The How to Make Money in Stocks Complete Investing System: Your Ultimate Guide to Winning in Good Times and Bad [Paperback]

William O'Neil (Author)

Book Description

Publication Date: August 10, 2010

Anyone Can Learn to Invest Wisely With This Bestselling Investment System!

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 successful investing. O'Neil's powerful CAN SLIM Investing System--a proven seven-step process for minimizing risk and maximizing gains--has influenced generations of investors.

Based on a major study of all the greatest stock market winners from 1880 to 2009, this expanded edition gives you:

• Proven techniques for building 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 profitable trends
• Strategies to help you avoid the most common investor mistakes!

Includes the Investor's Business Daily Action Plan DVD

The CAN SLIM Investing System
The American Association of Individual Investors 12-year study of over 50 leading investment strategies found O'Neil's CAN SLIM System to be the top-performing strategy. CAN SLIM produced 2,763.3% over the 12 years vs. 14.9% for the S&P 500.

Complete Investing System-You Get Started in Three Easy Steps:

1. ACTIVATE YOUR eIBD SUBSCRIPTION
   You'll get one month of access to the tools and features in eIBD and investors.com to help you apply what you learn in How to Make Money in Stocks

   Get your first month of eIBD now at investors.com/system. Then, watch the enclosed Action Plan DVD that gives you a quick overview for using eIBD.

2. REGISTER FOR YOUR LIVE INVESTING WORKSHOP
   At this three-hour workshop, IBD experts will give you an overview of the CAN SLIM System and provide an action plan for using key features and investing tools.

   Call 1-800-831-2525 to register for the workshop nearest you.

3. READ HOW TO MAKE MONEY IN STOCKS
   This book gives you the foundation for your investing success, so be sure to read each chapter carefully. Follow these three steps and you'll be on the path to being a more successful investor.

You Can Do It, Too!
"I figured I made more money in stocks using IBD as my daily resource than I've made as a CPA over the last 10 years." -- Robert F., Illinois, CPA

"This system has helped me find the big winners in a market rally, and more importantly, it has helped me avoid the big losses in a market downturn." -- Michael A., Florida, retired

Editorial Reviews

About the Author

Author Profile
William J. O'Neil (Los Angeles, CA) is the founder and chairman of Investor's Business Daily, one of the world's leading financial newspapers, and is internationally regarded as a foremost source of investment research and advice. He is also founder of William O'Neil + Company, a leader in equity market information and data research for more than 400 major institutional money managers worldwide.

Product Details

• Paperback: 500 pages
• Publisher: McGraw-Hill; 1 edition (August 10, 2010)
• Language: English
• ISBN-10: 0071752110
• ISBN-13: 978-0071752114
• Product Dimensions: 9 x 6.6 x 1.3 inches
• Shipping Weight: 1.6 pounds (View shipping rates and policies)
• Average Customer Review: 4.3 out of 5 stars  See all reviews (45 customer reviews)
• Amazon Best Sellers Rank: #8,335 in Books (See Top 100 in Books)
  • #17 in Books > Business & Investing > Investing > Stocks
  • #34 in Books > Business & Investing > Investing > Introduction

Most Helpful Customer Reviews

105 of 106 people found the following review helpful

5.0 out of 5 stars A complete book September 13, 2010

By bobby

Format:Paperback

This is a great book. It will turn many of the conventional nuggets of wisdom about stock market on their head. It is a fairly complete book. For an individual trader it explains the investing process well. The 100 or so charts at the beginning of the book are very valuable and informative. CANSLIM is the right system to follow in my experience as well. Probably the most important piece of advice in the book is the advice to cut your losses short at 7-8% from your purchase price of a stock. Most recently 3 follow through days in the market have failed. This book however says that follow through days which mark the beginning of an uptrend in a stock market are reliable about 80% of the time. No book, no investing philosophy can be perfect, that's why one needs to cut the losses short so that one can live to fight another day.

This book with green cover is only slightly different from the one with orange cover. The differences are-
1) there is a quiz at the end to test your knowledge of CANSLIM
2) there are more recent charts of stocks which were hits and picked around March 2009 as part of William O'Neil's institutional service. These are stocks like Priceline, CERN, NFLX etc.
3) there is a CD attached to the back cover about a trial of one of their services.

All in all i don't think there is a need to get the latest book if you already have the book with orange cover.

66 of 70 people found the following review helpful

5.0 out of 5 stars Simply the BEST. October 11, 2010

By Steve Burns TOP 1000 REVIEWERVINE™ VOICE

Format:Paperback|Amazon Verified Purchase

I have read over 150 books on stock trading and investing. I have reviewed them all here on Amazon. With this book I will now have read "How to make money in stocks" three times, reading the 2nd, 3rd, and now 4th edition. I have to say after reading this book at different stages in my trading journey, and having used its principles in real investing and trading I truly believe this is the #1 stock trading/investing book out there. I myself have used the principles of this book to average over a 20% return in my 401K from 2003 to 2007 and then like some of the smart readers of O'Neil's newspaper went to cash in January 2008 completely sidestepping the financial meltdown thanks to his principles. Author William O'Neil is the modern day predecessor of the greatest trading legends, Jesse Livermore, Nicolas Darvas, Gerald Loeb, and Bernard Baruch. From the investing results of his proteges Gil Morales and Chis Kacher with their accumulative 18,000% return during the boom years that they document in "Trade like an O'Neil Disciple" he is likely the greatest living pure stock trader in the world. William O'Neil also runs O'Neil and Company and advises some of the world's top money mangers. O'Neil is also publisher of the Investor's Business Daily newspaper which he subsidizes because it is not profitable. (I think he publishes it for himself, all of his other businesses are profitable.)
At the beginning of the book you will see the price charts of the greatest winning stocks of the past 100 years. They are marked with notes to show you what proper bases look like and what a stock looks like coming out of a cup with handle formation. You will see the difference between a strong chart and a weak chart.... It is very interesting to see what a climax top looks like right when a stock runs out of buyers and then investors sell in a panic. How the 50 day moving average relates to a chart along with the general market is also very educational.
The book lays out both excellent fundamental reasons for buying growth stocks using the CAN-SLIM method along with the rules on when to buy them. It also advises to cut all losses to no more than a maximum of 7% to 8%, and to prepare to take profits when you are up 20% to 25% in a winner. The key is to cut the loser when it starts failing to make new highs out of a chart cup with handle formation, and also let a winner run and do not sell it unless it pulls back sharply or it runs to high to fast and fails to hold the new highs with a climax top formation.
The CAN SLIM method is based on a stock having these fundamental criteria:
C-Current quarterly earnings per share should be up a major percentage-25% to 50% minimum-over the same quarter the previous year.

A-Annual earnings growth rates of 25% to 50%.

N-New products,new services or new management along with new price highs.

S- Supply and demand:big volume demand for the stock at key points.

L- Buy only the leading stock in the top industry groups.

I-Only buy stocks with some institutional sponsorship.

M-Only buy into an up trending market.

The book covers each of these areas in great detail. This deluxe edition of the book also has a free month of eIBD, an action plan DVD, and admission to a three hour IBD investing workshop. You will understand the CAN SLIM system after reading this book. This system was built after studying the greatest winning stocks of the past 100 years both their fundamentals and technicals. This book is a wealth of information. It is not based on anyone's ego, beliefs, or predictions. William O'Neil has turned making money in stocks into a science. AAII's independent study showed the CAN SLIM method was #1 of many systems tested from 1998 to 2009 with an average 35.3% annual and cumulative 2,763% return.
The only thing I disagree with in this book is O'Neil suggesting buying and holding stock mutual funds for 15 or 20 year time horizons because unlike stocks they do come back and history has shown 10 year holding periods are almost always a win. Studies have shown you can double your returns in a stock index by simply selling when it crosses down through its 200 day moving average and only buying back when it crosses back above the 200 day moving average. I could not watch my mutual fund's value melt away and do nothing, they do track the market very closely. I do not understand why O'Neil would put that in his book after the carnage of 2000 and 2008. I mentally can not deal with such large losses I go to cash from mutual funds in recessions and down trends. The book could have also gone a little deeper into the psychology of investing/trading, most traders and investors have huge problems cutting their losses, letting their winners run, and sometimes even pulling the trigger to buy the stock. I would love to have had a chapter on O'Neil's thoughts on trading psychology.
Regardless, in my opinion the #1 book on investing/trading on the market today. Read more ›

28 of 29 people found the following review helpful

4.0 out of 5 stars Basically HowTMMIS Ed. 5... but not worth getting if you have Ed. 4 March 17, 2011

By itravel

Format:Paperback

William O'Neil's books are an essential part of any investor's or trader's library. Seriously, even if you don't buy into his philosophy, what he says in these books will help you since he tells you the rules of the market. I (and many other traders) have made a lot of money using his method.

The only difference between this book (basically, 5th Edition) and the 4th edition (orange cover) is the "Bonus Chapter" at the end - 45 pages of test charts and questions. In my opinion, not worth buying if you already own the 4th Edition. Yes, the DVD is also included, but it's only maybe 15 minutes long and tells you how to use their newspaper and site. Once again, not worth paying extra for... I'm sure their investor.com site has a similar video available. The 4th/5th edition include several additions over the prior editions, and I highly recommend buying one of them to replace the 1st-3rd edition books.

When I started learning O'Neil's strategy in 1993, there was only the newspaper. Then, he added one seminar ($800), which I took in 1999 and which helped me understand his system and make (and keep) 300% in 6 months (9/1999-3/2000). Today, there are so many options to learn... Investors.com, his several books, several different levels of seminars, Meetup user groups, etc. Ironically, this book pretty much covers everything that's taught through the other mediums - you just need to read it carefully and thoroughly and repeatedly. From what people have told me, the one medium which teaches skills not mentioned in the book is the Chart reading seminar ($3000), where you learn advanced chart reading skills.

Learning to trade using CANSLIM (i.e. the O'Neil method) does changes your life, but you need to be ready to spend several years to learn the skill.

10 of 11 people found the following review helpful

4.0 out of 5 stars A key book for growth investors May 10, 2012

By J. Keenan

Format:Paperback

Along with O'Neil's excellent THE SUCCESSFUL INVESTOR, this book is one of the best introductions to growth stock investing available. He proposes a method (CANSLIM) to discouver what are the best candidates for investment and measure overall market health. BOTH are required for his method to work. The fact that it encourages the use of Investor's Business Daily (IBD) is not a drawback to my mind because market and industry trends change so frequently that you need a daily source of information to keep up with possible CANSLIM candidates. That being said, readers should realize that this method requires that you familiarize yourself with charts and that you be willing to take responsibility for your choices. Not everyone is willing to spend 10-30 minutes a day reading IBD. Many too, prefer to rely on brokers or a guru to make choices because it gives them somebody to blame when there are losses. IBD is useless for such investors.

If I had to summarize the CANSLIM method in a single sentence, I would say that it is a technique that allows individual investors to piggyback on the ebb and flow of institutional money. O'Neil strongly believes that markets rise and fall because of the daily collective decisions of thousands of domestic and foreign financial institutions (mutual funds, banks, insurance companies, hedge funds, etc.) moving billions of dollars around in search of growth. Compared to these corporations, individual retail investors have no influence. Also, institutional investors are much better informed about future trends than you or I can be. It follows that we as individual investors can greatly reduce the chance element in stock selection by focussing only on institutional-quality companies currently in favour. Avoid penny stocks.... Seek the industries whose market price has risen the most during the last 6 months. And within these industries, focus only on the "leading" stocks showing the best fundamental (earnings and sales growth, healthy margins, industry-changing new products) and relative strength (upward percentage movement in the last year). Above all, do not avoid stocks because they have risen too much or have high price/earnings ratios. The biggest winners every year, the ones that double and triple, are forever hitting their 52-week highs. So look there and do not waste time with stocks hitting new lows. These "bargains" mostly sink lower and destroy your capital.

It follows from the above that the predictive articles most investors eagerly follow in the financial press / websites every day are a WASTE OF TIME. Is this or that company "undervalued"? Insiders are the most informed, but for the rest of us the best path is to see whether the stock is trending upward on good volume. Does this or that chart pattern mean that an explosive rise is soon to come? Nonsense, no one has a crystal ball. The CANSLIM approach is to watch overall market trends and individual stock movements on a day-to-day basis and decide accordingly. Technical chart indicators like moving averages are only benchmarks that guide our thinking on a case-by-case basis, not esoteric mumbo jumbo that somehow predict the future.

A few caveats: assuming the market is not in a bear phase or in correction, O'Neil encourages you to search for these "leaders" as they break out of sound bases. Then you must buy in within 5% of their breakout "pivot points" IF their volume is well above average on that day. To help you find these leaders, IBD lists 50 candidates every weekend that satisfy CANSLIM criteria. Some have not yet broken out. Others may be too extended from their most recent breakout. Unfortunately, 10-15% of the IBD 50 are replaced every week. So that in hindsight it is easy to point out how this or that stock did well "because" it was a leader, but there are many many more examples of CANSLIM candidates with excellent bases and fundamentals that suddenly drop large percentages after proper breakouts simply because market psychology has shifted. It follows in hindsight that they were never true leaders. Meanwhile, there are plenty of companies with excellent charts, but questionable fundamentals, that do as well or better than his CANSLIM leaders. This can be very frustrating.

Secondly, for Canadian investors looking for CANSLIM candidates in the TSE, it is well to remember that our heavy reliance on resource stocks means that their fundamentals are often terrible just before they perform best. Resource stocks rise most dramatically when the market perceives that the commodities underlying these stocks are poised to rise in value after a period in the dumps. CANSLIM is therefore a poor guide in this area.

To sum up, CANSLIM works best with young companies offering new products, often in tech industries. That way, their sales, earnings and margins show the steady rise that gives them a high fundamental score in the CANSLIM universe. At the end of the day, however, the market is a maelstrom of fear and hope where fleeting perceptions of future potential far outweigh past fundamentals. CANSLIM can help you narrow your list of choices, but it can also give you a false sense of security until the day where your "leader" suddenly loses favor. CANSLIM leaders are NOT "buy and forget about it" stocks. CANSLIM has nothing to do with Buffett or his methods. If your stock pick drop 8% below your purchase price, you are strongly advised to sell. If it falls below its 50-day moving average after doing well, you are strongly advised to sell and preserve your gains. The point is, you must monitor them and the major indexes on a daily or at least a weekly basis. Leadership is a tricky business. Read more ›