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

Rating:
Summary: A little overated but yes a must read for a new trader
Review: I would say as far as bang for your buck you can't lose on this one if you've never traded stocks before.. However you would want to get Technical Analysis of Stock Trends 8th Edition (5 stars in my book) if you want to be a serious / well informed trader..

O'Neils book briefly touches on some major issues and is more geared toward the IBD (Investors Business Daily) trader.. It's basically a "system" to trade stocks refered to as CANSLIM..

CANSLIM is interesting but it does not apply to the style of trader that I am and if your intested in options he seems to be kind of an anti-option trader at least in this publication (but still very important concepts that all traders should know)..

O'Neil's IBD also is primarly concerned stocks that are not "low priced" so you can forget about using this system on stocks that cost $10-$15 but nevertheless you can still apply the principles yourself.. If you have'nt read this book you should but everything in it is not to live or die for.. Must read but develope your own style and use some of his principles as part of a foundation to become a good trader.

One thing for sure you'll learn how to read stocks listed in IBD.. This book is one of the books that got me interested in Technical Analysis.. It is well written but sometimes over opinionated but very useful.. Don't forget no matter how you rate a stock the data is only is good as the source and may not be accurate as you think.. May all your trades yield you fortunes :)..

Rating:
Summary: works, but you need the right kind of market
Review: CANSLIM works, but you must have a momentum market to get the best results. In choppy or down markets, this strategy leaves a lot to be desired. For that type of market, see "How Markets Really Work."

Rating:
Summary: Can be a Dream or a Nightmare
Review: This book is dangerous because it leaves an investor in the dark when it comes to chart reading. CupNHandles, Double Bottoms, blah blah blah. The truth is this book only shows investors how to interpret so called "pivot points" which in my opinion are not pivot points because they are rarely near true resistance or support levels. Also, the way O'neil explains how to spot market tops and bottoms is laughable. Many Canslim followers are lost when it comes to everyday price movements. All they understand are "pivot points and breakouts." It's like children who look at a map and can only recognize 1 city. To be truly successful you need, in my humble opinion, to understand trendlines, Bollinger bands, MACD, and that stocks for the most part either trend or trade in ranges. Also, play around and draw trend lines like crazy on some charts. After a while one should see that price movements are not random, but are strategic in trying to achieve an advantage on the opposing side as to which way a trend should occur. What you should recognize is that after a side (longs or shorts) loses the battle, they often times leave or join forces making a stock continue to trend up or trend down. If you pile on after they have already piled on, which is what O'neil advocates, they will crush you one at a time, multiplied by millions, using your 8% stop loss rule. Moreover, I can't tell you how many times breakouts fall back 8% below their "pivot point" to a trend line and then continue upwards from there. CupNHandle patterns are great if the pivot point is within 6% of of a trendline, but they rarely are, so beware. Why am I explaining this? Afterall, everybody is filthy rich using CanSlim. However, there are many things I agree with. Those rules being: buy quality, look for growth, buy strength, cut losers short, don't argue with the market, don't average down in price unless you are highly skilled, I assure you, you aren't, and let winners ride so misinformed, blind CanSlimers will purchase your shares from you. This book is great if you couple it with a technical trading book. Alone the book is a nightmare.

Rating:
Summary: Needed - a pinch of salt with this book
Review: I bought this book last year and subscribed to IBD after reading the book. The author gives some good pointers on identifying companies with superior growth numbers using his CANSLIM method. However the book is very vague on chart reading which by the way is what the whole book is about. For example, the author uses the term "pivot point" without ever defining it.

His newspaper is heavily advertized throughout the book. It feels like it is the other half of completely mastering the art of investing - the first half being reading this book. IBD does have a nice system of categorizing stocks according to metrics such as EPS and comparing them to all other stocks in the market. This database seems pretty useful in finding out just how good a company's performance is compared to all other companies.

But what is surprising is whenever IBD analyzes current charts for a stock in its columns, they always seem to be making "sharp diagnoses" after the event! For example, after a stock has fallen they will run a column and tell us why that stock fell and what sell characterstics its chart exhibited. Never have I seen them suggest sells/buys before the stock actually tanked/rose. If they are so sure about their chart reading skills, why can't they make those predictions before the stock does something drastic? I would want to see them take real time examples. Perhaps build a portfolio in real time - shouldn't be hard for people professing to teach others how to invest. That way they could actually teach IBD readers how to correctly apply their methods. I have not seen them do anything like that in the eight months I subscribed to IBD.

The IBD 100 index is also heavily advertized on the IBD website. AFAIK there is no fund that actually follows the index. The set of companies that forms the index changes every week. If one were to run a fund that mimics the IBD 100, the overhead of selling/buying stocks according to the index would be pretty high I would imagine. Also since most of the companies in the index are small caps, the very act of selling/buying whenever companies appear or disappear from the index would drive down or drive up the prices of those stocks diminishing returns. So the returns one would get if one were to run a fund following the IBD 100 index would be less than the returns of the virtual index that IBD touts so much.

In total O'Neil sounds like a quack and I am not convinced that I can consistently make money by reading his newspaper or following his often unclear advise. It is possible that in a bull market like the one that existed in the late 90s one could end up getting a list of all the hottest stocks in the market from IBD. If you "invest" in them and they go up, you are a genius! Thanks to IBD.

I would recommend not spending any money on this book. You should perhaps borrow the book from a library and read it.

Rating:
Summary: The best you'll find.
Review: This is the best system you'll find anywhere. I originally worked as a broker for a firm that followed the Bill O'Neil philosophy and that firm made $$ for their clients consistently. Now I follow this system and trade for my own accounts with even better results. My last stock, TASR, was up roughly 100% (much more on margin) in one month and I found this stock by using the fundamental & technical analysis that I've learned through Investors Business Daily along with dailygraphs (www.dailygraphs.com). His strategy of cutting losses quick and letting winners ride is necessary to preserve capital and maximize gains. AAII (American Association of Individual Investors) rated this as the best performing strategy over several years period.