Winning on Wall Street by Martin Zweig

A Top Analyst Shares His Strategy: How to Spot Market Trends Early, Which Stocks to Pick, When to Buy and Sell for Peak Profits and Minimum Risk

The man, the myth, the market—Mr. Martin Zweig, a legendary financial analyst, shares his timeless insights on stock market success.

Winning on Wall Street is a classic investment book by Martin Zweig and a successful, widely respected stock market analyst who became famous for his forecasting models. The book lays out Zweig's system for combining fundamental and technical analysis to identify favorable market periods, select winning stocks, and manage risk.

About the Author

Martin Zweig (1942–2013) was an American investor, money manager, and investment educator. He is best known for his influential newsletter, The Zweig Forecast, and his frequent appearances on the financial television program Wall Street Week with Louis Rukeyser.

Zweig famously predicted the 1987 stock market crash, which solidified his reputation.

Core Principles of Zweig's Strategy

Zweig's strategy is a disciplined, multi-faceted approach to investing, often summarized by the phrase "don't fight the tape and don't fight the Fed."

Market Timing

Don't Fight the Fed: Zweig's analysis showed that the Federal Reserve's monetary policy and interest rates have a powerful influence on the stock market's direction. A trend of falling rates is bullish, while rising rates are bearish.

Don't Fight the Tape: Zweig used momentum indicators, such as the advance/decline line and up/down volume, to measure the market's overall strength, or "the tape". He advised aligning with the market's prevailing trend rather than attempting to predict reversals.

The "Super Model" Strategy: To manage market timing, Zweig created a model that combined his monetary and momentum indicators to determine whether the broad market was bullish or bearish. When the model turned bearish, he recommended moving into cash to minimize risk.

Stock Selection

Zweig used a quantitative "shotgun approach" to filter a wide number of stocks based on a series of fundamental and technical criteria, often referred to as a "growth at a reasonable price" (GARP) strategy.

Earnings and Sales Growth: He screened for companies with consistent and accelerating earnings and sales growth over multiple quarters and years.

Reasonable Valuation: Zweig cautioned against overpaying for growth and sought stocks with a price-to-earnings (P/E) ratio that was not excessively high relative to their growth rate.

Relative Price Strength: He looked for stocks that were outperforming the broader market, theorizing that strong companies should display superior price action.

Insider Activity: Zweig watched for significant insider selling, which he viewed as a potential red flag.

Risk Management

Zweig emphasized the importance of minimizing losses. He recommended using stop-loss orders to automatically exit a position if it fell below a predetermined price. This disciplined approach allows investors to "cut losses short and let profits run."

Enduring Relevance

While some of the specific indicators Zweig used, such as the Federal Reserve's prime rate, have changed in relevance, his core philosophy remains influential.

Many of his principles, including the importance of earnings momentum, market timing, and risk management, are still highly regarded by successful investors. The American Association of Individual Investors (AAII) has also shown Zweig's screening method to be effective, with its model portfolio significantly outperforming the S&P 500 over several decades.

Financial Writers Hail the Work of Martin Zweig With Praise

"When a newsletter writer leads all his competition in picking stocks for a year, you might dismiss it as a lucky streak. But when the same writer comes back and repeats his triumph for a second year running it's clearly time to consider what he may have going for him that the others don't"
—Louis Rukeyser

"May be the hottest, most respected stock picker in the land."
—Arthur Howe, Philadelphia Inquirer

"One of the canniest market watchers around."
—Jack Egan, New York Magazine

"He has a pretty darn good record when it comes to riding market trends and picking stocks"
—Kathryn M. Welling, Barron's

"As America's hottest stock picker... Zweig makes this town's superagents seem like schleppers in comparison"
—Los Angeles Magazine

"Dr. Martin Zweig is one of the most creative technical analysts in the investment industry. He has done more statistical work to establish the reliability of his approach than perhaps any other publisher of a stock market service."
—Robert Nurock, President, Investors Analysis and Chief Elf, Wall Street Week