Martin Zweig's investing strategy is to buy and sell stocks in accordance with monetary conditions, the performance of the market as a whole, and the performance of individual stocks. It is certainly not to "buy and hold" stocks.

Zweig's strategy combines several elements:
  • Fundamental analysis of the prevailing monetary conditions. The main indicators used are interest rates and debt levels.

  • Technical analysis of the stock market as a whole, to measure market momentum. The three indicaters used are the Advance/Decline ratio, Up Volume and The Four Percent Indicator.

  • The Super Model, where the above indicators are combined to give a final score. The Super Model indicates whether the broad market is likely to be bullish or bearish.
If the super model indicates bullish conditions are likely in the broader markets, Zweig believes investors should allocate their maximum funds to buying stocks. Individual stocks are chosen using the following criteria:

Fundamental or Technical Analysis

To judge the market as a whole, Zweig gives greater weight to technical analysis than fundamental analysis. To judge individual stocks, he gives greater weight to fundamental analaysis than technical analysis.


Jesse Livermore

Martin Zweig's own stock-market hero was Jesse Livermore. Zweig's trading philosophy is heavily influenced by Livermore. Some of Livermore's words are particularly pertinent:

They say you never grow poor taking profits. No you don't. But neither do you grow rich taking a four-point spread in a bull market.



A Summary of Martin Zweig's Market Strategy

The basis of Martin Zweig's investment philosophy is to take a measure of whether the broader market is bearish or bullish and then stay in tune with it. If the market is bullish, buy attractive stocks and let your profits run. Lock in profits or cut your losses by selling according to pre-established criteria. If the market is bearish, stand on the sidelines with cash, waiting to enter the market when it turns bullish.