Financial Advice 

Black-Monday Model says Sell

Black-Monday Model says Sell

With the 30th anniversary of the Black Monday stock-market crash fast approaching, and many investors in a nervous mood, it’s an opportune time to revisit the market-timing model developed by Martin Zweig, the man who famously called the 1987 crash and helped many of his followers to profit from it. That’s exactly what we plan to do in this Friday’s issue of the Investors Chronicle. However, in the meantime Mr Zweig’s “Super Model” has ominously just issued its first sell signal (18 August) in more than a decade. 

The signal from the model could be worth taking seriously given several other indicators that were followed by Mr Zweig are also flashing warning signs.

While our feature will explore the Super Model in-depth, as outlined in Mr Zweig’s classic book Winning on Wall Street, at its core his system monitors and quantifies the potential effect of two factors that have been shown to have a strong and enduring relationship with share-price movements: momentum and value (based on changes in interest rates that share valuations tend to be anchored to).

The feature will explore how the Model works, what to make of its first sell in more than a decade, the spooky similarities between now and 1987, and what investors can do should they wish to protect their portfolios from the possibility of market falls.

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