How To Make Money In Stocks: A Winning System in Good Times or Bad, 3rd Edition

The techniques in How to Make Money in Stocks are hardly revolutionary, but therein lies their strength, as O'Neil claims his is "a winning system in good times or bad." Investors interested in Net stocks might be disappointed--the author's first rule is that a company must show a pattern of growing profits, which disqualifies many dot coms. (Try Rule Breakers, Rule Makers for a different take.) O'Neil's approach to stocks is, above all, rational, and he pays little heed to market hype.

Those new to investing would do well to read this book before embarking, and even more seasoned traders may find How to Make Money in Stocks a refreshing return to basics. Markets may swing bull and bear, but O'Neil promises to stand firm. --Demian McLean

To be honest, I was a slow learner too. So,let me take you back a little bit. I first picked up this book in '92, read it, got excited but then went back to doing it my way. I picked it up again in '94, read it and made a note in the book that a company stock called DELL fit the profile of his CANSLIM methods, set the book down, forgot about it and went back to doing things my way. (Didn't buy DELL in '94) Finally, early last year of '98, I again picked up the book and read it. This time I saw a little note that I had written in the book in '94 about DELL and thought to myself 'why was I so stubborn' about 'doing it my way' that I missed out on so much valuable time and money. Since then, I've bought the stock and a few others that have catapuled my portfolio balance to over 200%. Now that feels real good.

Like me for the first time, you'll probably understand most of what he says in the book but you may not relate to what he says entirely until you've been practing or 'getting your feet wet' in the stock market for a little while. Since buying and selling stocks is not a perfect science but rather an art, you will need to go back and reread the book many times over while you're in the market before you'll truly 'get it'.

My only critism about his CANSLIM method is that he steers you towards buying stocks with a low number of floating shares which indicate small to mid cap stocks because he says these stocks have the greatest upside potential. I disagree because hitech stocks like Dell, Microsoft, AOL, and Cisco that have gone global can still grow very rapidly if not faster than some of the small guys.

Other than that, armed with this book and his Investors Business Daily, you'll be able to achieve the returns that you've always wanted.

The selection method detailed in this book is called CANSLIM. The information, and CANSLIM method, is based on years of research and number crunching with main frame computers some years ago. O'Neil and his associates profiled 100s of already successful companies to determine what characteristics made a company's stock rise BEFORE it was a winner. His findings, and the CANSLIM selection method, are explained in great detail.

William O'Neil is also the CEO and Editor of the Investors Business Daily. His CANSLIM method of stock selection can best be executed using his IBD Newspaper. Surprise! Bound inside, there is a coupon for 10 free issues.

"How To Make Money In Stocks" is not the easiest book to understand for the beginner. It's information though will help narrow down 1000s of stocks to just one or two. I use it as a reference book and refer to it often. Take some notes on the inside cover- your going to need them.

An excellent buy, this book is destined to be a classic. As William himself says of one of his chapters: "one of the most valuable chapters in this book.... should be worth several hundred times what you paid for [it]. I agree.

William O'Neil doesn't tell you anything new about growth investing. He tells them in a way that makes sense. Accelerating EPS, something new, leadership, market direction, institutional support...these are well-known growth investment criteria. So people who are slagging off O'Neil here don't really know much about investing. And yes, you have to spend a lot of time/money on charts, on price mevements, and on researching companies. I spend a fortune on Company REFS every year. Why not? Has someone told you that getting rich was easy? If you are not ready to give investing a great deal of your time, money and passion, you can forget about it.

I have followed his methods and yes, I have made good money from them. That too living here in the UK, where you cannot get all the information we need on O'Neil's criteria (and no, I haven't subscribed to IBD, there is no use of IBD for UK markets). So you have to be imaginative. I don't have access to IBD's proprietary relative strength measure, so I use Company REFS's measure instead, and analyse charts of a stock (against FTSE-100 and sector index) very closely using ShareScope. UK companies don't have quarterly reports, so I use half-yearly reports instead. I don't have access to IBD's SMR rating (sales + margin + relative strength). So I take a very close look at each of these measures on Company REFS and ADVFN. If you are driven enough, you can find a solution to every problem.

My only complaint is that O'Neil doesn't empasise the importance of cash flow and balance sheet enough. He does mention the requirements of 1) low debt and 2) cash flow per share higher than EPS, but only fleetingly. But that's really nitpicking. Everybody has (at least should have, anyway) their own investment strategy. So you need to decide which bit you want to stress on.

Great book A must read for every investor.

If you combine O'Neil's theories with your own ideas and throw in some technical analysis and hard work, you can be well on your way to riches. For charting, check out tc2000.com, great software.

I saw one review ripping on technical analysis and the guy said he was a professional. Technical analysis should be used for buying and selling in my opinion; otherwise you are just letting chance and instinct determine when you buy and sell. This book will give you a brief idea of charting and technical analysis but if you want a more detailed description check out Technical Analysis of Stock Trends by Edwards and Magee.