how to make money william o’neil pdf,Understanding William O’Neil’s Approach
Understanding William O’Neil’s Approach
William O’Neil is a renowned investor and the founder of Investor’s Business Daily. His book, “How to Make Money in Stocks,” has become a staple for many investors looking to understand the stock market and make profitable investments. This article will delve into the key principles outlined in O’Neil’s book, providing you with a comprehensive guide on how to make money in stocks.
The CAN SLIM System
One of the core concepts in O’Neil’s approach is the CAN SLIM system. This system is designed to help investors identify and capitalize on strong stocks. CAN SLIM stands for:
- C – Current Quarterly Earnings per Share
- A – Annual Earnings per Share
- N – New Products, New Management, New Highs
- S – Supply and Demand
- L – Leader or Laggard
- I – Institutional Sponsorship
- M – Market Direction
Let’s take a closer look at each component:
C – Current Quarterly Earnings per Share
This component focuses on the company’s most recent earnings report. O’Neil emphasizes the importance of looking for companies with strong earnings growth. A good rule of thumb is to look for companies with earnings growth of at least 25% over the past year.
A – Annual Earnings per Share
Annual earnings per share growth is another critical factor. O’Neil suggests looking for companies with a history of consistent earnings growth over several years.
N – New Products, New Management, New Highs
This component looks at the company’s innovation and leadership. O’Neil believes that companies with new products, new management, and a track record of new highs are more likely to succeed in the long term.
S – Supply and Demand
This component focuses on the technical aspect of the stock. O’Neil suggests looking for stocks with strong support and resistance levels, as well as a clear trend.
L – Leader or Laggard
O’Neil differentiates between leaders and laggards. Leaders are stocks that are outperforming the market, while laggards are stocks that are underperforming. He recommends focusing on leaders.
I – Institutional Sponsorship
This component looks at the level of institutional ownership in a stock. O’Neil believes that institutional investors are often right, so it’s important to look for stocks with significant institutional ownership.
M – Market Direction
The final component of the CAN SLIM system is the market direction. O’Neil suggests that it’s important to be aware of the overall market trend and align your investments accordingly.
Implementing the CAN SLIM System
Now that you understand the CAN SLIM system, how do you implement it in your own investing strategy? Here are some steps to get you started:
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Research companies that meet the criteria outlined in the CAN SLIM system.
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Analyze the technical charts of these companies to identify strong support and resistance levels, as well as a clear trend.
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Monitor the market direction and align your investments accordingly.
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Stay disciplined and follow your investment strategy consistently.
Real-World Examples
Let’s look at a few real-world examples of companies that have successfully implemented the CAN SLIM system:
| Company | Current Quarterly Earnings per Share Growth | Annual Earnings per Share Growth | New Products/Management/New Highs | Supply and Demand | Leader or Laggard | Institutional Sponsorship | Market Direction |
|---|---|---|---|---|---|---|---|
| Apple Inc. | 25% | 20% | New products, new management, new highs | Strong support and resistance levels, clear trend | Leader | High | Uptrend |
