What the Zacks Bull of the Day Backtest Actually Measures

What the Bull of the Day is

Zacks Investment Research publishes a “Bull of the Day” and a “Bear of the Day” each trading day. These are single-stock editorial picks, typically drawn from companies carrying a favorable Zacks Rank, where the rank itself is driven largely by the direction and magnitude of recent analyst earnings-estimate revisions.

Portfolio Watch reads these two picks from the Zacks homepage every four hours and stores one row per calendar day: the date, the bull ticker and company name, and the bear ticker and company name. We deliberately do not store a price at the moment of publication, which has consequences for the backtest that we explain below.

The value of tracking these picks over time is that a daily editorial pick is easy to remember selectively. A stored history is not. Once you have a complete record, you can ask the only question that matters: would systematically following the picks have beaten simply buying the index?

The exact simulation rules

Our performance chart is regenerated after the close each weekday. It walks forward day by day from the first pick we ever stored, and on each market day it applies these rules in order:

1. Contribute. Add $100 of fresh cash to the Zacks bucket and $100 to the SPY bucket. Principal increases by $100.
2. Define the active set. Sort every stored bull pick by date and take the 30 most recent. That is the strategy's universe for the day.
3. Sell what dropped out. Any ticker currently held that is no longer in the active 30 is sold in full at that day's closing price.
4. Buy the newest pick. Spend the entire Zacks cash balance on the single most recent bull pick, at that day's closing price.
5. Buy the benchmark. Spend the entire SPY cash balance on SPY, at that day's closing price.

Prices come from daily closing data, so the simulation only advances on days the market was actually open. The chart then plots the Zacks bucket's market value against the SPY bucket's market value, with contributed principal shown underneath as a reference line.

The holding period floats

It is tempting to describe the exit rule as “hold for 30 trading days.” That is close, but not exact, and the difference occasionally matters.

A position is sold when its ticker is no longer among the 30 most recent picks. Because Zacks sometimes names the same stock more than once within a short window, a repeated ticker has its clock effectively reset and stays in the portfolio longer than 30 days. In the other direction, if scraping misses a day, the window advances on a shorter list of picks. The rule is genuinely “stay in the most recent 30 picks,” and the resulting holding period clusters near 30 trading days without being fixed at it.

Note also that because the entire cash balance goes into the newest pick each day, the portfolio is not equal-weighted. A stock picked on a day when the cash balance was large, or held across several repeat nominations, will carry more weight than one bought once with a single day's contribution.

Four biases that inflate the result

We would rather you discount this chart correctly than trust it uncritically. Four known issues push the reported outcome in the strategy's favor.

1. Dividends are excluded on both sides

The simulation tracks price only. SPY distributes a dividend roughly quarterly, and reinvesting those distributions is a meaningful part of the index's long-run total return. Individual Zacks picks are frequently growth-oriented companies that pay little or nothing. Ignoring dividends therefore takes more away from the benchmark than from the strategy, and the true gap is narrower than the chart shows.

2. Entry happens at the close, not at publication

We buy at the closing price of the day the pick is recorded. A real subscriber reading the pick in the morning would transact earlier, at a different price. Since a widely read editorial pick can attract buying pressure during the session, the closing price may already embed part of the reaction. Depending on the day, this can help or hurt, but it is not a price any particular reader could reliably have obtained.

3. No trading costs or slippage

The rules generate a trade nearly every day, plus a liquidation whenever a ticker ages out of the window. Commissions are widely zero for retail equity trades now, but bid-ask spreads are not, and they are widest on exactly the smaller and more volatile names that editorial picks often feature. A high-turnover strategy is precisely where frictionless assumptions do the most damage.

4. The sample is short and starts when we started

The series begins on the first day we stored a pick, not at some economically meaningful starting point, and it requires only a handful of stored picks before it begins reporting. A record measured over a period without a serious drawdown tells you very little about how the approach behaves in one. Treat the result as a description of one specific window, not an estimate of future edge.

How to read the chart sensibly

Given all of the above, the chart is best used for direction and magnitude rather than precision. A few practical habits:

• Look at the shape, not the final number. Whether the strategy line pulls away steadily or on a handful of outlier days tells you far more than its ending value. Concentrated gains from one or two names are not a repeatable edge.
• Watch the drawdowns. Compare how far each line falls below its own prior peak. A strategy that ends slightly ahead after a far deeper drawdown has not actually outperformed on any risk-adjusted basis.
• Mentally haircut the gap. Subtract something for the missing SPY dividends and something for spreads on daily turnover before concluding the strategy is ahead.
• Remember the concentration. Holding up to 30 single stocks bought one at a time is dramatically less diversified than holding SPY, even when the headline returns look similar.

What this is not

This simulation is a research exercise built on our own stored data, published so that you can see precisely what assumptions sit behind a line on a chart. It is not a track record, not an audited result, and not a product you can buy. No money was managed under these rules.

If you want the full inventory of where every number on the site comes from, including refresh intervals and known gaps, see our data and methodology page. For definitions of the terms used above, see the glossary.

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