VOL. XCIV, NO. 247
BOOK BREAKDOWN
NO ADVICE
Monday, January 19, 2026
Intermediate · 2009
How to Make Money in Stocks
by William J. O'Neil · Partly Dated
A rules-based growth-stock system: screen for exceptional fundamentals + leadership, buy breakouts from proper bases in strong markets, and manage risk aggressively with tight sell rules.
Level
Intermediate
Strategies
4 types
Frameworks
5 frameworks
Rating
Target Audience
Ideal Reader
- Investors who want a structured growth/momentum system with clear buy/sell rules
- People willing to use charts for timing (price + volume) without turning it into day trading
- Anyone who needs discipline: stop-losses, profit-taking rules, market exposure rules
- Investors building a repeatable screening + watchlist workflow
May Not Suit
- Index-only investors who do not want to pick individual stocks
- Value-only investors who primarily buy based on cheap valuation ratios
- Anyone who will not follow strict sell rules (this system depends on them)
- Highly tax-sensitive investors who want minimal turnover
Investor Fit
| Strategy | Growth Investing · Trading · Behavioral Finance · Quantitative |
| Time Horizon | Short-term (< 1 year) · Medium-term (1–5 years) |
| Asset Focus | Equities |
| Math Level | Basic Arithmetic |
| Prerequisites | Comfortable reading basic price charts and volume · Understands EPS, revenue growth, margins, ROE, and basic balance-sheet risk · Able to place orders and manage stops without improvising |
Key Learnings
- 1Stock selection + timing both matter: fundamentals find candidates, charts tell you when demand is real
- 2Market direction is a gate: even great stocks struggle in weak markets
- 3The best winners tend to show strong earnings/sales growth, leadership, and institutional demand
- 4Buy breakouts from proper bases at defined pivot/buy points (avoid chasing extended moves)
- 5Cut losses fast and consistently (the system assumes many small losses and a few big winners)
- 6Take profits systematically (or use hold rules for exceptional leaders)
- 7Leaders beat laggards: relative strength and industry leadership matter
- 8Avoid common investor mistakes: averaging down, buying low-priced cheap stocks, ignoring market trend, holding and hoping
Frameworks (5)
Formulas (6)
Case Studies (3)
Choppy market / false breakouts
Takeaway
In weak markets, breakouts fail more often; market-direction gating prevents death-by-a-thousand-cuts.
Leader stock after multiple base breakouts
Takeaway
Late-stage bases can fail abruptly; watch for distribution and respect sell rules.
Exceptional leader that breaks out and runs fast
Takeaway
A few big leaders drive results; hold-rule exceptions are designed to keep you in those moves.
Mental Models
- —CAN SLIM as a checklist: fundamentals + leadership + demand + market trend
- —Price/volume = footprints of institutional buying and selling
- —Breakouts work best when supply is absorbed and demand surges
- —Small losses are a cost of doing business; large losses are optional
- —Your edge is rules + execution, not predictions
Key Terms
- CAN SLIM
- A 7-part framework for growth-stock selection and timing: Current earnings, Annual earnings, New, Supply/demand, Leader/laggard, Institutional sponsorship, Market direction.
- Base
- A consolidation pattern after an advance that can set up a breakout if institutions accumulate shares.
- Pivot point / buy point
- A price level where a stock breaks out of a base; ideally confirmed by strong volume.
- Breakout
- A move above the buy point that signals demand overpowering supply.
- Distribution day
- A broad-market decline on heavier volume, suggesting institutional selling pressure.
+2 more terms in book
Limitations & Caveats
Keep in mind
- •Turnover can be high; taxes and spreads can materially reduce returns
- •False breakouts and whipsaws can cluster in sideways/choppy markets
- •Chart interpretation can become subjective without strict definitions
- •Not designed for deep-value, income, or macro investing styles
- •Hard stop rules can be gapped through in overnight news (slippage risk)
Related Tools
Related Books
Reading Guide
Priority Reading
- CAN SLIM components (C/A/N/S/L/I/M)
- When to sell and cut losses (risk rules)
- When to sell and take profits (profit rules + exceptions)
- How to read charts (bases, pivots, volume)
Optional Sections
- —Tooling/data-source-specific sections if you're only extracting principles
Ratings
Concept Tags
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