How to Make Money in Stocks by William O’Neil
Download How to Make Money in Stocks – How to Make Money in Stocks: Through every type of market, William J. O’Neil’s national bestseller, How to Make Money in Stocks, has shown over 2 million investors the secrets to building wealth. O’Neil’s powerful CAN SLIM® Investing System―a proven 7-step process for minimizing risk and maximizing gains―has influenced generations of investors.
Table of Contents
How to Make Money in Stocks
Right up front in this latest revised edition, you’ll see 100 charts of the greatest winners from 1880 through 2008. Study them carefully. You’ll discover secret insights into how these companies set the stage for their spectacular price increases. Don’t worry if you’re a new investor and don’t understand these charts at first. After all, every successful investor was a beginner at some point—and this book will show you how to spot key buying opportunities on the charts, as well as critical signals that a stock should be sold. To succeed you need to learn sound, historically proven buy rules plus sell rules. As you study these charts you’ll see there are specific chart patterns that are repeated over and over again whether in 1900 or 2000. This will give you a huge advantage once you learn to recognize these patterns that in effect tell you when a stock is under professional accumulation. It is the unique combination of your finding stocks with big increases in sales, earnings and return on equity plus strong chart patterns revealing institutional buying that together will materially improve your stock selection and timing. The best professionals use charts. You too can learn this valuable skill. This book is about how America grows and you can too. The American dream can be yours if you have the drive and desire and make up your mind to never give up on yourself or America.
Based on a major study of market winners from 1880 to 2009, this expanded edition gives you:
- Proven techniques for finding winning stocks before they make big price gains
- Tips on picking the best stocks, mutual funds, and ETFs to maximize your gains
- 100 new charts to help you spot today’s most profitable trends
PLUS strategies to help you avoid the 21 most common investor mistakes!
“I dedicated the 2004 Stock Trader’s Almanac to Bill O’Neil: ‘His foresight, innovation, and disciplined approach to stock market investing will influence investors and traders for generations to come.’”
―Yale Hirsch, publisher and editor, Stock Trader’s Almanac and author of Let’s Change the World Inc.
“Investor’s Business Daily has provided a quarter-century of great financial journalism and investing strategies.”
―David Callaway, editor-in-chief, MarketWatch
“How to Make Money in Stocks is a classic. Any investor serious about making money in the market ought to read it.”
―Larry Kudlow, host, CNBC’s “The Kudlow Report”
INTRODUCTION – How to Make Money in Stocks
You Can Learn and Benefit from America’s 100 Years of Super Winners After the market debacles of 2000 and 2008, most investors now know that they need to take charge and learn much more about what they’re doing when they save and invest their hard-earned money. However, many investors don’t know where to turn, whom to trust, or what they must stop doing if they are to achieve dramatically superior investment performance. How to Make Money in Stocks
You don’t have to give your money to a Bernie Madoff, who’ll take it but won’t tell you exactly what he’s doing with it. Instead, you can and should read a few good investment books, attend some investment classes, or participate in an investment meet-up group so that you can learn how to invest with real confidence. At the very least, you should learn and understand well the sound principles and proven rules and methods that will protect and build your investment portfolio over time. Half of all Americans save and invest; now it’s time to learn to do it intelligently with critical knowledge. When I started investing, I made most of the same mistakes you’ve probably made. But here’s what I’ve learned: You should buy stocks when they’re on the way up in price, not on the way down. And when you buy more, you do it only after the stock has risen from your purchase price, not after it has fallen below it. How to Make Money in Stocks
You buy stocks when they’re nearer to their highs for the year, not when they’ve sunk so low that they look cheap. You buy higher-priced stocks rather than the lowest-priced stocks. You learn to always sell stocks quickly when you have a small loss rather than waiting and hoping they’ll come back. You pay far less attention to a company’s book value, dividends, or PE ratio—which for the last 100 years have had little predictive value in spotting America’s most successful companies—and focus instead on more important proven factors such as profit growth, price and volume action, and whether the company is the number one profit leader in its field with a superior product. You don’t subscribe to a bunch of market newsletters or advisory services, and you don’t let yourself be influenced by recommendations from analysts, who, after all, are just expressing personal opinions that can frequently be wrong. How to Make Money in Stocks
You also have to acquaint yourself with charts—an invaluable tool most professionals wouldn’t do without but amateurs tend to dismiss as complicated or irrelevant. All these vital actions are completely contrary to human nature. In reality, the stock market is human nature and crowd psychology on daily display, plus the age-old law of supply and demand at work. Because these factors have remained the same over time, it is remarkable but true that chart patterns are just the same today as they were 50 years ago or 100 years ago. Few investors know or understand this. It can be to your inspiring advantage. In this fourth edition of How to Make Money in Stocks, I’m showing you right up front, in Chapter 1, 100 annotated color charts of 100 of America’s greatest winning stocks, covering each decade from the 1880s to the end of 2008—from the Richmond and Danville Railroad in 1885 and Northern Pacific during the famous corner of the stock in 1901, when it raced from $115 to $700 in one week, to Apple and Google in our twenty-first century. There is a lot you can learn from studying these great examples. How to Make Money in Stocks
You’ll see that there are such things as chart bases that have been repeated year after year with enormous success. There are 105 examples (among the 100 stocks) of classic bases that look like cups with handles when viewed from the side. Some are small, others large, and still others in between. In addition to cups with handles, we’ve identified eight other distinctively different, highly successful base patterns that have occurred in cycle after cycle. Bethlehem Steel in 1915 is our first powerful high, tight flag example and served as a perfect historical precedent for later high, tight flags such as Syntex, Rollins, Simmonds Precision, Yahoo!, and Taser. All of these stocks had huge price moves. Charts will help you tell the better stocks and general markets from the weaker, riskier stocks and markets that you must sidestep and avoid altogether.How to Make Money in Stocks
That’s why I put all these examples in Chapter 1, with notes marked on the charts to help you learn a skill that could just change your whole life and let you live better and smarter. A good clear picture is worth a thousand words. These 100 examples are just a sample of what you’ve been missing. We have models of more than 1,000 great stock market winners over the last 100 years. It takes only one or two to make your year or your future. But you have to get serious and work at really learning and knowing what you’re doing when you invest. You can do it if you really want to. You’ll probably find this a whole new way of looking at America and its stock market. From the railroad to the auto and the airplane, from the radio and TV to computers, from jet airliners to space exploration, from massive discount stores to semiconductors and the Internet, this country has shown rapid, unceasing growth. Living standards for the great majority of Americans have improved materially from what they were 100, 50, or even 30 years ago. How to Make Money in Stocks
Yes, there will always be problems, and everyone likes to criticize. But America’s innovators, entrepreneurs, and inventors have been a major driving force behind its unparalleled growth. They have created the new industries, new technologies, new products, new services, and most of the jobs from which we all have benefited. Now it’s up to you to learn how to intelligently take advantage of the relentless growth opportunities America’s freedom makes possible and that entrepreneurs keep presenting for everyone during every business cycle. In the following chapters, you will learn exactly how to pick big winners in the stock market and nail down the gains they produce. You will also learn how to substantially reduce your mistakes and losses. Many people who dabble in stocks either have mediocre results or lose money because of their lack of knowledge. But no one has to continue to lose money. How to Make Money in Stocks
You can definitely learn to invest wisely. This book will provide you with the investment understanding, skills, and methods you need if you are to become a more successful investor. I believe that most people in this country and throughout the free world, whether they are young or old and regardless of their profession, education, background, or economic position, should learn to save and invest in common stocks. This book isn’t written for the elite, but for the millions of ordinary guys and gals everywhere who want a chance to be better off financially. You are never too old or too young to start investing intelligently. YOU CAN START SMALL–If you’re a typical working person or a beginning investor, you should know that it doesn’t take a lot of money to start. You can begin with as little as $500 to $1,000 and add to it as you earn and save more money. I began with the purchase of just five shares of Procter & Gamble when I was only 21 and fresh out of school. Mike Webster is one of our in-house managers who also started small. In fact, Mike sold personal belongings, including his music CD collection, to raise cash for investing.How to Make Money in Stocks
Prior to managing money for the firm, he had a gain of over 1,000% in his personal account in 1999, a very unusual year. Steve Birch, another of our in-house money managers, started managing money earlier. He took advantage of the roaring bull market of the late 1990s and protected most of his gains by going mainly to cash in the bear market. Between 1998 and 2003, he had gained over 1,300%. Both Mike and Steve have had their rough years, but they’ve learned from their many mistakes, which we all make, and gone on to achieve significant performance. You live in a fantastic time of unlimited opportunity, an era of outstanding new ideas, emerging industries, and new frontiers. However, you have to read the rest of this book to learn how to recognize and take advantage of these amazing new situations. The opportunities are out there for everyone. You are now in a continually changing and, hopefully, improving New America. We lead the world in high technology, the Internet, medical advancements, computer software, military capability, and innovative new entrepreneurial companies.How to Make Money in Stocks
The communist/socialist system and the concept of a centralized “command economy” are now relegated to the ash heap of history. They did not work. Our system of freedom and opportunity serves as a model of success for most countries in the world. Today it’s not enough for you to just work and earn a salary. To do the things you want to do, go the places you want to go, and have the things you want to have in your life, you absolutely must save and invest intelligently. The income from your investments and the net gains you can make will let you reach your goals and provide real security. This book can just change your whole life. No one can hold you back but yourself.
Table of CONTENTS
A Winning System: CAN SLIM®
Introduction You Can Learn and Benefit from America’s
100 Years of Super Winners
CHAPTER 1 The Greatest Stock-Picking Secrets
CHAPTER 2 How to Read Charts Like a Pro and Improve
Your Selection and Timing
CHAPTER 3 C = Current Big or Accelerating Quarterly Earnings and Sales
CHAPTER 4 A = Annual Earnings Increases: Look for Big Growth
CHAPTER 5 N = Newer Companies, New Products, New Management,
New Highs Off Properly Formed Bases
CHAPTER 6 S = Supply and Demand: Big Volume Demand at Key Points
CHAPTER 7 L = Leader or Laggard: Which Is Your Stock?
CHAPTER 8 I = Institutional Sponsorship
CHAPTER 9 M = Market Direction: How You Determine It
Be Smart from the Start
CHAPTER 10 When You Must Sell and Cut Every Loss … without
CHAPTER 11 When to Sell and Take Your Worthwhile Profits
CHAPTER 12 Money Management: Should You Diversify, Invest for the
Haul, Use Margin, Sell Short, Buy Options, IPOs, Tax Shelters,
Nasdaq or Foreign Stocks, Bonds, Etc.?
CHAPTER 13 Twenty-One Costly Common Mistakes Most Investors Make
Investing Like a Professional
CHAPTER 14 More Models of Great Stock Market Winners
CHAPTER 15 Picking the Best Market Themes, Sectors and Industry
CHAPTER 16 How to Use IBD® to Find Potential Winning Stocks
CHAPTER 17 Watching the Market and Reacting to News
CHAPTER 18 How You Could Make Your Million Owning Mutual Funds
CHAPTER 19 Improving Management of Pension and Institutional
CHAPTER 20 Important Rules to Never Forget
Real Success Stories
Reviews – How to Make Money in Stocks
There are different methods of trading/investing in the stock market. There’s value investing (like Warren Buffet), there’s day trading, swing trading, and then there’s growth investing. This book is about growth investing. That is, investing in companies that show exceptional earnings and sales growth (which are the things that affect a stock’s price during a bull market cycle). It’s not better or worse than the others. But thanks to Bill O’Neill and his Investor’s Business Daily service, it is easier to learn.
This is because IBD (the newspaper/service accompanying this strategy) does half the work for you. The book will tell you to look for companies with a certain amount of earnings growth by quarter, for example, and that sounds like a lot of work–and normally, it would be. But if you pay the $10 per month, or whatever it is, for the paper, all of that stuff is done for you. The data is available for any stock in the market, and you’re given a list of the top 50 stocks that meet the criteria listed in the book.
But as I said, that’s only half the work. Knowing which stocks to buy is easy (thanks to this strategy), but knowing when to buy them and when to sell them is the hard part. The book goes into detail on that. It involves looking for certain patterns in the price charts (also available through their service), and then buying if the price goes above a certain level. Then there are also rules on when to sell.
It’s a rules-based system, which is good because it gives you a set of criteria by which to buy and sell stocks, but there is room for flexibility (depending on your abilities as a technical analyst and/or your knowledge of a particular company) which is going to make or break you as a stock trader.
I should finish this review, though, by saying that most traders lose money in stocks. Unless you’re so obsessed with stocks that you’re willing to put in thousands of hours (just like any highly competitive skill) before you are successful, I’d recommend just buying a mutual fund instead. It’s a lot less hassle, and unless you become an elite trader, your returns will likely be comparable over a long enough period of time.
If there is any negative that I have to say about this book, it’s that it says nothing about what I believe is the most difficult part about trading. The psychological aspect. I would reference Mark Douglas for that
Don’t get me wrong but this is one of the worst books I have ever read.
Let me explain why…
This book is about growth investing and growth investing only. The reason I thought the book is horrible is because the author go against some of the already proven techiniches and consensus already stabilished not only in Wall Street but for great legends like Benjamin Graham, Warren Buffett, John J. Murphy, Bulkowski, Nison and others.
For instance, he desregards the use of P/E or Discounted Cash Flow as a good metrics, giving exemples about the high P/E ratios found on Microsoft and other Tech Growth stocks and how the investor would have missed those stocks.
But he does not tell the story about the dot com bubble and how this same over valued P/E stocks went from a fortune to nothing, capitalizing on earning growth that even did not existed, more like a future promisse.
He gives other example about Bank of America with low P/E in 2008. For God Sakes a global financial crises and meltdown of stock market should not be a parameter for nothing and pro investor or not, who earned money in that year?
Other point the author dismiss based on his research is about Technical Analysis and some Patterns, saying almost all patterns have a low rate of success. The only pattern that he considers good is cup and handle because he was the first person to spot it and write about it, I guess…
On the final chapters the author have some chapters with titles like When to sell or how to time markets and stuff like that, but he does not give clear clues and techniques and pictures of how to do it and how to do it, he just talk in a shallow way.
He dislikes the idea of buying good and stabilished companys like Coca-Cola and Gillete just because the are too big to generate good profits or because he judges their management team old fellow with no interest to innovate or step out of the box. Also deslikes the idea of buy and hold good companies like Warren Buffett does.
In resume, is almost like he is saying “Go Big or Go Home!” and instigating the new investor to take risks with this unproven enterprises…
Like I said, this is a good for those interested in buy and look for growth stocks and maybe in this matter it can be a useful book, but to dismiss all the common sense and already proven techniques ranging from value investing and technical analysis for me would be madness
This is the first review I have ever written on Amazon; this book is that incredible. The book lays out exactly what most successful stocks have done to be successful and when to buy that stock before it shoots up. The basic premise of the book is to buy companies that have demonstrated certain chart patterns (the patterns explained in the book) and have solid fundamentals.
So far, in only 3 months of investing with his strategy, I have made 15% returns on my investments. Before I read this, I had to wait at least a year or two before making that kind of money. However, he does solicit his website throughout the book. At first, I was skeptical of someone trying to sell financial advice (everyone seems to solicit you for market advice nowadays), but I decided to give his website a try. Ends up, they give you a month trial for free, and it costs $30 per month after the trial. With the amount of money I have made from this book, the $30 a month is a drop in the bucket of my profits.
To provide concrete examples, his website told me to look for Winnebago (WGO) in August-September 2017, YY Inc.’s (YY) incredible 25% shoot up after their amazing quarter in November 2017, and Square’s (SQ) ungodly skyrocket in November 2017. Those are but some of the success stories I would never have found had I simply read he book and tried to do the analysis that the website provides for you. I strongly recommend reading the book and paying the monthly membership for the website. I have not regretted it at all.
About the Author
William J. O’Neil is the founder and chairman of Investor’s Business Daily. He also founded William O’Neil + Company, a leader in equity market information and data research for more than 400 major institutional money managers worldwide.