How to Make Money in Stocks by William J. O'Neil through McGraw Hill
by nlpken
(Oklahoma City)
I've spent 7,000+ hours plowing through almost every book you've mentioned(appx 150+ books, videos, PDFs, etc.), most are good, and yet THEIR ALL "EXPENSIVE AND TIME WASTING" DISTRACTIONS until you've got the foundations built in your mind!!!!!
The MASTER OF THE FOUNDATIONS REQUIRED FOR LONG-TERM "SUCCESSFUL TRADING" are clearly spelled out in "How to make money in Stocks".
The Foundation is CANSLIM
C= Current earnings, preferably 25% increase or HIGHER
A= Annual Earnings, Preferably 25% increase or HIGHER, year over year for last 3 years. (when you study the best stocks of the last 100+ years, you'll find, if you DO ENOUGH HOMEWORK that all the GREAT 100+% PRICE GAINERS all demonstrated SUPERLATIVE EARNINGS POWER, SUPERLATIVE SALES INCREASES, and
superlative management of those spectacular numbers! Others help but these are the foundations of LEADERS!
N= New products, New services, New Management, New territories, New applications of existing products, Re-organization for efficiency, and any other NEW ..... that raises the hopes of professional investors, fund managers, their 75-85%+ of all trades.
S= Supply & Demand (a volume function that takes some study, all superlative performance in the stock market is about volume, learn to read it on the charts VOLUME <> PRICE = Like watching a water hose volume vs. temperature=metaphors help!).
Sometimes wealthy traders manipulate small stocks, so find those they can't manipulate (not penny stocks, some will reward ya, then the next will rape ya - too many are not trustworthy).
L= Leader or Laggard, This becomes very clear when you start learning from Mr. O'Neil's book. LEADERS are managed by diligent managers, and are pro-active vs. re-active. Steve Jobs is a MODEL of PRO-ACTIVE MANAGEMENT, DYNAMIC, DILIGENT, CHALLENGING, PRODUCTIVE, HELPFUL TO SOCIETY!
I=Institutional Sponsorship > 75-85% of the market movement is due to INSTITUTIONS Millions and Billions, Go to Yahoo Finance and look at the companies that own 400-500 millions shares, those quantities moved Apple, YAHOO, QUALCOM..... and other larger NASDAQ tech stocks to their astronomical levels(before splits). Even though Institutions have shadow algorythms to HIDE THEIR BUYING TRENDS. Go to Effective Volume.com and you'll notice some largers stocks have tremendous increases in Large Traders volume for two weeks to two months before the price starts moving. It's the simultaneous buying large and selling small lots that absorbs the free float, until they want you to know about it, then it's announcements on Bloomberg and CNBC for their profits!
Manipulations always have and always will happen in numerous forms! Volume alerts are as VALUABLE AS PRICE ALERTS! That's what always caught Nicolas Darvas's attention. If the stock stayed in a range for a lenth of time, with minimal volume, that's support and confidence. It the stock went down on significant volume, either insiders knew something was amiss or followers ran out of patience and were leaving, significantly.
M=Market Direction, VERY CONTRARY TO Burton M. and all the other manipulators who profess DISTORTIONS, it's very possible to hit 70-95% accuracy on prognosticating the market when you learn the details that impact the market...
Profit taking, Elliott Waves, "VOLUME" - both up volume and down volume (L Williams, J Murphy, R Arms, McClellan's, Dr Elders Tools J Greenblatt all have learned this VOLUME is next after Earnings & Sales).
If I would have started with this book, based on what I've finally learned, I could have gotten by with buying just about 25-40 of the books I've got now.
If you don't start with "How to Make Money in Stocks" you'll probably get eaten alive by the pro-traders (they know everyone is either a target or a predator) they've learned it at numerous institutional firms.
Even floor traders at NYSE, CBOE, and all the exchanges around the world have HIGH TURN OVER RATES, you either learn early with some mentor helping to keep you out of trouble, or you perish (explode your alloted account budget).
Why would anyone who's looking to learn trading start out with anyone other than the oldest and best teacher. Mr. O'Neil actually did the first computer analysis of stocks in the later 50s-60s. He spent the time trying to understand what the most important factors actually were, and discovered them. He also found out that many Pro's don't understand how important CANSLIM factors actually are after they get distracted by all the talking heads in NYC / Chicago.
Don't allow all the junk ideas to distract you, go to the source of the most potent FOUNDATIONAL system on the planet. Then you'll know which stock is worth risking your savings on, and when to get in and when to get out (-6-8% loss max).
How the volumes over a 21 day span can tell you when the markets are rolling over! Accumulation vs. Distribution days on the markets.
A & D days are based on Volume and Price!
Go to YouTube.com and type in William J. O'Neil, find the book and watch the video's. Then go to www.investors.com and search for online educational audio's, listen to his 20-60+ minute interviews on radio (I believe both are free).
It will probably take you 500-1,000 hrs of good study time to deeply understand the mechanics of Mr. O'Neil's discoveries, but once you do, WOW, an EPIPHANY!
I've looked for this kind of information over the last 15 years, all over the internet (?15,000 + sites?) and it's not clearly available anywhere except in 'HOW TO MAKE MONEY IN STOCKS" by William J. O'Neil. Then read his two DISTINGUISHED DICIPLES book.
"How to trade like an O'Neil Disciple" published 2009 by Dr Karcher and Mr. Morales. These TWO SUPER TRADERS worked side by side on a personal basis with Mr. O'Neil and know what they're doing after becoming consultants to numerous leading institutions that follow O'Neil and Company.
There are a lot of very successful traders in the industry, but few are willing to really help you become successful, without taking all of your money. If you're like me, you can't afford their MIS-DIRECTIONS, DISTORTIONS, DELETIONS, GENERALIZATIONS, MINIMIZATIONS of content, Maximizations of COSTS! Those are the characteristics of PREDATORS, not teachers! WJO (WON) is the KING of TEACHERS as are his Diciples!
Ken M.
