Wealth Insights

William O’Neil’s book How to Make Money in Stocks is a goldmine of investing wisdom. His CAN SLIM strategy has helped countless investors achieve financial success. Here are the top 15 strategies from the book that can transform the way you approach the stock market.

1. Master the CAN SLIM Strategy

O’Neil’s C.A.N.S.L.I.M. formula is a proven method for identifying winning stocks:

• Current earnings growth – Look for companies with strong quarterly EPS growth.
• Annual earnings growth – Seek firms with consistent year-over-year profit increases.
• New product, service, or management – Innovation fuels stock price momentum.
• Supply & demand – Stocks with low float and high demand tend to surge.
• Leader in the industry – Invest in market leaders, not laggards.
• Institutional sponsorship – Strong institutional backing signals confidence.
• Market direction – Follow broader market trends to time your investments wisely.

2. Cut Losses Quickly

Never let a small loss turn into a disaster. O’Neil advises selling a stock if it drops 7-8% from your purchase price to protect capital.

3. Buy High, Sell Higher

Contrary to the belief that you should buy cheap stocks, O’Neil advocates for buying stocks breaking into new highs—this signals strength and future growth potential.

4. Follow the Market Trend

Market direction dictates success. Use major indexes like the S&P 500 and Nasdaq to confirm trends before making investment decisions.

5. Volume Confirms Price Action

When a stock moves up on high trading volume, it confirms institutional interest. Weak volume in an uptrend can indicate a false breakout.

6. Learn to Spot Chart Patterns

Recognizing bullish chart patterns like the cup-with-handle, double bottom, and flat base helps identify stocks ready to explode in value.

7. Earnings Drive Stock Prices

Strong earnings growth is the backbone of winning stocks. Look for companies with at least 25% EPS growth in recent quarters.

8. Ignore News & Tips—Trust the Data

Many investors make emotional decisions based on media hype or rumours. O’Neil emphasizes relying on hard data, charts, and earnings reports instead.

9. Avoid Over-Diversification

Too many stocks can dilute returns. Instead, focus on a select few high-quality stocks that meet CAN SLIM criteria.

10. Patience & Discipline Win the Game

Successful investing requires patience and discipline. Stick to your strategy, avoid panic selling, and let your winners run.

11. Don’t Be Afraid to Sell Weak Stocks

If a stock isn’t performing as expected, cut it quickly and move on to stronger opportunities.

12. Study Past Market Winners

Learn from history by analysing past stock market winners to understand their patterns and characteristics.

13. Timing is Everything

Even great stocks can fail if bought at the wrong time. Always consider market conditions before investing.

14. Keep an Eye on Institutional Activity

Watch for large investors buying or selling stocks—they influence market movements significantly.

15. Stick to Your Plan and Avoid Emotional Investing

Fear and greed are your biggest enemies. Having a clear strategy and sticking to it will keep you ahead in the long run.

Final Thoughts

O’Neil’s How to Make Money in Stocks is a must-read for serious investors. By applying these 15 proven strategies, you can significantly improve your stock market success and build lasting wealth.