Martin Zweig
An Overview of Martin Zweig
Period of Reign: 1970-1995
Associated With: The Zweig Forecast
Highlights: Editor of The Zweig Forecast, which was the top market advisory fund for 15 years, from 1980 to 1995, returning 16% annual returns
Quotes: “If a company can show nice consistent earnings, I don’t care if it makes broomsticks or computer parts.”
Fun Fact: Owns the most expensive apartment in Manhattan; a $70 million triplex penthouse on Fifth Avenue
Post-Success: Zweig is a trustee of the Museum of American Financial History and has made various significant donations to this institute
Martin Zweig investing style summarized
- In a strong market, pick those companies that are outpacing and continue trending with higher highs and higher lows
- Cut losses and run with profits
- Either be in the market or out of it. Market timing is relevant, look at factors such as the Prime Rate Indicator, the Fed Indicator, and the Installment Debt Indicator
- The two greatest fundamentals of a company are their earnings trend and the price-to-earnings ratio
Martin Zweig Books
To be added.
Additional Martin Zweig resources
- The unofficial Martin Zweig website, containing background info and detail of his investment style, much coming from Zweig’s book
- A collection of short briefs on Zweig, most commenting on his odd collections and habits
Stock Screen Parameters to Mimic Martin Zweig’s Investment Style
The below bullet points attempt to recreate Martin Zweig’s investment style using technical parameters that can automatically be screened. These parameters are from an interpretation by Harry Domash, and were run using the MSN stock screener. The text in italics explains how the parameter was defined in the screener.
1) Long Growth: Find companies with consistent sales and earnings growth. Zweig says 15% is acceptable, but also gives examples of companies with over 30%
Parameter: 5-Year Annual EPS Growth Rate >= 15%
Parameter: 5-Year Revenue Growth >= 15%
2) Recent Growth: Find companies that are accelerating in growth instead of decelerating
Parameter: EPS Growth Qtr vs Qtr >= .75 * 5-Year Annual EPS Growth
Parameter: Revenue Growth Qtr vs Qtr >= .85 * 5-Year Annual Revenue Growth
3) Revenue vs Earnings: Find companies whose revenue growth doesnt greatly outpace the EPS growth, indicating shrinking profit margins. On the other hand, EPS growth shouldn’t greatly outpace revenue growth, indicating profits are only coming from cost cutting, not from sales
Parameter: 5-Year Annual EPS Growth Rate >= .75 * 5-Year Revenue Growth Rate
Parameter: 5-Year Revenue Growth Rate >= .75 * 5-Year Annual EPS Growth Rate
4) Value: Dont overpay or underpay. A high P/E may signal the stock is overvalued, and a low P/E may signal that investors have low confidence in the company. Zweig compares a companies P/E to the market to determine if it is over or under valued (SoS Note: Perhaps comparing this to industry average would be a better interpretation, since certain industries command higher P/Es due to higher expectations of growth)
Parameter: P/E Ratio: Current <= 1.5 * S&P 500 Average P/E Ratio Current
Parameter: P/E Ratio: Current >= .4 * S&P 500 Average P/E Ratio Current
5) Winners: Find stocks that are winners, beating or keeping pace with the market. The Relative Strength parameter compares a stock’s strength to that of the market, with a 50 meaning it is matching the market
Parameter: 6-month Relative Strength >= 50
6) Debt: Find companies that do not have a high level of debt
Parameter: Debt to Equity Ratio <= Industry Average Debt to Equity Ratio
7) Surprise: Find companies who haven’t recently disappointed the market with lower than expected earnings
Parameter: Recent Qtr Surprise % >= 0
