The following is a book review by Stephen Burns.
How We Made 18k% in the Stock Market
Trade Like an O’Neil Disciple (Wiley Publishing) a great book for those of us wanting a peel back the curtain and take a peak inside the world of William O’Neil. I found the book very useful with guidance on trading like Mr. O’Neil, with plenty of nice charts with very useful examples of when to buy and sell stocks. The book does a great job of getting inside the mind of O’Neil, from the standpoint of his frugality and trading methods. It’s easy to spot his major influences being the likes of Jesse Livermore, Richard Wyckoff, and Nicolas Darvas.
This book contains many of the same key elements found in previous O’Neil books:
- Buy expensive stocks and stay away from low priced issues.
- Do not average down in price–only pyramid up to your position.
- Be quick to take losses with your max being 8%, average wins being 20%.
- Let your winners run as long as long as they are behaving properly.
- Diversification is for those that do not know what they are doing.
- It is better to have a few of the best stocks and watch them closely.
O’Neil believes in buying the best stock in one of the best industries with the best fundamentals and growth. However these stocks must be bought at the right time — as they break out of established bases hitting new highs. Another key is these stocks can only be bought during up trending markets. The basis of the O’Neil system is to do what really works in the market by studying the pasts biggest winning stocks and their chart patterns and fundamentals.
The authors of this book were O’Neil’s right hand men for many years, both managing internal portfolios for his company and giving seminars with Mr. O’Neil. Kacher and Morales had cumulative returns of 18,000% and 11,000% over a seven year period, so it goes without saying these guys know how to trade and did a great job in this book explaining how they made such outrageous returns. I found the “Pocket Pivot” buy point especially informative as an ideal point to buy a hot stock based on its chart while it was in the “cup” of the famous O’Neil “cup and handle ” formation. This is a huge new discovery that can increase winning percentages a great deal while using the CAN SLIM system by making the buy point sooner and safer.
The reader gets to read what the author’s considered the ten commandments of Bill O’Neil. These were not issued from Mr. O’Neil but rules and principles gathered while working with the trading wizard day by day.
The book is absolutely packed with excellent information on how the authors achieved such outstanding results and tells of their trading journey. I could not begin to touch upon the vast amount of information contained in this book so I advise buying the book. At the end of the book the authors recommend the writings of Eckhart Tolle and Esther Hicks to really be able to handle the stress and have the right mind set for successful trading. This mention is much needed as I feel that trading psychology is neglected in the O’Neil books. He likely has no need to overcome the mental demons that plague other traders. The need to be right and the inability to handle losses when it is time to sell. Truly an excellent book on trading by real traders.
Stephen Burns a trend follower and break out trader that specializes in the Darvas System. To learn more about him and his trading style you can pick up his recent book at Amazon.com
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