Author : William J. O'Neil
Date of Publication : 2002 (3rd Edition)
This is an excellent book on stock trading. The author, Mr William J. O'Neil, has developed a simple-to-remember yet powerful formula known as the CAN SLIM stock trading system to guide investors on how to pick the best performing stocks from among the thousands in the stock market.
Each character of the CAN SLIM stock-picking formula is actually an abbreviation of 7 the characteristics to look out for in a winning stock before it makes potential price movement.
Mr William J. O'Neil devoted a chapter each to describe these 7 characteristic of the CAN SLIM stock-picking formula. Basically, the 7 characeristics that an investor should look out for in a good stock include the company’s earnings performance, whether there’s new management in place, whether there's new products rolling out, level of institutional ownership, a company's relative strength in respect to the industry sector it belongs to etc.
I personally like the chapter on characteristic "M" – concerning Market Direction. This chapter advocates the importance of monitoring the daily market trends ie. The Dow Jones Industrial Average, S&P 500 Index and the NASDAQ Index to determine the market sentiments closely. Mr William J. O'Neil also guides investors how to spot bearishness trend developing by observing days of distribution from price & volume actions. Of course, Mr William J. O'Neil also guides investors how to look for signs of possible breakout to bullish trend.
This trading book is filled with many great stock trading principles and rules. Mr William J. O'Neil teaches us the importance of setting stop loss to preserve our trading capital in case a stock stops performing and the stock price starts falling.
If you have been trading stocks using technical indicators, Mr William J. O'Neil has also included a chapter to describe a few chart patterns to look out when buying a stock. But Mr William J. O'Neil did warn that such buying charts patterns might not work in a bear market situation.
Mr William J. O'Neil took the opportunity to introduce some of the subscription services offered by his company, William O’Neil + Co.. These include the Investor’s Business Daily newspaper and web-site, IBD SmartSelect Corporate Ratings subscription etc.
I have personally subscribed to the IBD SmartSelect Corporate Ratings service, which I find useful & informative. This service provides investors with a comprehensive analysis of every stock classified under the proprietary "197 O’Neil Industry Group". By studying an individual stock's corporate ratings like Earnings Per Share Ratings, Relative Price Ratings, Sales and Return on Equity Ratings, Group Relative Strength Ratings, Accumulation/Distribution Ratings, an investor can make use of the information to determine whether a stock is currently a good performer in a strong industry group thus would probably continue to performer better or is a stock currently a poor performer and should be safely ignored.
Conclusion : I find this book to be important to anyone who has intention to commit his or her hard-earned money or has already invested some money in the stock market. It will surely guide you to be a better investor in picking the right stocks and at the same time preserve your trading capital in case the market turns negative or when the stocks start showing signs of weaknesses.
You can also read further reviews of this book from Amazon.com before buying it. This book retails at $10.36 at Amazon.com
I welcome any comments from readers who have read this wonderful book. Thank You.
Yours Truly
Carol Leng
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