more questions?