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How to Make Money in Stocks by William O'Neil

How to Make Money in Stocks is a book about exactly that. The author, William O'Neil is a Harvard business school graduate. He has been involved in stock brokering, publishing, and data collection/analysis. When computers were just starting to become available, he compiled a huge database of stock information and deduced a bunch of correlations which he later applied to developing a trading system.

He found that stocks that did well had a few things in common. Those being, growing recurring quarterly EPS, growing recurring annual EPS, and good management practices (maybe we'd call that good governance nowadays?). In addition to those characteristics, the stocks had to demonstrate technical analysis cues in order to prompt trade entry. He employed a team (and still does and IBD, investors business daily) to do all that work. He now publishes that data in a publication named IBD (Investors Business Daily) available in print or on the web.

To make it easier for people to understand how to use IBD, or even for people that want to learn to invest that don't use IBD, he wrote the book "How to Make Money in Stocks". He developed the acronym CANSLIM to help people in their decision making process, but also to explain to his readers how his analysts come to their conclusions. Basically, the book is all about CANSLIM, with each chapter being a letter in the acronym.

To summarize, How to Make Money in Stocks teaches you how to analyze stocks fundamentally and then look for technical cues to enter and exit trades. It is a very good book from a very intelligent and successful person. I enjoyed reading this book very much and have read it two additional times. It is worth mentioning that this book is aimed specifically at US stock markets. O'Neil states "there is no reason to invest in anything but US stock markets". He emphasizes the Nasdaq. As a futures trader, I still enjoyed this book very much. He gives excellent points on how to spot market tops in the main US stock indices. His investment service IBD also keeps a running tab on what stage the major US indices are in, bottoms, tops, middles, you name it. I recommend the book, even if you are strictly a futures trader.

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