February 20, 2013

Martin Zweig, Who Called Crash of ’87, Dies at 70

Investing legend coined phrase: ‘Don’t fight the Fed’

Martin Zweig's Winning on Wall StreetA generation of stockbrokers and individual investors for whom Martin Zweig represented the wisdom of Wall Street are mourning the stock market legend’s passing on Monday at the age of 70.

Before the era of all stocks, all the time on CNBC and various Internet channels, there was PBS’ Wall Street Week with Louis Rukeyser, where Zweig (left) was a frequent guest starting in the 1970s, admired for his deep technical analysis of markets.

It was on Rukeyser’s show one Friday in October 1987 that Zweig made his most famous call, predicting a market crash, which occurred the very next trading day, Monday, Oct. 17.

The Dow plunged 508 points, a 23% decline and an apparent vindication of a technical indicator Zweig developed called the put-call ratio.

The successful call boosted interest in his Zweig Forecast newsletter, which the Cleveland native and New York and Miami resident had been writing since 1971 and which Hulbert Financial Digest ranked No. 1 during the 15 years it was monitored.

Zweig, a Ph.D in finance, had also written books, such as “Winning on Wall Street” (1986), and launched two closed-end funds.

The market maven coined a bit of Wall Street wisdom that investors, especially recently, have ignored at their peril: “Don’t fight the Fed,” he said, meaning that declining interest rates were going to lift stock prices. “Don’t fight the tape” was another Zweig dictum, meaning that going against a market trend is dangerous to one’s portfolio.

Together with partner Joseph DiMenna Jr., Zweig managed hedge funds that pioneered the now widely used long-short strategy that involves simultaneously buying equities expected to outperform while shorting those expected to decrease in value.

Zweig served on the board of his alma mater Wharton School of Business, and was active in other charities as well. He is survived by his wife, Barbara, and two sons, Zack and Alex.

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