157 of 158 people found the following review helpful
on September 13, 2010
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.
102 of 106 people found the following review helpful
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.
58 of 60 people found the following review helpful
on March 17, 2011
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.
30 of 33 people found the following review helpful
on May 10, 2012
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.
33 of 39 people found the following review helpful
on May 10, 2013
I really wanted to love this book. Really, I did... When I saw all the positive reviews, I just figured the ones who rated the book with lower ratings must be IBD haters, but sadly, much of what the 3, 2, and 1 star raters said about this book is true. I checked this book out at my local library because I realized that buying books on trading stocks is a 50/50 crap shoot and I am very glad that I didn't buy this book! I am a firm believer that life is about continuous improvement in all areas so I am always looking to learn more about trading in the market, hence my decision to get this book.
I started seriously trading stocks and stock options almost 3 years ago and I find that most gurus (like O'Neil) do everything they can to over complicate the process of trading to psychologically brainwash people to believe that they need to buy and/or subscribe to their expensive systems in order to find the holy grail to make money in stocks. Thank goodness I didn't read his book before I started trading, cuz if I had, I would feel too inept and fearful to trade. If this was my intro to the stock market, lord knows I'd still be sitting on the sidelines (instead of making money trading in the stock market) with the paralysis of analysis syndrome that many succumb to in terms of getting their feet wet in the stock market. Don't get me wrong, you definitely need to educate yourself about trading the market, but I don't subscribe to spending hundreds and thousands of dollars to do it, and Mr. O'NeiI's self promotion of his packages could easily cost as such. I certainly did learn somethings that I didn't know about the stock market as I read this book, but what I learned won't make or break my current strategy which is to trade LEAP call options in robust, long standing, stable, strong large cap companies with minimal emphasis on being obsessed with crystal ball chart reading. Using the KISS (i.e. Keep It Simple Sweetie) method we were taught in school, I have more than doubled both my long term (i.e. retirement) and short term (money to live on today) portfolio in less than 6 months. I am no expert, thus I am always learning, but this author says that you will have to read his book 5 or 6 times (and pay for his IBD system) before you are ready to be successful in the market and this book is as thick as 1.5 bibles or a webster's dictionary (this book is 500 pages!). And if you have a life (like most of us do), more than likely, you won't be so inclined to do that. Call me the Forest Gump of stock trading, but I've found that trading stocks don't need to be as difficult as these guru's make it out to be, which is why most people don't even bother trying to get into the market. They purposely make it complex and convulted because they want to influence people to buy their system of doing things. I have found that whenever I've overcomplicated things by trying to do exactly what this guru said or that guru said, without fail, I've lost money, but when I use my simple little strategy mentioned above combined with common sense, sound money management, and staying attuned with the happenings of the market on a daily basis, I've been doing quite well with my trades. With today's Information age, there is just no reason to be spending hundreds or thousands of dollars on systems like Mr. Oneil, and truth be told, most people don't have that kind of money to begin with. The turn off for me is that this book starts out with dozens upon dozens of stock charts that tests your ability to find the ever illusive "cup with a handle." I looked, and looked, and looked and even asked other people to look at the charts to see if they could see a "cup with a handle" and no one I queried could spot this image which was disappointing because it is one of the main premises on how he claims will get you paid if you see such a chart. Perception of an image (as most of us remember from our college psychology class or text book where an image would be presented to the class and some would often see the image of an old lady and others would see an image of a young lady with a hat on and her head turned to the side, or some would just see an abstract image of nothing at all) is in the eye of the beholder so that is a very poor way of conveying a main tenet of a trading system.
And yes, others are right, Mr. O'Neil goes on adnauseum discussing how attending his trainings or subscribing to the IBD/CANSLIM system (via his website and newspaper) of trading stocks is going to mean life or death with your ability to make money in the stock market, and because I do make money trading stocks and options and I have yet to apply his system, I whole heartedly disagree. I believe you can make money with his system or any other system that fits your trading style, risk tolerance, and stock trading psychology. The key is to find the trading system that is just right for you and IBD isn't the end all be all. There is always something to learn from books like this, but I've learned to chew the meat and spit out the bones. With that said, you may want to see if the book is at your local library before spending your hard earned cash on it so you can be your own best judge. Lastly, IBD groupies, please don't hate on me (like many of you have done to others who dare to not rate this book with high marks) because I have a different opinion from the rest of you that have drank the O'Neil Kool-Aide...
12 of 13 people found the following review helpful
on October 4, 2010
The definitive guide in making money in the stock market. As a CPA and investor, this book points out the true things that matter in any company that is trying to grow. Those same attributes must also exist for a company to mount a sustainable increase in their stock price. If I had just one penny for every dollar made and lost netted that this specific book has made investors, I would have enough money to spend for two generations. Do yourself a favor and make this the first book you every read on stock investing. When you finish and feel like you are ready for your second book on the subject, reread this one again.
8 of 9 people found the following review helpful
on January 9, 2011
If you're serious about learning a winning system of investing, then I recommend this book to you. Be warned though, if you do not have at least a rudimentary understanding of financial fundamentals or a background in economics, much of this book will be difficult to understand on first read. I have had to reread many passages as it is also very very dense with information. Not for the feint of heart or the true beginner but a great and proven system nonetheless. Be prepared to devote some time to reading this and studying its principles.
17 of 22 people found the following review helpful
on January 16, 2011
HOW TO MAKE MONEY IN STOCKS by William J. O'Neil
This GOLDMINE SHOULD BE REQUIRED READING IN HIGHSCHOOL/COLLEGE FINANCE COURSES!
I've wasted a great amount of time, money, patience, willpower, motivation before I WISELY took the time to read this book, last year. [I only wish I had of discovered this before I found all the other books I've spent too much money for. Some are over $100 and are worth 1/10 what this $29.95 is worth. If studied, this book is worth untold wealth]
In 07 I quit driving to give TRADING EDUCATION A TRY FOR 6 months full time, after having lost 80% in the 2000 bear due to two unwise advisors who disagreed with my perception to get out. After nearly 4 years I'm still going, although working part-time in summers.
Since 07, I've spent appx $20k on education? and got a smashed egg kind of an education.
Like splat from 20 stories. I understand nearly every basic thing, except how, when, where, which, who, whys of stock selection, THE FOUNDATIONS of ALL SUCCESSFUL TRADING.
In total, I'm around 6-7,000 hours into this and "was" feeling discouraged, frustrated, deceived, cheated, ripped off, and several other colorful adjectives and adverbs.
Appx 2.5 years ago, while browsing the internet, I stumbled onto something about IBD and attempted to get some free info. Within a short few days or hours, some sharp young man at IBD called and I subscribed to the paper, (same one I had purchased 20-30 times while driving over the road. I knew it seemed 10x more potent than WSJ from 3-4 years subscribing to WSJ in the 80s. But I didn't have any idea what I could have done with it till I finally read "How to Make Money in Stocks". WOW Everything that I ever wanted to know that hadn't already been answered is in there.
EPS + SALES + ROE + RS[to S&P500], = The STAR FUNDAMENTALS + the STAR TECHNICALS WISELY BLENDED TOGETHER, like they should have always been (an are by the most successful investors) Cup W/Handles, Consolidations, Ideal behaviors, and at least a dozen other "GRANDFATHERLY + MASTERFUL" insights are shared. If you understand anything about the stock market, this book will get you saying "FINALLY, SOMEONE SAID IT IN A WAY I CAN UNDERATAND IT". +MASTERFULLY CRAFTED IBD 50 CHARTS, SORTED LISTS IN SECTORS, BIG MOVERS, NEWS MOVERS, ETC.
+ THIS IS THE ONLY BOOK THAT LAYS IT OUT CLEARLY, EFFECTIVELY, COMPLETELY, WITHOUT HOLDING OUT CRITICAL ELEMENTS!
Mr. O'Neil's "C A N S L I M" system, like he repeats often isn't just his, it's what he found that GREAT STOCKS "ALWAYS" DEMONSTRATE, HE IS ONLY THE "GENIUS" THAT TOOK THE TIME AND TROUBLE TO DISCOVER IT!
The book is loaded with 100+ MODEL STOCK CHARTS(with important notes), and he explains very adequately, that you don't need any more DISTRACTIONS to trading, it's already challenging enough on it's own.
85-99% of traders loose their profits during challenging times. After deeper reading in the later chapters everyone should discover some of the evidence as to why this is so.
Futhermore, you should also find several reasons to manage your own money and not trust some money manager with all of it, maybe some, but never all, they're motivations can never be the same as yours! Few, very few have the constitution or self-discipline to keep your interests in their "fiduciary responsibility" scopes.
To sum up; If you CHOOSE TO WASTE YOUR TIME, LIKE I DID, GOOD LUCK ON MAKING IT THROUGH THE MAZES OF DISTRACTIONS, RIP-OFFS, POOR TEACHERS, ON THE WRONG TRACK TEACHERS ETC.
IF YOU DON'T START WITH THIS BOOK, THERE'S PROBABLY ONLY A 50% OR LESS CHANCE YOU'LL EVERY LEARN ENOUGH TO BECOME SUCCESSFUL AT MANAGING YOUR OWN MONEY. You have to have the patience to spend 500-1000 hours studying this until you're no longer curious about how to verify what you see on the charts(Stocks and Indexes). Mr. O'Neil will help you realize how to track the markets and the best stocks, he's done it for decades now.
DO NOT PASS UP THIS BOOK, IT'S THE ONLY FOUNDATIONAL WORK OF IT'S KIND + it's SIGNIFICANTLY LESS EXPENSIVE than the ALTERNATIVES + THIS IS THE MODEL all other seek to copy!!! By the time you wade through all the other crap, you may not have to patience, time, resources, willingness or motivations needed to try again! THIS BOOK WILL SAVE YOU COUNTLESS HOURS OF FRUSTRATION, and you can have it mastered in as little as 3-500 hours of study, and you'll understand charts as well as many successful traders. Then consider all the other superlative educational tools at IBD. [...] IBD-50 lists published every Friday after the close is a gift to people wanting to learn to trade successfully! Pass it by at your on peril! The majority of the most successful institutions watch it carefully! As you'll discover after tracking it for a while.
4 of 4 people found the following review helpful
on May 2, 2013
Great book. I regret not having read it before. As a former academic I had avoided it due to its loud title, but after reading 130+ books on trading and investing I would put it in first place. It is laden with facts and historical examples. I wish there were more books of this kind in the market. Studying financial history ought to be one of the soundest approaches to trading and investing and William O'Neil has the most obviously correct, yet rare approach to trading and investing which is to study the financial history and the best stocks in the history of the stock market.
It is the best implementation of a rigorous method yet, economists and financial economists continue teaching the efficient market hypothesis are our sheer ignorance. I highly recommend this book. William O'Neil deserves the Presidential Medal of Freedom among other awards.
22 of 29 people found the following review helpful
on October 16, 2010
The problem I have with this book is the lack of HOW. While it talks about CANSLIM's principles and has great charts, it skimmed on the details of the definition of bases, and at times reading this book I felt it was trying to sell me more IBD products than give me the details.