William ONeil - How to Make Money in Stocks: A Winning System in Good Times and Bad, Fourth Edition

How to Make Money in Stocks

A WINNING SYSTEM IN
GOOD TIMES OR BAD

FOURTH EDITION

WILLIAM J. ONEIL

Copyright 2009, 2002 by William J. ONeil; 1995, 1991, 1988 by The McGraw-Hill Companies, Inc. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.

ISBN: 978-0-07-161414-6
MHID: 0-07-161414-1

The material in this eBook also appears in the print version of this title: ISBN: 978-0-07-161413-9, MHID: 0-07-161413-3.

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From a Declaration of Principles jointly adopted
by a Committee of the American Bar
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This text contains the following, which are trademarks, service marks, or registered trademarks of Investors Business Daily, Inc., William ONeil + Co. Incorporated, or their affiliated entities in the United States and/or other countries: Investors Business Daily, IBD, CAN SLIM, SmartSelect, ACC/DIS RTG, SMR, Stock Checkup, Stocks on the Move, Daily Graphs, Daily Graphs Online, ONeil Database, and The William ONeil + Co. 197 Industry Groups.

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Part I:
A Winning System: CAN SLIM

Introduction You Can Learn and Benefit from Americas
100 Years of Super Winners

CHAPTER 2 How to Read Charts Like a Pro and Improve
Your Selection and Timing

CHAPTER 5 N = Newer Companies, New Products, New Management,
New Highs Off Properly Formed Bases

Part II:
Be Smart from the Start

CHAPTER 12 Money Management: Should You Diversify, Invest for the Long
Haul, Use Margin, Sell Short, Buy Options, IPOs, Tax Shelters,
Nasdaq or Foreign Stocks, Bonds, Etc.?

Part III:
Investing Like a Professional

After the market debacles of 2000 and 2008, most investors now know that they need to take charge and learn much more about what theyre doing when they save and invest their hard-earned money. However, many investors dont know where to turn, whom to trust, or what they must stop doing if they are to achieve dramatically superior investment performance.

You dont have to give your money to a Bernie Madoff, wholl take it but wont tell you exactly what hes doing with it. Instead, you can and should read a few good investment books, attend some investment classes, or participate in an investment meet-up group so that you can learn how to invest with real confidence. At the very least, you should learn and understand well the sound principles and proven rules and methods that will protect and build your investment portfolio over time. Half of all Americans save and invest; now its time to learn to do it intelligently with critical knowledge.

When I started investing, I made most of the same mistakes youve probably made. But heres what Ive learned:

• You should buy stocks when theyre on the way up in price, not on the way down. And when you buy more, you do it only after the stock has risen from your purchase price, not after it has fallen below it.
• You buy stocks when theyre nearer to their highs for the year, not when theyve sunk so low that they look cheap. You buy higher-priced stocks rather than the lowest-priced stocks.
• You learn to always sell stocks quickly when you have a small loss rather than waiting and hoping theyll come back.
• You pay far less attention to a companys book value, dividends, or PE ratiowhich for the last 100 years have had little predictive value in spotting Americas most successful companiesand focus instead on more important proven factors such as profit growth, price and volume action, and whether the company is the number one profit leader in its field with a superior product.
• You dont subscribe to a bunch of market newsletters or advisory services, and you dont let yourself be influenced by recommendations from analysts, who, after all, are just expressing personal opinions that can frequently be wrong.