How to Make Money in Stocks by William J. O'Neil

Discussion in 'Educational Resources' started by expiated, Dec 23, 2020.

  1. expiated


    I singed up for a free seven-day trial with Blinkist, but found only two books that were of any interest to me at all. This was one I was curious to check out, so even though the content was pretty standard, I figured I might as well go ahead and summarize it for myself to get a little more out of the information it offered (by synthesizing it in my own mind). I'll probably get started on this task later today.

  2. You've probably seen this, but it's interesting how trading fear/greed etc never seem to change. Interesting I think even after 100 years. Should be able to easily read it for free. The author did eventually kill himself, but I think that was more from personal relationship problems... Also, was Livermore the prototype for Great Gatsby? Maybe.

    Ironplates and Gaslight Capital like this.
  3. deaddog


    This is the book I recommend to anyone who is interested in investing in stocks.

    Follow the advise O'Neil gives and you'll be a successful investor.

    You'll know what to buy, when to buy and most importantly when to sell.
  4. Peter8519


    CANSLIM ... ya... Analyst EPS estimates are everywhere. If missed EPS numbers, sometimes the stock got slammed... hard but other times no biggie. When it's hot like China EV, batteries, Solar, work from home tools etc... they are really hot.
  5. expiated


    Summary #1: Stock Chart Patterns

    Experts in almost every field learn to see patterns that have replicated themselves in the past, time and time again, in order to help them decide how to act in the present. For example, doctors use X-rays, MRIs, and brain scans to treat illnesses before they progress, and geologists use seismic data to help companies find hidden oil reserves.

    The best way for investors to do the same is to learn stock chart price patterns. This will assist them in deciding when to jump in or out of a stock. And one pattern in particular is especially helpful—one that looks like a cup with a handle—which just so happens to be its name.

    Whether the stock is the Northern Pacific Railway at the beginning of the twentieth century, Apple in the twenty-first, or Sea Containers in the 1970s, the trusty Cup with Handle stock-market price pattern has resulted in great rewards for investors over the decades.

    More specifically, after rising for a period of time, a stock will often fall. As it falls, it sometimes makes a rounded, downward curve, which then becomes a steady, flat line. This is the base of the "cup."

    This base is very important. Because, without a strong base of investors who believe in the stock, it could just collapse. But with this solid foundation, the stock will rise properly when its fortunes change.

    As it climbs upward, it will form the other side of the cup. Just then, it dips back again, and it will form the "handle.° It's precisely at that point that you should buy in. More times than not, the stock will shoot upward.
  6. %%
    Good idea/profits;
    + not likely you pick it clean in 7 or 14 days.......................................
    Cliff [summary] notes on that will help;
    maybe 20%.
    80-100% works much better/in etfs anyway
  7. panzerman


    Fine, but how do you quantify Cup with Handle into an algorithm that can be programmed, and used to scan over thousands of possible financial assets?
  8. expiated


    I don't use Cup with Handle myself. But in terms of what I DO use, I rely on This allows me to quantify and scan over thousands of possible financial assets to find the ones that meet my criteria in terms of where they are positioned in relation to various moving averages and/or moving average envelopes; how many days, weeks, or months they have been rising or falling; their proportion of winning days to losing days; their respective P/E ratios; and on, and on, and on.
    Pkay likes this.
  9. expiated


    Summary #2: Increase in earnings is the most important quality in a good stock

    Given that profitability is the key to any successful business, and since, generally speaking, a successful business is accompanied by a growing stock, it follows that one should aim to choose stocks with big earnings increases.

    History bears this out, as illustrated by Google and Apple...

    Google started trading at $85 per share in 2004 and climbed to $700 in 2007. Then, in only 45 months, Apple went from $12 per share to $202. While it’s true that both companies were revolutionizing their distinct spaces in the market, it’s also true that both showed big increases in earnings just before their stocks shot up. Google showed earnings gains of 112% and 123%, and Apple’s earnings were up a staggering 350% the quarter before the stock really took off.

    But, there are pitfalls to this approach. One is getting dazzled by rumors of big future earnings. For instance, during the big internet boom of the late 1990's, many speculative stocks didn't have concrete earnings to show for themselves. Nonetheless, investors drunk on the optimism of the moment bought them anyway.

    These companies then experienced enormous declines during the dotcom crash. But tech companies which did have serious earnings, such as AOL and Yahoo!, suffered much less. The point here is to only invest in companies with real growing earnings.

    When searching for these profitable businesses, focus on the earnings-per-share or EPS number, which is calculated by dividing a company's total after-tax profits by the number of shares issued. Try to find companies that have big, consistent percentage increases in their EPS number.

    In short, percentage increase in EPS is the most important factor to look at when making a decision to buy.
  10. taowave


    I would read Momentum Masters if you are interested in the Canslim approach..
    #10     Dec 26, 2020