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How to make money in stocks - William O'Neil

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blue-steens
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last yearBusy2 min read

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Oh, the title is cheesy. I know. Almost a reason not to buy the book.

Anyway, somehow William O'Neil's writings made their way onto my shelf where they sat ignored for a while. Then I read about O'Neil and David Ryan, an O'Neil scholar, in Jack Schwager's Market Wizards and got really excited.

The book is split into three parts.

Part 1

explains the essence of O'Neil's CANSLIM system and is pure gold. I almost didn't want to read on after that and just repeat the whole section. However, that's not how I read books. I prefer to get an overview first and then go back. Anyway, O'Neil combines technical and fundamental analysis. So far, I haven't looked into fundamentals at all. So, his method is an amazing guide!

Part 2

goes into common mistakes traders make and chart reading. There are some nuggets, but not many new insights as far as mistakes are concerned. For me the best part of this section is the chapter on technical analysis.

Part 3

discusses great stocks of the past and gives more advice on how to identify unfolding plays. The best section here is the chapter on historic winners with loads of annotated charts. It'll take some time to work through this properly.

Conclusion

The annotated charts are one of the extremely valuable aspects of O'Neil's book. His explanations are written in easy to understand language. At quite a few points, I felt that the book was a sales pitch or almost like a user guide for O'Neil's venture Investors Business Daily. For a non-member it's not useful to know which proprietary stock ratings to look for on IBD. This aspect made part 2 and 3 a bit of drag at times. However, even amongst all that are nuggets of wisdom.

I had been wondering how to integrate fundamentals into my nascent technical analysis and also how to develop my technical chart reading further. O'Neil's system gives me a great starting point to become a more informed trader.

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