How To Make Money In Stocks by William O’Neil
This book is about finding “multibaggers” – the stocks that double in price and then keep climbing higher. Having studied the best-performing US stocks throughout history, William O’Neil distills the attributes they share and prescribes a system to identify and trade the future winners. It is a no nonsense guide to making money, a reference for adherents, and a refreshing challenge to orthodox investing.
You can forget the “buy and hold” strategy: limiting your losses and timing the market are far more important if you are to preserve your wealth. And you can disregard the traditional valuation metrics because they were of little help “post-GFC”, in the 2000 tech bubble, or in any of the previous periods in which enormous gains were made. Focus instead on new growth areas, recognise patterns in market trading – one hundred examples of price chart are provided! – and buy more of the stock as its price trends upwards.
Admittedly, this is not a light or entertaining read. It blatantly plugs O’Neil’s stock data services, and more frustratingly it fails to address the “false positives”: O’Neil gives no examples of stocks that meet his criteria and yet fail to deliver. Nevertheless, it contains concepts that are critical to your wealth. For example, at Cadence Capital we seek to benefit from trends, and we actively scale into and out of stocks to maximise returns and to prevent large losses. There is some drudgery to investing after all, namely the discipline required; you can consider this book a modest test!