Guide · Trend following
Does Zweig 4% Model work?
Across 375 stocks, Zweig 4% Model cut the worst fall on 82%, beat buying and holding on risk-adjusted return on 14% and on raw return on 15%. Mainly a seatbelt: it softened the big falls on most stocks, but usually gave up return to do it.
What it predicts
Buy after a 4% weekly rise off the low; sell after a 4% weekly fall from the high. Simple, and it forces you to stay with the main trend.
- In when a weekly close is 4% above the lowest weekly close since the last sell.
- Out when a weekly close is 4% below the highest weekly close since the last buy.
Trend following plays bet that prices that have been rising tend to keep rising for a while, and falls tend to keep falling. The family guide
How to use it
- It trades often (about 11 switches a year per stock), so costs, spreads and taxes eat into it more than the backtest's 0.05% per switch suggests.
- Expect to be wrong more often than right: only 35% of its calls worked. Its results come from the size of the winners, so following it means sitting through strings of small losses.
- It worked best on Industrials & rentals (22% beat holding on risk-adjusted return) and worst on Big tech (0%).
- Use it as one input. Your signal combines the plays you count with the other factors you weight into one call.
When it worked
Zweig 4% Model did best against holding in the COVID drop (+17% median gap) and worst in the 2020–21 rally (−27%). Median gap in return against holding the same stock (per year over stretches longer than 18 months; crypto excluded).
| 2008 crash | Recovery 2009–19 | COVID drop | 2020–21 rally | 2022 bear | Since Oct 2022 | |
|---|---|---|---|---|---|---|
| Zweig 4% Model | +13% | −9% | +17% | −27% | +8% | −10% |
Where it worked
By kind of stock: how often it beat holding on risk-adjusted return, and the median Sharpe ratio gap.
| Group | Beat holding, risk-adjusted | Sharpe gap |
|---|---|---|
| Industrials & rentals | 22% | -0.15 |
| Financials | 19% | -0.13 |
| Software & devices | 18% | -0.24 |
| Healthcare | 17% | -0.20 |
| Micro caps | 17% | -0.26 |
| Real estate | 16% | -0.09 |
| Indexes & ETFs | 14% | -0.10 |
| Energy & power | 14% | -0.21 |
| Consumer & retail | 12% | -0.25 |
| Industrials & materials | 12% | -0.19 |
| Media & telecom | 10% | -0.12 |
| Metals & mining | 10% | -0.25 |
| Semiconductors | 9% | -0.26 |
| Sectors | 8% | -0.15 |
| Big tech | 0% | -0.11 |
Where it helped most
Sharpe ratio gap against holding, stocks with 3+ years of history
Right now
Zweig 4% Model holds 150 of 377 names as of the Oct 13, 2026 close.
Changed its call in the last two weeks:
Backtest results since 2005 (or as long as each stock has traded), against holding the same stock over the same dates, after 0.05% per switch. Past results don't promise future ones. This analysis does not constitute trading advice. Please meet with an advisor or independently review sources before making any decision.