I believe the best way to beat the market is to learn from Professionals (Market Gurus) who have done so time after time. That is why one can consider following a stock picking criteria based on one of the recognized strategies of well known stock market professionals.

This time I will elaborate on one of the most recognized modern investing Gurus on Wall Street – Martin Zweig and his time proven stock picking strategy.

Introduction

Martin Zweig was born in 1942 in Cleveland, Ohio. He took his first degree at the University of Pennsylvania's Wharton School of Finance, then an M.B.A. at the University of Miami, studying by night and working as a stock-broker by day. He completed his formal education in 1969, with a Ph.D. in finance at Michigan State University. Shortly after completing his Ph.D., Zweig invented the puts/call ratio, a well-known market indicator.

Zweig’s most famous quotes:

"I measure what's going on, and I adapt to it. I try to get my ego out of the way. The market is smarter than I am so I bend."

"To me, the "tape" is the final arbiter of any investment decision. I have a cardinal rule: Never fight the tape!"

"People somehow think you must buy at the bottom and sell at the top to be successful in the market. That's nonsense. The idea is to buy when the probability is greatest that the market is going to advance."

Between 1970 and 1972, Martin Zweig wrote several articles for Barron's magazine. In each, he made a successful prediction for the coming direction of the market.

The resulting public demand led him to begin small-scale publishing of The Zweig Forecast, a market letter. After he advertised The Zweig Forecast in Barron's, it took off.

The Zweig Forecast was the top market advisory for the 15 year period between 1980 and 1995. Zweig Forecast delivered a 16 percent per annum compounding return, the highest risk-adjusted return of any market advisory service during that time.

According to the AAII (American Association of Independent Investors), out of more than 50 stock-screens it operates, the Martin Zweig Stock Screen has been its top performer in the last eight years - up more than 1,700 percent between 1998 and 2006.

In short Martin Zweig's basic stock market strategy is to be fully invested in the market when market conditions are positive and to sell stocks when conditions become negative. Risk minimization and loss limitation are a crucial part of Zweig's investment style. His book, "Winning On Wall Street" describes how Zweig determines whether to be in the market or not.

Zweig’s Stock Picking Strategy

When picking stocks, Zweig goes strictly by the numbers. As he writes in his book, "If a company can show nice consistent earnings, I don't care if it makes broomsticks or computer parts." Zweig is focusing on three main criteria to fish out potential winners:

1) Strong historical sales and earnings growth. 2) Reasonably priced. 3) Strong price movement relative to the market.

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