Book How To Make Money In Stocks
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I could belabor my point with more examples but instead I recommend 2 much more insightful and informative books on investing: The Warren Buffet W
Horrible book filled with useless garbage and nonsense. Basically, a get rich quick by using my subscribing to my website scam. Author's technical investing strategies are presented in a very non-rigorous and non-compelling manner. He uses examples but any idiot can cherry pick a few examples to prove a point. That does not make a convincing argument.I could belabor my point with more examples but instead I recommend 2 much more insightful and informative books on investing: The Warren Buffet Way or The Little Book of Common Sense Investing.
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How to Make Money in Stocks teaches readers how to identify good companies that are about to become great and then how to determine if and when to buy their stock. The mnemonic CAN SLIM
William O'Neil's book made me want to give up fantasy sports and take up investing. It seems like the time I spend reviewing an athlete's past performance and projecting future ones could be better spent on researching stocks, something that could actually make me money and possibly provide a similar stimulation.How to Make Money in Stocks teaches readers how to identify good companies that are about to become great and then how to determine if and when to buy their stock. The mnemonic CAN SLIM describes how he identifies fundamentally sound companies. C=Current earnings, A=annual earnings, N=new product, S=Supply and demand, L=leader or laggard of their sector, I=Institutional sponsorship, M=how the stock is priced relative to market indices. The mnemonic seemed like a gimmick targeted at suckers who paid to learn about stocks in a Holiday Inn ball room, but the content of the mnemonic seemed sound.
The portion of the book I found most interesting was learning how to interpret stock charts. O'Neil recommends buying stocks after they have formed a good base price. The base refers to the shape a stock's historical price has made in recent weeks. There are a few shapes he recommends and at first these shapes seemed about as arbitrary as picking a loose grouping of stars and calling it a constellation, but after further research it seems like there is some truth to this advice. I can definitely look at the chart of a stock that went up and identify the base pattern signalling its rise. The real question is whether I can identify a base pattern without the benefit of hind sight. If so, goodbye fantasy sports. If not, fantasy sports, I'll never stray again.
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It is for long term investing - 6-18 months. The learning rate using canslim is very low, because you have to spend weeks, months before your forecast proves wrong or right!
Right now, this is not what i want, so i close this book, after reading most important parts: common mistakes and cup and handle pattern.
About 40% of this book is full of charts, and you will spend considerable amount of time reading them.
overall, the book advertise
i swept through this book and got a detailed overview of it.It is for long term investing - 6-18 months. The learning rate using canslim is very low, because you have to spend weeks, months before your forecast proves wrong or right!
Right now, this is not what i want, so i close this book, after reading most important parts: common mistakes and cup and handle pattern.
About 40% of this book is full of charts, and you will spend considerable amount of time reading them.
overall, the book advertises its own newsletter service, stating you should be independent but still listen to the guru.
As one reviewer on amazon stated:" you would have to put in lot of work & time to figure out if it works or not"
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Although better written than most stock literature, it's still just a big tease with the goal of self-advertisement that piggy-backs on empty promises, but may succeed just enough to keep you coming back for more (of his books or other genre books). It's just the "start" that is meant to get you interested in the market and possibly in t Originally published in 1988 and then republished in 2008. Entrepreneur, stockbroker and writer William J. O'Neil attempts to give tips to rookies about stocks.
Although better written than most stock literature, it's still just a big tease with the goal of self-advertisement that piggy-backs on empty promises, but may succeed just enough to keep you coming back for more (of his books or other genre books). It's just the "start" that is meant to get you interested in the market and possibly in the job.
Stock market trade remains something that only people with a lot of money can generate profit out of and regular folks like you and I should not dab into it at novice level by ourselves. If you've got money to invest and you're a beginner, go to a stock broker. If you want to be a stock broker, go to college. The financial and economics sector is vast and intricate and difficult to master and honestly if you're an entrepreneur busy running your business you do NOT have time to be continually informed on your own about the stock market changes. One book or 10 books on the "stock exchange" by some "gurus" is not going to do anything for you. The market is tough to predict, if at all possible, as many factors out of our control of foresight are at the base of it (unless you are a groomed expert, and even then who knows if you'd struggle or not). ...more
1. Treat trading like a business, so you'll want to cut the worst performing ones and hold the best ones
2. Pick stocks based on the growth of a company, such as earning growth, product growth etc
3. Understand that the key to win is to lose less than others, so you need to cut loss strictly at 8% (absolute loss), but allow the winner to grow at least 20%, which is 3:1 ratio.
4. And most importantly, respect and follow the market, do not fight against it.
I have to say O'Neil isn't a good writer. The book could be organized with better structure. Instead, O'Neil poured lots of random thoughts in each chapters which makes it not quite consistent. And he tried too hard to sell his IBD stuff. He could totally remove those IBD things from each chapter and have a new chapter to give hands-on instructions for those who are interested. I do like the Q&A section where he explained his thoughts about lots of common topics in investment, such as short selling, options writing etc.
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Some spoilers below:
The CANSLIM principles are:
C: Current quarterly earning growth should be high. You should only look at quarter to quarter increase to avoid seasonality. And the growth rate should be at least 20%. You could check consensus estimates to confirm your idea. But it's better to make sure the sales growth is at least 25% too. Similarly, if the earning growth slowed down significantly for two quarters, it's also a sign of weakness.
A: Annual earning should increase steadily for at least two years before the break out too. Also, pay attention to ROE and cashflow per share. The author believe everything in the market sells for about what it's worth at the time based on the law of supply and demand. So there's no such "cheap" stock to him.
N: New product, services or management from the company. Basically, there should be something new to drive the break out.
S: Supply and demand determines the price. It's a good sign for a small to mid size company to buy back stocks. And lower debt ratio is also good. One way to show the S&D is by checking the volume. If volume dry up when a stock pull back in price, it means there's no further selling pressure. And when price going up, you'll want to see volume up because it means some institutions start to buy too.
L: Leader is far better than lagger. Still, consistent with author's idea about chasing the best stocks, those lead their industries and are number one in their field. People buy lagger with sympathy but it never catch up. So learn to sell worst performer and keep the best a little longer.
I: Institutions are the key buyers of a growing stock. Buy only those stocks that have at least a few institutional sponsors with better-than-average recent performance and have added institutional owners in recent quarters.
M: Market direction is more important that all rules above. In bear market, stocks usually open strong and close weak. In bull market, stocks usually open weak and close strong. The general market averages need to be checked every day. The use of limit order is not recommended because you want to move fast.
And the most important two topics:
To detect a market top, keep a close eye on those composites and indices. On one of the days in uptrend, volume will increase but the price increase becomes smaller, which is "heavy volume without further price progress up". The average may close down for the day, making the distribution easy to see. After four or five days of definite distribution over any span of four or fives weeks, the market will almost always turn down. After the first day's rebound, the second day will open strongly but suddenly turn down near the end of the session.
To recognize the market bottom: A rally attempt begins when a major market average closes higher after a decline that happened either in the day or during previous session. Starting on the fourth day of the attempted rally, look for one of the major average to follow through with a booming gain on heavier volume than the day before. When a bear market bottoms, it frequently pulls back and settles above or near the lows made during the previous few weeks. Remember, no new bull market has ever started without a strong price and volume through confirmation.
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Knowing that helped a lot because halfway through I started to question if this book is just one big sales pitch. After reading an entire chapter dedicated to promoting their product I started to notice every other page has their product mentioned as being used to make a critical decisions.
I just finished, so I'm still not sure what I think of the book. Their method seems way too perfect. I couldn't find much information about their Company or William J. O'Niel. He has a net worth of $100 million but most of his Wikipedia is about his products. Also all the people in the testimonials who made money mentioned they made it in between 1996-2000. Anybody with a brain could have made money during that time.
A lot of the methods in the book contradicts everything everybody says (ex. Doing things the Warren Buffet Way and Buying a good company like Coca Cola to keep for 10 years...everybody I've met cites Buffet the way every business person I've met says 'like Steve Jobs' after every sentence) and that made it very attractive. I really want to believe what I read works, but I might have to buy a subscription to their database to do it in the best way possible. I'm skeptical for that reason.
I'm giving it 4 stars because it's a classic, William J. O'Neil includes a great story about how he made millions by betting everything he owned on margin multiple times, and besides the sales pitch it is a pretty good book. I'm not a big investor but I have heard money managers say a lot facts he mentioned as doctrine...which may or may not be a good thing.
...more O ́Neil's key message is to focus on momentum, and change. Instead of fearing or having disbelief in stocks that trade on 25-50 times earnings and making new highs, he advocates them using his CAN SLIM system. I think every value investor should read this book. It would prevent them from buying apparently cheap value traps in bad industries etc.
The book is divided in 3 parts. In the first part it's all about his winning system, CAN SLIM. The second part is called, "be smart from the start" and the third part is called "investing like a professional". It's written in a very easy language, but to me it's a bit too much of a commercial. The negatives with this book are that's sometimes I get the feeling that the book is written with the sole purpose of promoting O'Neill's newspaper and brokerage business. Another negative is that very rarely are there any issues or problems with his strategy. But overall the positive clearly outweighs the negatives.
The CAN SLIM method is an easy to understand framework to give you necessary focus on the dynamics of the stock, and its fundamentals. It focuses you on Current and Annual earnings growth as well as what is driving that, what is the New; products, management etc. After the fundamentals, it also looks at the chart, and some technical factors, Supply and demand for the stocks, if a stock is a Leader/Laggard in the market, in its industry, does it have Institutional sponsorship and finally in what direction is the overall Market heading. Compared to other authors that advocate a more dynamic approach to stocks like Jesse Livermore, Edvin Lefewre, or pure technical ones like Martin Pring, this actually brings the fundamentals to the forefront, trying to learn from previous success stories in the stock market, and to see to what extent these new ideas qualify as a potential ten-bagger.
In the early 90's I found myself too often buying stocks that had fallen out of favor and were looking cheap, only to learn they could get cheaper and also that there could be good reason for the cheapness. Bad fundamentals often turned into even worse fundamentals, and maybe even structural issues. After reading this book I got a more focused on what drives stocks, positive news (for big moves). I think all value investors, like me, should read this book to focus to a larger extent on growth and opportunities. Or at the very least avoid cheap stocks in dying industries, were often a "new technology growth" company are changing the dynamics of the industry. Think for example about Amazon vs companies selling electronics/books etc.
As a final note, O ́Neil's favourite book is Gerald Loeb's, The Battle for Investment Survival. This is another book to recommend if you need a more dynamic approach to your investing.
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Most of this books has valuable lesssons on what to look for when picking the next big stock. Combining extensive historic chart data and pointing out the key fundamentals to look for the author shows how great companies have previously made big runs in the market and how you can develop the skills to pick innovative growth stocks in the future.
He also highlights his CAN SLIM methodology: Current results , Annual results, New
Excellent blend of fundamentals and technicals for picking prime stocksMost of this books has valuable lesssons on what to look for when picking the next big stock. Combining extensive historic chart data and pointing out the key fundamentals to look for the author shows how great companies have previously made big runs in the market and how you can develop the skills to pick innovative growth stocks in the future.
He also highlights his CAN SLIM methodology: Current results , Annual results, New, Supply, Leader/Laggards, Innovation, Market. This is very important to understand not only fundamentals that drive price action but also how to know what the market is telling you and understand IBD methodology and data.
There are some latter portions that are marketing the IBD methodology, product and services. Although I use some of them it distracted a bit from the core message of the book but you can either skip it or learn something new.
I will have this as a reference to improve my skills, to remind me of possible key mistakes and rules to follow to be successful in the stock market.
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Something you might got after completing this book:
- How to choose a good stock base
Something you might got after completing this book:
- How to choose a good stock based on CAN SLIM standard
- When you cut the loss
- How many core stocks should hold
- How to analyze the chart to decide when buy and sell.
- ...
It is a very good book for beginners.
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The CANSLIM is great for finding quality stocks. One could apply it to a shorter time frame than suggested in the book and still be trading a strong stock, which of course gives you greater chances for a successful trade. Sounds simple doesn't it. Ha!
I traded the O'Neil CANSLIM method covered in this book for about 8% a month 10 years ago. Having daytraded for 2.5 years in recent years, I probably wouldn't be comfortable trading this method during the current economic situation.The CANSLIM is great for finding quality stocks. One could apply it to a shorter time frame than suggested in the book and still be trading a strong stock, which of course gives you greater chances for a successful trade. Sounds simple doesn't it. Ha!
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On the contrary, honey is just in the beginning few chapters and remainder is filled with IBD advertising and ineffectual information.
William O'Neill has done the heavy lifting. He has researched
how the market really works based on history, has put a few
rules together to help navigate one to success in the market which then helps you achieve confidence in your investing decisions.
What's in it for me? Learn to win big on the stock market.
For many people, the very thought of investing in stocks brings anxiety. What if the market goes south, and you lose everything? What if you invest in a dud while other great stocks shoot up around it? The truth is, those things do often happen. It's a risky game. Just look at grainy footage of the stock-market crash of 1929 or recall the dotcom bubble, and you'll see a world of panic and hysteria.
But i
I read this book thanks to Blinkist.What's in it for me? Learn to win big on the stock market.
For many people, the very thought of investing in stocks brings anxiety. What if the market goes south, and you lose everything? What if you invest in a dud while other great stocks shoot up around it? The truth is, those things do often happen. It's a risky game. Just look at grainy footage of the stock-market crash of 1929 or recall the dotcom bubble, and you'll see a world of panic and hysteria.
But it doesn't have to be like this. There are tried and tested methods. These will help you to choose great companies, invest in them at the right time, and avoid the unprofitable ones. You have to learn from history – from the stock market's great winners and losers. When you do that, it's possible to strategize so that you maximize your returns and avoid big losses. In these blinks, you'll learn some of these winning methods, from a telltale stock chart pattern to the best types of companies in which to invest.
In these blinks, you'll learn
• what a "cup with handle" means in stock-market parlance;
• what Cisco Systems and General Motors have in common; and
• how truly innovative companies can race ahead of the pack.
Final summary
The key message in these blinks:
Before you invest in the stock market, you should learn how to read stock-price patterns; one particularly useful pattern to look out for is called "Cup with Handle." As well as stock-price patterns, you should make sure that your chosen stock is sound in other ways. For instance, it should be an industry leader, ideally with an innovative product or service, while, most importantly, showing an increase in earnings. Finally, watch what top fund managers are doing but do your own homework, too.
Actionable advice:
Cut your losses!
You should know not just when to get into a stock, but also when to get out. That is, if you don't want to lose lots of money. As a rule, it's a good idea to sell a stock when it plunges to 8 percent below your buy-in price. That way, you can keep your losses small as you chase big wins.
What to read next:
Common Stocks and Uncommon Profits and Other Writings by Philip Fisher
You've just learned a whole host of top strategies for stock-picking. As you'll have discovered, there are things you can do to outsmart the market. It doesn't have to be as anxiety-inducing as it seems.
If you want to find out more tips on investing, then you should head over to the blinks for Common Stocks and Uncommon Profits and Other Writings. There, you'll learn the tried-and-tested philosophies of stock-market guru Philip Fisher, whose methods have guided investors and financiers for 40 years.
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I was a bit bothered by some of the reasoning ea
I read this book about technical analysis, despite being a fundamentally oriented investor myself, to see if I could gain any knowledge about investing by considering the perspective of a technician. So, I have read this book knowing I probably won't agree with large parts of it, but still in good faith, judging the arguments on its merits. I will try to let my review reflect this by not critiquing things where two reasonable people could disagree.I was a bit bothered by some of the reasoning early in the book, which seemed rather manipulative to me. For instance appealing to emotion (eg: FOMO), and other rhetorical tricks. The support presented for the authors' methods is rather thin and unrigorous, mostly referring to his own experience, without any real explanation of the soundness of the investing strategies. My interpretation is that the underlying idea of chart reading as an investment strategy is that you can derive fundamental trends in a stock by studying how that stock has traded historically, and that certain patterns repeat themselves and are actionable ex ante.
The proposed strategy is in large part a momentum strategy, with chart reading as a guide for determining when to buy/sell each particular stock. The author advises against investing in bear markets and to stick to stocks with accelerating positive fundamentals, in particular revenues and earnings per share. I liked some of the fundamental advice, but most of it can be found in any investment book. Some of the advice is also pure hogwash, I'm afraid.
On the positive side, there is some good advice for beginners in terms of things to avoid at the beginning in any investment journey. Things like shorting, options, commodities, and penny stocks are very common pitfalls for people just starting out. A good quote on the subject of risks for beginners:
"Winning investors should first learn how to minimise the investment risks they take, not increase them."
On the negative side, this quote sums up some of the hubris and quality of the argumentation in the book quite nicely:
"It's unbelievable how much erroneous information about the stock market, how it works, and how to succeed at it there is out there."
I'm afraid this book contains more than its fair share of examples of that.
Despite this books general incoherence it still gave me an introduction to technical analysis and some things to mull over, so my grade is 2/5.
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Now, onto the reason this book got only 2 stars from me:
1. I had to put this book down after the 200000000th time he mentioned how AMAZING America is (b/c
I'd already learned about CAN SLIM via fintwit and youtube, and I applied it (very loosely) last year during the crazy 2020 market. I'm not sure if it works b/c a monkey could probably have netted a pretty decent return after March of last year. But I do think the overall system makes a lot of sense and the sell rules are especially important.Now, onto the reason this book got only 2 stars from me:
1. I had to put this book down after the 200000000th time he mentioned how AMAZING America is (b/c capitalism) and how communism sucks and did I mention America is the best? I realized, in horror, about half way through the book, that he's probably a Trumper. He blamed the government for the 2008 subprime financial crisis and made repeated cringe-worthy comments about how biased (i.e. liberal) the media is and how we should all be careful of the information we consume. There was also some nonsense about Iran and Hitler and Obama that I've already blocked out of my mind.
2. The book is peppered with promotional bits about IBD's various services. Yes, he introduces the reader to a lot of valuable information such as how to scan for stocks that could have massive growth potential, but hey, if you want those metrics, you gotta use IBD's proprietary tools that will cost you an arm and a leg. He even devotes an entire chapter on how to use IBD tools to execute different aspects of CAN SLIM.
3. He mentions a lot of "research" that they've conducted to prove that his methodology is sound, but he provides no citation or source for this research. Nor has all of this research been peer-reviewed.
At the end of the day, I do believe CAN SLIM is a very interesting and systematic way to approach the market. I have no doubt it works for some people, and I will be incorporating bits and pieces of it into my own strategy. I just couldn't stand the terrible writing and biased political commentary.
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CANSLIM strategy in this book requires patience, objectivity, and detachment. It takes time. It's not a scalper's strat. I've had to backtest a My bread and butter book when I started dabbling in trading back at college, and is a foundation of my current trading strategies. I can directly attribute this book to helping me make some money that were at times more than the combined salaries of two deans. I own 3 out of 4 editions and currently looking for the first edition to add to the collection.
CANSLIM strategy in this book requires patience, objectivity, and detachment. It takes time. It's not a scalper's strat. I've had to backtest a collection of historical charts, more times than I would like to admit, in order to check the soundness of the strat and to let it sink in me when it works (sometimes or, conservatively, most times it doesn't and that's fine in the bigger picture of a strategy). These days I'm religious to the charts but I like how the book finds ways to combine technicals with fundamentals e.g. if the charts look right and the "stories" back it up then it's a good time to decide.
It has a comprehensive index; Plenty of charts and instructions to demonstrate signals.
Some cons: The book doesn't discuss down markets. There are ads pointing to their subscriptions but we've seen those in other good books (e.g. Seven Habits of Highly Effective People, etc).
Disclaimer: Futures trading is not for everyone and involves substantial risk of loss.
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He studied business at Southern Methodist University, received a Bachelor's degree and served in the United States Air Force.
William J. O'Neil is a stock trader, entrepreneur and writer, who founded the business newspaper Investor's Business Daily and the stock brokerage firm William O'Neil & Co. Inc. He is the creator of the CAN SLIM investment strategy.He studied business at Southern Methodist University, received a Bachelor's degree and served in the United States Air Force.
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Book How To Make Money In Stocks
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