Marty Zweig Predicted Black Monday

Black Monday in 1987 made Marty Zweig a legend in the financial world.

On the Friday before, while appearing on the TV show Wall $treet Week, Zweig said he expected a "brief and vicious" crash "next week." Then on Monday, the Dow Jones Industrial Average plummeted an astonishing 23%.

Zweig was forever after considered a true oracle of finance.

Cleveland-born Zweig's fascination with stocks began at 13, when his uncle gave him six shares in General Motors. This early spark ignited a career that would see him manage mutual funds and a hedge fund.

The fund he ran in partnership with Joseph DiMenna achieved an impressive 25% annualized return over 15 years, after fees. The S&P 500 only delivered 18.6% over the same period. By the turn of the millennium, Zweig had amassed a personal fortune of approximately $600 million.

Liz Ann Sonders of Charles Schwab worked under him. She called Zweig "the consummate worrier" but also "the ultimate warrior." This duality manifested in his meticulous, data-driven approach to markets. He was a pioneer in analyzing investor sentiment and developed the "put/call ratio" to measure confidence.

He was also the first to truly grasp how Federal Reserve policy dictated market direction. He even coined the now-ubiquitous phrase:

Don’t Fight the Fed.
– Marty Zweig

For Zweig, monetary policy was the preeminent force. If the Federal Reserve was easing, the market had tailwinds; if tightening, headwinds. To go against this tide was likely to be futile.

Equally critical to his philosophy was his second famous maxim, embodying his respect for market action:

Never Fight the Tape.
– Marty Zweig

The "tape" represented the market's raw price action and prevailing trend.

Zweig wrote two best-selling books. The one that is still relevant and excellent today is Winning on Wall Street. It's well worth reading.

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